Reviews of Important Papers on Forecasting
Before 1985 Reviews
Review of:

Imran S. Currim (1981), “Using segmentation approaches for better prediction and understanding from consumer mode choice models," Journal of Marketing Research, 18, 301-309.

The basic proposition of this paper is that segmentation of consumers should allow one to make better predictions because different groups behave differently. That is what we call 'common sense' in marketing. Sometimes, of course, our common sense is wrong; hence, the present study seemed like a worthwhile undertaking. The proposition was tested on the prediction of transportation mode choice (e.g. auto or bus) between two geographical points. But it was not the actual choice, merely the mode the consumers say they would take if they happened to make that hypothetical trip. The study was done with the competence, energy, complexity, and obscurity demanded for a Ph.D. thesis (which it was). However, the two segmentation schemes, one yielding 10 'benefit segments' did not yield more accurate predictions of overall market shares for five possible mode choice for a hold-out sample of about 170 subjects. The average error for the segmented models was identical to that of the aggregate model. In addition to being surprising, the results are disappointing. Should we abandon our common sense notions? Currim takes a different approach. He concluded that the segmentation approach helped–which it did for one of the two schemes used, while it hurt for the other.