The Potential for Consumer Segmentation in the Finnish Housing Market

type="main" xml:id="joca12037-abs-0001"> This article examines whether cluster analysis can be used to identify groups of Finnish residents with similar housing preferences. Because homebuilders in Finland have been providing relatively homogeneous products to an increasingly diverse population, current housing may not represent the occupiers' preferences so a segmentation approach relying on socioeconomic characteristics and expressed preferences may not be sufficient. We use data collected via questionnaire in a principal component analysis followed by a hierarchical cluster analysis to determine whether different combinations of housing attributes are important to groups of residents. We can identify four clusters of housing residents based on important characteristics when looking for a house. The clusters describe Finnish people in different phases of the life cycle and with different preferences based on their recreational activities and financial expenditures. Mass customization of housing could be used to better appeal to these different clusters of consumers who share similar preferences, increasing consumer satisfaction and improving profitability.