Ordinal Variables in the Segmentation of Advertisement Receivers

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1 Ordinl Vribles in the Segenttion of Advertiseent Receivers Mrek Wlesik, Józef Dziechcirz, Andrzej Bk Wroclw University of Econoics, Kondorsk 8/0, Wroclw, Polnd Abstrct: The pper presents segenttion study, which eploys ethods of clssifiction to single out the segents. The vribles esured on the ordinl scle were used s the criteri of rket segenttion. Vribles used reflected students ttitude towrds 0 stteents bout dvertising. Ordinl chrcter of the dt required ppliction of specific esure () of object s distnce. This esure ws used in order to evlute the siilrities of objects, which were bsed on nubers of reltions equl to, greter thn nd sller thn. Keywords: Clssifiction, Mesureent Scles, Mrket Segenttion.. Mrket segenttion Pioneer rticle of Sith [956] cused tht segenttion ppered s widely reserched nd pplied ttitude to rketing. Alost ech enterprise observes heterogeneity of its rket tht is why the division of consuers into hoogeneous sub-groups sees to be proising pproch. Due to tht fct enterprise y expect increse of profitbility of its rket opertions. Theoreticl justifiction of wht hd been expected, ws published in the work of Frnk, Mssey nd Wind [97]. They proved tht the expected vlue of obtined profitbility level is higher with the diversified pproch to the rket. This cused quick cceptnce of segenttion by both ngers nd specilists of rketing reserch. Mrketing strtegies re constructed on the results of the undertken segenttion. Siilr tencies re observed in Polnd. Multintionls which operte on Polish rket pprecite the role of diversifiction of rketing strtegies ccording to identified rket segents ore thn the others. There re two ost frequently eployed ttitudes towrds segenttion of prcticl rket reserches (see Green [977]): segenttion priori, segenttion post hoc bsed on clssifiction procedures. In post hoc odel of segenttion where clssifiction ethods re used differs fro the priori odel only by the wy the bse vrible ws chosen for segenttion. Insted of rbitrry choice of segenttion bse (in the priori pproch), vriety of consuers chrcteristics re used in the post hoc p-

2 proch. Additionlly, in the next step the clssifiction procedure where neither nuber of clsses nor their descriptive chrcteristics re known is used. The ost frequently used vribles for the segenttion study re those identifying needs, ttitudes, lifestyle nd psychogrphic chrcteristics of the consuers. As the result hoogeneous consuer groups re isolted nd identified. Fctor nlysis, which is t reducing the set (nuber) of dignostic fetures often, precedes clss isoltion process. The uthors of overviewing works by Frnk nd Green [968], Sunders [980], Punj nd Stewrt [983], Bene nd Ennis [987] nd Arbie nd Hubert [996] pointed out in ppliction fields for clssifiction ethods in rketing, inly in rket segenttion. Epiricl segenttion studies, which hve been dointed by two entioned bove pproches ( priori nd post hoc), re suppleented by fuzzy nd stochstic clssifiction, regression nlysis, nd conjoint nlysis. Appliction of clssifiction ethods requires forlistion of the siilrity of objects ter. The use of prticulr construction of siilrity esure deps on the scle on which the vribles were esured. The choice siilrity esures is esy when ll the vribles describing exined objects re esured on one type of scle. Literture presents plenty of different wys of siilrity esureent which cn be dopted to vribles esured on scle: rtio, intervl nd (or) rtio, noinl (including binry vribles). Wide rnge of siilrity esures hs been shown in the works of: Corck [97]; Anderberg [973]; Everitt [974]; Kufn nd Rousseeuw [990]. Wlesik [993], p , gives the proposl of the new esure of objects siilrity, which cn be pplied in sitution when vribles describing those objects re esured only on the ordinl scle. In the construction of the esure under considertion, Kll s ide of correltion coefficient for ordinl vribles (see Kll [955], p. 9), ws used. There is given non-epty set A of objects, ech of the is described by ordinl vribles. Becuse of the fct tht on the ordinl scle the only possible epiricl opertion is counting of events (which ens: llotting the nuber of reltions equl to, greter thn nd sller thn ), construction of distnce esure in the following for is being proposed: d i k j j b b i k j k i j il j k l j j l li, k n n i k j il jbk i j b j l j j l li, k li, k n k l j, ()

3 where: i p j b k r j, if x x x x 0, if x x x x, if x x x x i j p j k j r j i j p j k j r j i j p j k j r j, () p = k, l; r = i, l; i, k, l =,..., n nuber of object, j =,..., nuber of ordinl vrible, x x, x ) i th (k th, l th) observtion on j th ordinl vrible, i j ( k j l j j j b i k j ki j n j l li, k n j l li, k b il j kl j nuber of reltions greter thn nd sller thn defined for object i, nuber of reltions greter thn nd sller thn defined for object k. A distnce esure d ik stisfies conditions: d ik 0, d ii 0, dik dki (for ll i, k =,..., n) nd does not lwys stisfy the tringle inequlity (bsed on siultion nlysis). Trnsfortion of ordinl dt by ny strictly incresing function does not chnge the vlue of distnce (). Distnce d ik ssues vlues fro the [0; ] intervl. Vlue 0 indictes tht for the copred objects i, k between corresponding observtions of ordinl vribles, only reltions equl to tke plce. Vlue indictes tht for the copred objects i, k between corresponding observtions on ordinl vribles, reltion greter thn tke plce or reltion greter thn nd reltions equl to if they re hold for other objects (i.e. objects nubered l =,..., n; where l i, k). Discussion bout choice of hierrchicl clssifiction ethods hs been shown in the work of Gordon [987]. In rketing nd other behviourl sciences, the ost populr hierrchicl ggloertive ethod is coplete linkge (see Arbie nd Hubert [994], p. 7). The ethod of coplete linkge hs been dopted for the segenttion. This ethod ppers s one of hierrchicl ggloertive ethods which doesn t show the tency to crete the clsses of chin. Method of coplete linkge voids the disdvntge of other hierrchicl ethods which show the tency to incorporte the new objects into the existing groups. New clsses re rrely estblished. As the result, the possibility of presence of dissiilr objects in one clss occurs. The distnce given by the forul () hs been dopted s the siilrity esure.

4 . Segenttion of dvertising responders cse study A group of 44 students of Wroclw University of Econoics were questioned in order to isolte the groups (segents) which siilrly rected to certin stteents bout dvertiseents. The experient hs been conducted with the pln to use the clssifiction ethods ( post hoc pproch). The questionnires were done in the 996/997 cdeic yer. Segenttion ws bsed on 0 stteents bout dvertising:. Infortion coing fro the dvertiseent helps e to ke decision.. I don t believe such n dvertiseent which ephsises higher product qulity thn its copetitors. 3. I usully decide to buy dvertised product which is ccopnied by dditionl bonuses. 4. Without dvertiseents no product cn be ccepted by wide rnge of consuers. 5. In-store prootion hs liited influence on y purchsing decision. 6. Advertising is good source of infortion. 7. Advertising tepts people to sp their oney foolishly. 8. If dvertising were stopped, the custoer would be better off. 9. Generlly dvertiseents nnoy e. 0. The ost effective re TV coercils.. On the whole, dvertising is believble.. I enjoy television coercils. 3. In y opinion dvertiseents stronger the decision of purchses of elderly people. 4. Infortion of dvertised products sves y precious tie. 5. I usully decide to buy newly lunched nd dvertised product. 6. I think, tht legl regultions re necessry to liit the dvertiseent influence on consuers. 7. My brnd loylty could not be chnged even by exceptionlly good dvertiseent of copetitive brnds. 8. Most of the dvertiseents re bsed on the credulity of consuers. 9. Before purchsing of newly dvertised product I usully seek for y fris dvice. 0. Advertiseent is sign for e tht the product should not be purchsed. The questioned students were sked to rk the ctegory on the five-degree ordinl scle, which reflected their ttitude towrds the given stteent: 5 Strongly gree; 4 Agree; 3 Neither gree nor disgree; Disgree; Strongly disgree. For the purpose of this study, the hierrchicl ggloertive ethods were used to clssify students into reltively hoogeneous clusters. The coplete linkge ethod proved to be ost suitble, becuse it voids chin effect. Distnce () ws ssued s the esure of siilrity of objects. The optil nuber of segents should be between 0 nd 5. Due to the fct tht the lst

5 clss hs too few objects to consider it segent, finlly seven segents hve been estblished. In post hoc segenttion, very often the respondents ttitudes esured on the Likert scle is used s the segenttion bse. In order to estblish segents profiles the dditionl respondents chrcteristics re nlysed (see Green, Tull nd Albu [988], p ). The chosen deogrphic, geogrphic nd econoic chrcteristics re presented in the Tble. Tble : Chrcteristics of rket segents Vribles Segents I II III IV V VI VII Sex (fele / le) 0/5 7/9 / 9/4 6/ 9/4 3/ Averge nuber of household ebers Averge tie devoted dily for TV wtching (in hours) Averge tie devoted dily for rdio listening (in hours) Medin of onthly incoe being t student s disposl (in Polish Zlotys) Plce of residence during studies (% of students) Pernent plce of residence (% of students) Key: student s hostel prents flt 3 own flt 4 rented roo 3 4 A B C D A town with ore thn 00,000 inhbitnts B town with 50,000 to 00,000 inhbitnts C town with less thn 50,000 inhbitnts D villge Segent I trets dvertiseent s source of potentil benefits. Advertiseent for the is n infortion source of the product nd supports their decision of purchsing. It is dointed by woen (80%) inly been ccoodted t Students Hostels or living with prents nd coing fro the cities of bove 00 thousnd inhbitnts. This cluster hs the highest edin of onthly incoe. Segent II voids extree stteents when evluting (they prefer oderte ttitudes). Segent III shows the version to risk when buying dvertised products they consider fris dvice. They dit tht dvertiseents stronger ffect elderly people. TV coercils re considered s the ost powerful decision fctor. This conclusion y coe fro rdio listening hbits. Medin of

6 onthly incoe is the lowest ong ll segents. Woen represent 66.7% of this cluster. Segent IV shows strong brnd loylty. Men represent 60.9% of this segent. The representtives of this cluster sp reltively less tie on rdio listening. More thn 6% rent roo. Segent V is the lest nuerous. It includes the sll nuber of respondents. On one hnd they declre reluctnce to dvertiseents but on the other hnd they seek for the source of potentil benefits in dvertiseent. Men represent 64.7% of this cluster. This cluster devotes ost of its tie to TV wtching. The highest percentge of the re the flt owners. Segent VI does not look for the source of future benefits. It shows the reluctnce to dvertiseents. It devotes reltively less tie to TV wtching nd rdio listening. Respondents of segent VII do not trust dvertiseents showing t the se tie. Strong brnd loylty the highest percentge wish reltion to other segents rents roo. 3. Concluding rerks The use of segenttion vribles esured on ordinl scle is reltively rre in the literture. The specific nlyticl tools re needed for such infortion. Iportnt spect of this study ws forultion, in the ethodologicl sense, certin segenttion procedure which ipleents ordinl vribles s consuer description criteri. In the epiricl study seven segents hve been estblished. The profiles of seven segents were nlysed. Moreover, this segenttion study y be regrded lso s contribution to evlution of students rections s peculir socil group of dvertiseent receivers. Additionl result of this study is coputer progr, which llows coputing distnces between objects (see Appix). Appix The coputer code in the C++ lnguge coputing the vlue of esure () of the distnce considered is vilble t Wroclw University of Econoics in the Dept of Econoetrics nd Coputer Science (e-il: bk@keii.e.jgor.pl). Coputtionl lgorith of distnce () presented below, oits detils of enter nd exit opertions. The coplete coputer progre uses files in DBF fort, which serve both s the dt source nd the result files. The Borlnd C/C++ v. 4.0 copiler ws used for the progring nd the CodeBse++ v. 5. librry procedures served s dtbse progring lnguge. As the result of its ppliction the distnce trix is generted. This trix y be

7 used in the hierrchicl ggloertive ethods of the clssifiction for division of set of objects into clsses. This trix cn be used lso for further coputtions in the SPSS for Windows pckge. procedure dist_w(x, Y,, n) { Coputes distnce trix between objects ccording to the esure (). X dt trix (rows objects, coluns vribles esured on the ordinl scle); Y syetric distnce trix; nuber of vribles; n nuber of objects } vr i, j, k, l,,, b, b : integer; d: rel; 6 begin for i to n do begin for k i to n do begin s s s 0 ; 3 4 for j to do begin if X i j Xk, j if X k j Xi, j, then, then s b else if X i j Xk, j b else if X k j Xi, j s ; s ; s s s s 0 ; s3 for l to n do begin if l k l i then begin for j to do begin if X i j Xl, j if X k j Xl, j s d, then, then s b ; s 4 s4 b ;, then else 0 ;, then b else b 0 ; else if X i j Xl, j b else if X k j Xl, j 5 s5 ; s 6 s6 b ;, then else 0 ; 0.5 s s s s s s ; Yk, i d ; Yi k d , then b else b 0 ;, ; References Anderberg, M. R. (973). Cluster Anlysis for Applictions, Acdeic Press, New York, Sn Frncisco, London. Arbie, P. & Hubert, L. (994). Cluster Anlysis in Mrketing Reserch, in Advnced Methods of Mrketing Reserch, Bgozzi R.P. (Ed.), Blckwell, Oxford, Arbie, P. & Hubert, L. (996). Advnces in Cluster Anlysis Relevnt to Mrketing Reserch, in Fro Dt to Knowledge, Gul, W. & Pfeifer, D. (Eds.), Springer, 3-9.

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