Causes and Consequences

In the 3-cluster analysis I fall under class 1 i.e. Budget Party Hoppers. People belonging to this segment are characterized by young single people who are price sensitive and would prefer living in the town than in a secluded resort.

In the 5-cluster segmentation I come under the Cheap American Males or class 1 segmentation. Again this segment is characterized by price sensitivity of the people who fall mainly under the young, single and male demographics.

In class 2 segment of the 7-cluster segmentation, which is again the price sensitive crowd mostly under the age of 30, that prefers vacationing in hotels that are in the city and not in secluded areas.

e. There are both advantages and disadvantages of having high number of segments. With lesser number of segments, the biggest advantage is that the company can target a large customer base. Targeting a larger base could result in great sales. However, the disadvantage here is the fact that the segment may not be homogeneous. Lesser segments could result into people having different attributes within the segment thus making target marketing tougher. Class 1 in the cluster 3 has a big size of 134 however, their demographics are varied and not focused.

With an increased number of segments, such as the 7 cluster, the size of the segment becomes very small. However, the segment is homogeneous with its attributes thus making channeling marketing efforts easier and more effective. But a smaller customer base can effect profitability, thus being the biggest disadvantage. Class 7 of cluster 7 has a very focused demographics of young unmarried crowd however the segment size is only 15.

According to me, a 5 segment cluster best balances the pros and cons of segmenting as it gives both a good customer base in each segment and a targeted audience for marketing services to.