LAUSR

Purpose Alternative payment means have been expanding rapidly in recent years. The need to identify segments of customers that are targetable for both financial and nonfinancial institutions is growing. This study uses two different methods, discriminant analysis and decision trees, in order to (a) compare the effectiveness of the two methods for segmentation and (b) identify critical consumer characteristics which determine behavior and preference in relation to the use of payment means. Design/methodology/approach Using data from 321 bank customers, decision tree and discriminant analysis methods are used, first to test the same set of variables differentiating the customers and then to compare the respective results and prediction ability of the two methods. Findings Results show that discriminant analysis has a better model fit and segments the customers in a more effective way than the decision tree method. In addition, each method shows different variables to differentiate the customer groups. Resea...