Evaluating Market Segmentation Studies: The Properties of R2
- 1 July 1973
- journal article
- Published by Institute for Operations Research and the Management Sciences (INFORMS) in Management Science
- Vol. 19 (11) , 1213-1221
- https://doi.org/10.1287/mnsc.19.11.1213
Abstract
Virtually all of the empirical studies on market segmentation can be characterized as unsuccessful in terms of R2. That is, the set of independent variables used have not explained much of the variance in purchasing behavior. R2's of 0.01 and 0,02 are not uncommon. In this article we show that R2 is an inappropriate statistic to use in evaluating most of these studies. We show that good models with good sets of variables can yield low (and even zero!) R2's. In this context “good” variables are ones that explain the average purchasing behavior of a family. The previous studies on market segmentation should be re-evaluated in light of the results presented here.Keywords
This publication has 0 references indexed in Scilit: