FUZZY EXTENSION OF THE CODAS METHOD FOR MULTI-CRITERIA MARKET SEGMENT EVALUATION

Mehdi Keshavarz Ghorabaee,Maghsoud Amiri,Edmundas Kazimieras Zavadskas,Reyhaneh Hooshmand,Jurgita Antuchevičienė

doi:10.3846/16111699.2016.1278559

Mehdi Keshavarz Ghorabaee, Maghsoud Amiri + Show 3 more

Open Access

https://doi.org/10.3846/16111699.2016.1278559

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Abstract

One of the important activities of a company that can increase its competitiveness is market segment evaluation and selection (mse/mss). We can usually consider mse/mss as a multi-criteria decision-making (mcdm) problem, and so we need to use an mcdm method to handle it. Uncertainty is one of the important factors that can affect the process of decision-making. Fuzzy mcdm approached have been designed to deal with the uncertainty of decision-making problems. In this study, a fuzzy extension of the codas (combinative distance-based assessment) method is proposed to solve multi-criteria group decision-making problems. We use linguistic variables and trapezoidal fuzzy numbers to extend the codas method. The proposed fuzzy codas method is applied to an example of market segment evaluation and selection problem under uncertainty. To validate the results, a comparison is performed between the fuzzy codas and two other mcdm methods (fuzzy edas and fuzzy topsis). A sensitivity analysis is also carried out to demonstrate the stability of the results of the fuzz codas. For this aim, ten sets of criteria weights are randomly generated and the example is solved using each set separately. The results of the comparison and the sensitivity analysis show that the proposed fuzzy codas method gives valid and stable results.

Highlights

Market segmentation becomes an essential element of marketing in industrial companies, since it helps to find homogeneous market segments and to expand company’s market (Wedel, Kamakura 2012)
Unlike the other distance-based multi-criteria decision-making (MCDM) methods like TOPSIS and VIKOR, the evaluation process in the proposed fuzzy CODAS method is only based on negative-ideal solution, and the positive-ideal solution is not used in its process
Because this process can be viewed as a multi-criteria decision-making problem, we usually need to use an efficient MCDM method for it

Summary

Introduction

Market segmentation becomes an essential element of marketing in industrial companies, since it helps to find homogeneous market segments and to expand company’s market (Wedel, Kamakura 2012). The dividing process of a business market into some sub-groups of consumers, which are known as segments, is defined as market segmentation. In this definition, the business market can consist of existing and potential customers, and the segmentation is performed based on some characteristics which are common in the sub-groups. Companies need to evaluate the resulted segments and select the most appropriate one(s). This evaluation and selection process can be considered as a critical managerial decision because it may affect other decisions related to marketing strategy (Wind, Thomas 1994). An overall review of academic researches indicates that existing studies have relatively neglected the process of market segment evaluation and selection

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