Research Framework for market segment evaluation and
selection based on fuzzy MCDM approach
Professor: Ta Chung Chu
Student: Nguyen Khoa Tu Uyen – M977Z215
Nguyen Phan Anh Huy – M987Z264
1.1 Background and motivation
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The business environment is more and more competitive.
Therefore, companies need choose to target one or some
segments to increase their ability to success.

A company can not satisfy all market because there are
many types of customers with different characteristics
while resources of their company are limited. They must
focus marketing efforts on the chosen segments to
understand and satisfy their needs and wants.

If they choose to serve all markets, they will have
problems because of many limitations of their business.
That is the reason why market segment evaluation and
selection are crucial activities.
Ferrell and Hartline, 2008, how many market segments that the company
wants to choose depends on that company, based on company resources
and marketing program. The chosen markets can be changed if the
marketing program is changed. Companies need to choose relevant
variables (or criteria) to define their market segments and select their
target markets.
In a research of Ou et al., 2009, they define that “market segmentation
involves detecting, evaluating and selecting homogeneous groups of
individuals regardless of whether consumers or not with the intention of
designing and directing appropriate competitive strategies” and “market
segments are defined as groups of consumers who are expected to exhibit
similar purchasing responses”.
Then, they assess market segment evaluation as an essential component
international market development because it can help companies target
their markets and improve their success.

1.2 Problem Identification:
There are many references about market segmentation but they just focus
on the market segmentation approaches. The evaluation and selection of
market segments are not clearly and well focused on these journals.

In the research of Ou et al., 2009, they said that the criteria for market
segment evaluation and selection used are mostly evaluated by human
perception and judgment and the evaluation is subjective. Traditional
approaches such as statistics employing only exact crisp values cannot
well-support decision-making procedures for such evaluation problems.
Therefore, fuzzy multiple criteria decision making (MCDM) is a highly
suitable approach for this issue. They used Fuzzy Multiple Attributes
Decision Making (called MADM or MCDM) as an approach for market
segment evaluation and selection. But there are some limitations in their
study. For example, they are lack of literature review for previous market
segmentation approaches as well as market segment evaluation and
selection approaches. They just focus on the competitive analysis while
the other criteria such as potential profit and segment sizes, expected
growth are also important. Therefore, their model is not good enough.
1.3 Research Objective
There are three objectives when conducting this research as the following:



First, I can profoundly study market segmentation, market segment
evaluation and selection with their approaches to comprehend what we are
talking about.
Second, I want to establish an effective fuzzy MCDM model for market
segment evaluation and selection.
Third, I will conduct a numerical example to show the feasibility of the
proposed model.
1.3 Research limitation

First, in my thesis I just give the hypothetical numerical example for
testing the model. I am lack of time to conduct a case study so that the
result and feasibility of this model is not proved more persuasively and
clearly.

Second, my model is used for all kind of industries. I don’t focus on any
specific industry.
1.4 Research framework
This research consists of six Chapters shown in Fig. 1-1. The topic of this
research is chosen based on the analysis of background and motivation,
problem identification which expressed in chapter one. Then, chapter two
shows the literature review about market segmentation, market segment
evaluation and selection is conducted and the identified criteria. Some
basics on fuzzy sets theory are proposed in Chapter three. Chapter four is
a full presentation about processing of model establishment. The
numerical example is conducted to test the model in Chapter five and
finally, Chapter six is conclusion and discussion for further research.
Fig 1-1 Framework of the Research
Chapter 1 Introduction
Chapter 2 Literature Review
Chapter 3 Fuzzy Set Theory
Chapter 4 Model Establishment
Chapter 5 Numerical Example
Chapter 6 Conclusion and Discussion