Cluster Analysis in Test Market Selection

Selection of “matched” areas for test marketing is an important undertaking if reliable comparisons among markets are to be made. This usually has been done on a rather arbitrary basis, largely because of the large number of market characteristics on which markets can be viewed as similar or different.

The authors suggest a numerical procedure—cluster analysis—for matching prospective test markets on the basis of a large variety of characteristics which could affect test marketing results. In this way, markets can be pre-selected so as to reduce undesired variability among test areas.