Discriminant Analysis — An Aid to Market Segment Description

Looks at multiple discriminant analysis (MDA) a technique used to discover differences of the members of one group from another. Stresses that in marketing MDA is better used as a method of identifying the discriminant characteristics between market segments. Says that MDA works by providing maximum separation between the groups and this is obtained by maximising the difference between the means of the groups in relation to the standard deviation within the groups. Posits that many model building problems occurring in MDA are common to other multivariate techniques — especially regression analysis. Concludes that there are a few applications of MDA in marketing which illustrate its exceedingly wide potential wherever classification decisions have to be made.