Segmentation and New Product Development

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Segmentation and New Product Development Powered By Docstoc
					European Journal of Scientific Research
ISSN 1450-216X Vol.23 No.3 (2008), pp.454-457
© EuroJournals Publishing, Inc. 2008

                 Marketing Concepts; Segmentation and the
                      Product Development Process

                  Marketing department, Jadara National University, Irbid – Jordan


            This paper looks at two major concepts of marketing and how they apply to Dyson
     the vacuum cleaner and washing machine manufacturer. The paper looks at the value and
     application of segmentation and then at the concept design product development process.
     The paper ends with a short section of controlling and maintaining quality.

     Keywords: Segmentation, potential consumer, product development models, feedback,
               numerical values, expected performance.

The development of any new product will take time and effort as well as an understanding of the target
market and how the product can appeal to the target market. If we consider a large well known
company such as Dyson; well known for innovation and new product development we can consider
different elements of this company to understand the way in which products are developed to satisfy

The problem and solution
1. The Importance of Segmentation
The segmentation of a market will mean that the consumers or end users are broken down into
categories that may also mean that the services that t are marketed to them may be differentiated and
targeted to that market.
        Segmenting is the division of the consumer base, or potential consumer base into categories
where there are similar characteristics. There are a number of ways a market can be segmented.
Traditional methods of segmentation may included demographics dividing the market by
characteristics such as age, gender or ethic background Other psychical attributes may be used, such as
geographical location or even characteristics such as weight, hair colour or even those with poor
eyesight [3].
        The use of these segments has been seen over many years. However, it has been argued that
segmentation along these lines is too general. The use of socioeconomics may also be used as a
segmentation strategy, looking at occupation, income and education. More recent development also
includes the use of consumer life cycle stages, looking at factors such as marital status and position of
children if any. ACORN; A Classification of Residential Neighbourhoods may be seen as bring many
of these more objective measure together [3]. These are all objective measures, but the use of more
subjective measures are also seen in some segmentation strategies, which may include personality
Marketing Concepts; Segmentation and the Product Development Process                                455

inventories, which can include personal values, such as those who value fair trade products, and even
lifestyle inventories may be used to categorise consumers into groups with common traits.
        Segmenting is of both direct and indirect benefit for the suppliers. By placing consumers into
various groupings dependant on characteristics they can be targeted by the different companies and
advertising agencies, but this does not tell us what goes on in the 'black box' and how the purchase
decision is made [4]. However, we know that correct segmentation and targeting will impact in the
black box decisions. If products for babies need to be sold, they need to be targeted at segments of the
market with children, such as young mothers, expensive jewellery may be targeted at high-income
families, and event to be held in a specific venue may require geographical segmentation. Vacuum
cleaners need to be targeted at those who will buy and use them, householders who in turn may be
broken down into more defined segments.
        By defining the segments in the market the business unit can determine which segments have
the higher potential for the company in terms of profit creation. This may mean targeting different
segment to other division within the company. For example supermarkets may have both budget and
premium brands, Dyson also has different products, the more established brand may be seen as more
mainstream, whereas the newer products may require a larger investment so a higher disposable
income as well as the buyer being an early adopter. The business may also seek to build on the existing
segments, for example, there has been the release of the vacuum cleaners by Dyson aimed specifically
at pet owners, this creates a new segment in an existing market. This builds on the same brand name
and appeals to a similar segment of the market [2].
        In short, by defining the segments of a market in various ways, the potential of each segment
may be assessed and a match between what the company can offer and the needs of the segment may
also be assessed. Once a match is achieved between the goods a company offers and the identified
segments the marketing budget can also be used more effectively to create sales. For a business unit
there may be additional consideration such as the way that the operations and market plans will fit in
with the strategy used for the rest of the company. However, there are also limitations as not all
consumers of a single product will have the same characteristics that can be identified and this still
does not tell us what goes ion in the black box of decision making.
        The way in which segmentation occurs is necessary as this allows the products to be created in
a more effective manner, to meet the needs f a market, For example, we see the example in the case
study of Dyson developing a robot cleaner on the suggestion that a vacuum cleaner could be developed
that did not need to be pushed around. When looking at this we ca see this would be appealing to only
one segment of a very diverse market. Firstly, it would appeal to those who were comfortable with the
use of technology and competent in using it. This is also a new product s it would appeal to new
adopters and those who enjoy using technology. This is likely to indicate a younger rather than an older
market, and may also appeal to a market not usually interested in vacuum cleaners; males. The cost of
the new product would also indicate a group where there is a higher than average disposable income.

2. Product Development Process
If we look at the way in which a product is developed there are numerous product development
models. Here we can look at the conceptual design process it and apply it to the design of a new Dyson
washing machine.
        This is a fairly simplified process, which looks at the stages in the development of a product.
This starts with an evaluation stage where many ideas may be rejected, where the initial evaluation is
passed will then move on to a more detailed engineering process of design and evaluation prior to a
potential production. There is the ongoing evaluation of the product at different stages to ensure it is
both commercially viable and able to be produced within a level that will create profit as well as meet
an end user demand. This is a model that is the equivalent of the systems design seen in the Taguchi
robust design hierarchy [1].
456                                                                                            Leily Ziglari

         The first stage can be seen as that of benchmarking. This is a stage were there is research in the
form of the data collection. This may include a list of existing products that may be potential products
that will solve the need that the new product is being designed to meet [3]. This will mean looking at
what is already on the market that may be similar or appeal to the same market the new product is to be
aimed at.
         The data is collected and categorised into groups of similar products with data listed in a table
and values given to the features, which are then averaged to give the statistical average. If the product
is being aimed at the mass market then the score of the new product will aim t be comparable to this
statistically analysed average, if the produce is to be a premium product then it should be higher, and a
budget product should be lower [1].
         This study should also result in a product design specification, where the requirements for the
new product are determined ands can then be brought to fruition during the product realisation process.
The purpose of the product design specification is to lay a foundation to guide the development of the
product, such as quality levels and required characteristics [1].
         The next stage is the physical reliability study. This is the next logical stage form determining
the basis of the product. This is to determine of there is the ability to actually create the product with
the current level of technology or competencies and resources. If there are not the requirements within
the company there need to be the consideration of whether these can be brought in or if the
breakthrough and development required can be reasonably expected as achievable. Here it may be seen
that engineering and the realisation of new electronic white goods is one of the core competences of
Dyson. The analysis will use a simplified engineering approach, which may include the identification
of product already in existence in order to adapt and adopt their use to meet the required performance
levels. The current level of technology can be identified and the use of a power required analysis in the
process can also be identified [1].
         This analysis can be very complex; as a result several assumptions can be made to facilitate this
analysis. The result will be a indication of the viable of the product when measures against the current
capabilities and a determination of whether this is worth further investigation.
         This can be followed by a parametric study. Here there is the use of the data collected at the
first stage, the benchmark data and this is examined for trends in order to identify the direction that
developments are moving in and look at the relationship between the different characteristics of each
product. By understanding these trends and relationships there is a better ability design a better
         The similarity study is the next step. Here the study looks at products where there are similar
functions, but are of different sizes. This is undertaken in order to assess the different characteristics of
larger or smaller products in order to consider scaling up or scaling down f the same characteristics of
functions [1,3].
         This may look at geometric scaling, which is reasonably simple, but functionality is not as
easily scaled nor may the system itself as the alteration of size may alter the way that the system can
         A Pugh Concept evaluation table may also be used to evaluate the development of the new
product. This is a table that allows for the version of the product that is being developed to be
examined against the expected performance; plus signs are used to indicate an attainment that is better
than the expected level, a negative sign where there is a shortfall of the expectation.
         The design that is chosen is then the design that has the least negative signs. Where there is
draw the positive signs can then be considered. This is a good tool to be used during the concept stage
of the development as it allows for the flaws of shortfalls to be minimised. The advantages are that this
is a quick and easy to understand comparison system that allows a direct comparison.
         It is also possible that there is the potential use of this tool to propose a new design that is
amalgamated form other designs. However this would then have to be fully evaluated to re reach the
current stage [1,5].
Marketing Concepts; Segmentation and the Product Development Process                                 457

        The next stage is the decision matrix. This is stated as being a quantitative approach to take the
product form the conceptual design stage to the detailed design stage. This is a matrix where the
product is compared to the initial product design specification. The different requirements can be
weighted according to their importance; all the scores need to be within the same range of numerical
values to that there can be a direct comparison. This means that the different variations on the product
can be compared to determine which had the highest overall score when the scores are calculated for
each product taking the weightings into consideration [1,6].
        This is a system that allows for the use of various tools, all of which are designed to assess
different aspects of the new product, form the concept and desired characteristic to a comparisons with
those on the market that may be desirable and the way there may be a 'borrowing' of technology or
design concepts for exiting products. The application of these may all help Dyson indicate which areas
are important and which are not and how value may be added to the

3. Monitoring and Controlling
The monitoring and controlling of the products may be seen as key to the continued success of the
product. This means controlling the inputs and regularly testing the outputs. However, these are goods
which require a longer term testing, therefore testing needs to be not only momentary, but also
following a product through a forced lifecycle. The feedback from consumers using the products and
records of call outs under warranty may also be used to identify weak areas where there can be
improvements to save costs as well as increase consumer satisfaction. This means monitoring and
collecting information and analysing it proactively form different sources.

The result
This may be seen as indicating the way the target market can be marketed to, they are less likely to be
watching daytime television but may be more interested in younger style magazines. Therefore
segmentation is not only key to developing the product but also to communicating efficiently with the
        This study resulted product design specifications, where the requirements for the new product
are determined and can then be brought to fruition during the product realisation process.
        The paper ended with a short section of monitoring, controlling and maintaining quality.

[1]    Anderson Dale O. (2001), Conceptual Design, retrieved 22nd March from
[2]    Gershon Howard J. (2003, Nov-Dec), Market management: a concept worth exploring, Journal
       of Healthcare Management, v48 i6 p363(3)
[3]    Hooley G J; Saunders J A; Piercy, (1998), Marketing Strategy and Competition Positioning,
       London, Prentice Hall
[4]    Kotler, P, (2003), Marketing Management, International Edition, New Jersey, Prentice Hall
[5]    Mintzberg H, Quinn J, Goshal S (1998) The Strategy Process (Revised European Edition),
       London, Prentice Hall
[6]    Thompson J L, (1998), Strategic Management; Awareness and Change, London, Thompson
       Business Press.

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