Transportation Market Segmentation via Latent Class Analysis



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Public transportation is a primary method of mobility within and between communities for many people. Transportation systems can involve a variety of transit modes and routes, such as fixed-route bus lines or on-demand van services. The usefulness of these services largely depends on how adequately they meet the wants and needs of nearby populations. Market segmentation is a common strategy employed by transit organizations to divide their target population into various groups based on transit preferences, socio-demographic factors, and more. These segments can then be analyzed by transit planners to develop targeted routes, policies, and marketing strategies. In this paper, we introduce latent class analysis (LCA) as a tool for transit planners to rigorously perform market segmentation. In addition to an overview of the method, we estimate and analyze a toy latent class model to illustrate various mechanics of LCA. Lastly, we perform a case study analyzing transit preference market segments in the Pioneer Valley Transit Authority's (PVTA) Northern service region. Our results suggest the existence of three latent classes with members of each having distinct attitudes towards transportation and PVTA's services.



Latent Class Analysis, Market Segmentation, Public Transportation