Dynamics in international market segmentation of new product growth

A. Lemmens, C. Croux, S. Stremersch

Research output: Contribution to journalArticleScientificpeer-review

163 Downloads (Pure)

Abstract

Prior international segmentation studies have been static in that they have identified segments that remain stable over time. This paper shows that country segments in new product growth are intrinsically dynamic. We propose a semiparametric hidden Markov model to dynamically segment countries based on the observed penetration pattern of new product categories. This methodology allows countries to switch between segments over the life cycle of the new product, with time-varying transition probabilities. Our approach is based on penalized splines and can thus be flexibly applied to any nonstationary phenomenon, beyond the new product growth context. For the penetration of six new product categories in 79 countries, we recover the dynamic membership of each country to segments over the life cycle. Our findings reveal substantial dynamics in international market segmentation, especially at the beginning of the product life. Finally, we exploit the dynamic segments to predict the national penetration patterns of a new product before its launch and show that our forecasts outperform forecasts derived from alternate parametric and/or static methods. Our results should encourage multinational corporations to adopt dynamic segmentation methods rather than static methods.
Original languageEnglish
Pages (from-to)81-92
JournalInternational Journal of Research in Marketing
Volume29
Issue number1
DOIs
Publication statusPublished - 2012

Fingerprint

International market segmentation
New products
Penetration
Life cycle
Segmentation
Product category
Hidden Markov model
Methodology
Time-varying
Multinational corporations
Transition probability
Splines

Keywords

  • country segmentation
  • dynamic segments
  • international new product growth
  • penalized splines
  • semiparametric modeling

Cite this

Lemmens, A. ; Croux, C. ; Stremersch, S. / Dynamics in international market segmentation of new product growth. In: International Journal of Research in Marketing. 2012 ; Vol. 29, No. 1. pp. 81-92.
@article{306086bd670f48d297d136fcc24fc82a,
title = "Dynamics in international market segmentation of new product growth",
abstract = "Prior international segmentation studies have been static in that they have identified segments that remain stable over time. This paper shows that country segments in new product growth are intrinsically dynamic. We propose a semiparametric hidden Markov model to dynamically segment countries based on the observed penetration pattern of new product categories. This methodology allows countries to switch between segments over the life cycle of the new product, with time-varying transition probabilities. Our approach is based on penalized splines and can thus be flexibly applied to any nonstationary phenomenon, beyond the new product growth context. For the penetration of six new product categories in 79 countries, we recover the dynamic membership of each country to segments over the life cycle. Our findings reveal substantial dynamics in international market segmentation, especially at the beginning of the product life. Finally, we exploit the dynamic segments to predict the national penetration patterns of a new product before its launch and show that our forecasts outperform forecasts derived from alternate parametric and/or static methods. Our results should encourage multinational corporations to adopt dynamic segmentation methods rather than static methods.",
keywords = "country segmentation, dynamic segments, international new product growth, penalized splines, semiparametric modeling",
author = "A. Lemmens and C. Croux and S. Stremersch",
year = "2012",
doi = "10.1016/j.ijresmar.2011.06.003",
language = "English",
volume = "29",
pages = "81--92",
journal = "International Journal of Research in Marketing",
issn = "0167-8116",
publisher = "Elsevier Science BV",
number = "1",

}

Dynamics in international market segmentation of new product growth. / Lemmens, A.; Croux, C.; Stremersch, S.

In: International Journal of Research in Marketing, Vol. 29, No. 1, 2012, p. 81-92.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Dynamics in international market segmentation of new product growth

AU - Lemmens, A.

AU - Croux, C.

AU - Stremersch, S.

PY - 2012

Y1 - 2012

N2 - Prior international segmentation studies have been static in that they have identified segments that remain stable over time. This paper shows that country segments in new product growth are intrinsically dynamic. We propose a semiparametric hidden Markov model to dynamically segment countries based on the observed penetration pattern of new product categories. This methodology allows countries to switch between segments over the life cycle of the new product, with time-varying transition probabilities. Our approach is based on penalized splines and can thus be flexibly applied to any nonstationary phenomenon, beyond the new product growth context. For the penetration of six new product categories in 79 countries, we recover the dynamic membership of each country to segments over the life cycle. Our findings reveal substantial dynamics in international market segmentation, especially at the beginning of the product life. Finally, we exploit the dynamic segments to predict the national penetration patterns of a new product before its launch and show that our forecasts outperform forecasts derived from alternate parametric and/or static methods. Our results should encourage multinational corporations to adopt dynamic segmentation methods rather than static methods.

AB - Prior international segmentation studies have been static in that they have identified segments that remain stable over time. This paper shows that country segments in new product growth are intrinsically dynamic. We propose a semiparametric hidden Markov model to dynamically segment countries based on the observed penetration pattern of new product categories. This methodology allows countries to switch between segments over the life cycle of the new product, with time-varying transition probabilities. Our approach is based on penalized splines and can thus be flexibly applied to any nonstationary phenomenon, beyond the new product growth context. For the penetration of six new product categories in 79 countries, we recover the dynamic membership of each country to segments over the life cycle. Our findings reveal substantial dynamics in international market segmentation, especially at the beginning of the product life. Finally, we exploit the dynamic segments to predict the national penetration patterns of a new product before its launch and show that our forecasts outperform forecasts derived from alternate parametric and/or static methods. Our results should encourage multinational corporations to adopt dynamic segmentation methods rather than static methods.

KW - country segmentation

KW - dynamic segments

KW - international new product growth

KW - penalized splines

KW - semiparametric modeling

U2 - 10.1016/j.ijresmar.2011.06.003

DO - 10.1016/j.ijresmar.2011.06.003

M3 - Article

VL - 29

SP - 81

EP - 92

JO - International Journal of Research in Marketing

JF - International Journal of Research in Marketing

SN - 0167-8116

IS - 1

ER -