Segmentation of Investors Based on Choice Criteria

Understanding the criteria used by investors to evaluate any investment instrument is important for the marketers of any investment product. It is also important for them to segment the investors based on their choice and know the characteristics of each segment of investors. The present study has identified four commonly used criteria namely convenience, risk protection, return and liquidity. By using these criteria, investors are segmented into three categories namely, rational, normal and irrational based on the extent to which they consider each criterion. Rational people analyze any investment instrument by using all the criteria, whereas irrational people take investment decisions without considering any. The discriminant analysis is used to test the suitability segmentation.