Artificial neural networks: A new methodology for industrial market segmentation

The authors explore the potential of artificial neural networks in assisting industrial marketers faced with a segmentation problem by comparing their classification ability with discriminant analysis and logistic regression.

Abstract

Neural networks are a type of artificial intelligence computing that have generated considerable interest across many disciplines during the past few years. The authors explore the potential of artificial neural networks in assisting industrial marketers faced with a segmentation problem by comparing their classification ability with discriminant analysis and logistic regression. The neural networks achieve higher hit ratios on holdout samples than the other methodologies. A marketer in a business-to-business situation may be able to segment a market more accurately, thereby improving efficiency for sales forces and other promotional activities, by using artificial neural networks.