Methodological reasons for the theory/practice divide in market segmentation

Abstract

A theory/practice divide exists in market segmentation. The main reasons are the focus of academic studies on statistical techniques, and managers' lack of understanding of fundamental segmentation basics (Dibb 2005;Greenberg and McDonald 1989). To date, only one study has explored methodological reasons for the theory/practice divide: Dibb and Simkin 1994. We extend their work by: (1) detailing key methodological aspects likely to cause difficulties in translating segmentation findings into managerially useful information, and (2) empirically investigating specific research questions about methodology-induced reasons for the theory/practice divide derived from both theory and the propositions of previous studies. Results indicate a large proportion of managers lack a fundamental understanding of market segmentation methodology, thus over-interpreting the validity of solutions. More than 60 per cent of managers indicated that to them, market segmentation is like a "black box", and they have difficulties interpreting presented segmentation solutions. Practical recommendations for improvement are provided.

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