The segment-molecular-orbital representation is developed and incorporated into the recently developed linear-scaling localized-density-matrix method. The entire system is divided into many segments, and the molecular orbitals of all segments form the basis functions of the segment-molecular-orbital representation. Introduction of different cutoff lengths for different segment-molecular-orbitals leads to a drastic reduction of the computational cost. As a result, the modified localized-density-matrix method is employed to investigate the optical responses of large Poly(p-phenylenevinylene) aggregates. In particular, the interchain excitations are studied. The complete neglect of differential overlap in spectroscopy hamiltonian is employed in the calculation.