after collecting the relevant data, market segmentation is the key to market-based pricing and revenue maximization. airlines, for example, employed this tactic in differentiating between price-sensitive leisure customers and price-insensitive business customers. leisure customers tend to book earlier and are flexible about when they fly and are willing to sit in coach seats to save more money for their destination, whereas business customers tend to book closer to departure and are typically less price sensitive. success hinges on the ability to segment customers into similar groups based on a calculation of price responsiveness of customers to certain products based upon the circumstances of time and place. revenue management strives to determine the value of a product to a very narrow micro-market at a specific moment in time and then chart customer behavior at the margin to determine the maximum obtainable revenue from those micro-markets. micro-markets can be derived qualitatively by conducting a dimensional analysis. business customers and leisure customers are two segments, but business customers could be further segmented by the time they fly (those who book late and fly in the morning etc.). useful tools such as cluster analysis allow revenue managers to create a set of data-driven partitioning techniques that gather interpretable groups of objects together for consideration. market segmentation based upon customer behavior is essential to the next step, which is forecasting demand associated with the clustered segments.