Required Sample Sizes for Data-Driven Market Segmentation Analyses in Tourism

Under all simulated data circumstances, a sample size of 70 times the number of variables proves to be adequate and will provide guidance to data analysts in academia and industry who wish to conduct reliable and valid segmentation studies.

Abstract

Data analysts in industry and academia make heavy use of market segmentation analysis to develop tourism knowledge and select commercially attractive target segments. Within academic research alone, approximately 5% of published articles use market segmentation. However, the validity of data-driven market segmentation analyses depends on having available a sample of adequate size. Moreover, no guidance exists for determining what an adequate sample size is. In the present simulation study using artificial data of known structure, the impact of the difficulty of the segmentation task on the required sample size is analyzed in dependence of the number of variables in the segmentation base. Under all simulated data circumstances, a sample size of 70 times the number of variables proves to be adequate. This finding is of substantial practical importance because it will provide guidance to data analysts in academia and industry who wish to conduct reliable and valid segmentation studies.