Market segmentation for customer satisfaction studies via a new latent structure multidimensional scaling model

It has been well documented in the marketing literature that customer satisfaction is critical to any businesses' success. However, it is far less clear as on how marketers comprehend customer differences in customer satisfaction evaluations, and leverage such understanding in forming their marketing strategies. Only recently have researchers begun to explore the notion of individual or segment differences in the formation of overall satisfaction judgments. To extend the exploration of unobserved customer heterogeneity in customer satisfaction studies with multiple attributes, we propose a latent structure multidimensional scaling (MDS) model to visually depict unobserved customer heterogeneity with respect to the theoretical components of customer satisfaction judgments. Our model is developed on the basis of the well-established expectancy-disconfirmation theory of customer satisfaction. We describe the proposed MDS model and discuss the technical aspects of the model structure and maximum likelihood estimation.