The Indian Market Research Bureau $($IMRB$)$ is a leading market research agency that specializes in tracking consumer purchase behavior in consumer goods $($both durable and non$-$durable$).$

IMRB tracks about $30$ product categories $($e$.$g$.$ detergents, etc.$)$ and within each category, about $6070$ brands. To track purchase behavior, IMRB has constituted about $50,000$ household panels in $105$ cities and towns in India, covering about $80\%$ of the Indian urban market. $($In addition to this, there are $25,000$ sample households selected in rural areas; however, we are working with only urban market data$).$ The households are carefully selected using stratified sampling. The strata are defined on the basis of socio$-$economic status, and the market $($a collection of cities$).$

IMRB has both transaction data $($each row is a transaction$)$ and household data $($each row is a household$),$ and, for the household data, maintains the following information:

Demographics of the households $($updated annually$)$

Possession of durable goods $($car$,$ washing machine, etc.; updated annually$)$ and a computed "affluence index" on this basis

Purchase data of product categories and brands $($updated monthly$).$

IMRB has two categories of clients: $(1)$ Advertising agencies who subscribe to the database services. They obtain updated data every month and use it to advise their clients on advertising and promotion strategies. $(2)$ Consumer goods manufacturers who monitor their market share using the IMRB database.

Key Problems

IMRB has traditionally segmented markets on the basis of purchaser demographics. They would like now to segment the market based on variables more directly related to the purchase process $($selling proposition$)$

Doing so would allow IMRB to gain information about what demographic attributes are associated with different purchase behaviors and degrees of brand loyalty, and more effectively deploy promotion budgets.

The better and more effective market segmentation would enable IMRB$$s clients to design more cost$-$effective promotions targeted at appropriate segments. Thus, multiple promotions could be launched, each targeted at different market segments at different times of a year. This would result in a more cost$-$effective allocation of the promotion budget to different market$-$segments. It would also IMRB to design more effective customer reward systems and thereby increase brand loyalty.