Latent Class Analysis Case Study

Business Objective:

An apparel company would like to understand its customers' needs and purchase behaviors for a particular product category so that it can better serve their varying needs.

Research Objective:

The research was designed to identify, profile, and target potential customers most receptive to the apparel company's brand.

Methodology:

CMI employed Latent Class Analysis (LCA) techniques to conduct the needs-based market segmentation of customers.

1. First, CMI worked with the client to identify relevant demographic, psychological, attitudinal, and behavioral indicators that may be used for segmentation.
2. Second, CMI used Latent Class Analysis to determine the appropriate number of segments of customers, based on their responses to the above-mentioned indicators.
3. Finally, CMI analyzed the size, characteristics, and market demand of each segment to provide more detailed information to the apparel company.

The Result:

The research and analysis identified a specific number of customer segments and provided insights into the psychological, attitudinal, and behavioral dynamics that propel or limit interests in the brand.  These insights were instrumental in developing more targeted and effective business and marketing strategies.  In addition, results pertaining to differences in market demand by the resulting segments provided valuable information on the estimates of potential purchase by customers in these segments.