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This report will systematically explain the concept of market segmentation together with examples of how Dyson can segment its markets.

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Terms of reference The assistant to the Manager of the marketing department of Dyson have been asked to write a report that describes the concept of market segmentation with suggestion on how Dyson could segment its markets, an outline of the new product development process along with suggestions of how Dyson should apply these stages and concluding with an explanation of how Dyson can perform their marketing control. Procedure This report is fully based on secondary data, primarily from the course literature but also other internet based sources. Findings This report will systematically explain the concept of market segmentation together with examples of how Dyson can segment its markets. This will be followed by a stage outline of the new product development process accompanied by my suggestions on how Dyson should apply these stages. Finally, a descriptive scenario of how Dyson might control and monitor its performance will follow. Levels of market segmentation Mass marketing A company using this strategy does not segment the market at all; it offers the same product and uses the same promotion for all consumers. This method has often been used by companies with mass production of convenience products or by companies with few or none competitors. Mass marketing is associated with low promotion costs often reflected by a low price. Segment marketing This involves the process of dividing the market into categories with different characteristics and needs. By doing this a company can adapt all their offerings towards the needs of one or more different segments, in order to better fulfil these needs. The advantages are that a company can target the segments of which they best can match the consumer needs or those segments with the least number of competitors. Niche marketing A niche is basically a sub-segment which often has unique characteristics and special needs. Niches often search for special features, for which they are prepared to pay for. ...read more.


This stage of the process is not only about generating many ideas; they should also be good ideas which are oriented towards the company's goals and objectives. To ensure this the company can introduce an ideas system management, which collects reviews and evaluates the ideas. In order for the company to generate these ideas they can consult many different sources. Internal sources: New ideas can be generated from the company's formal research and development department. They can also encourage their employees to come with new ideas through different programs and schemes. The level of encouragement for employees to generate new ideas can be seen as a cultural artefact. Customers: Analysing customer's questions and complaints can generate new ideas. A company can also conduct surveys to learn more about the consumer's needs and wants or they can involve customers in the development process. Sometimes lead consumers develops new products on their own since they are the most advanced users and are able to identify improvements before others. Competitors: Companies can analyse competing products or services by either survey consumer opinions about competitors products or they can analyse the competing product themselves and analyse its sales records. Distributors, suppliers and others: Distributors are often in more close contact with the market and can more easily and regularly obtain consumer information and opinions. Suppliers can inform about new techniques or raw materials that opens up new possibilities for product development. Dyson: Dyson should appoint at least one person in charge of collecting and evaluating new ideas, this person should also communicate the goals and objectives that the new ideas are supposed to solve. The R&D department must be put to work with these goals and objectives in mind. Dyson should together with their distributors investigate the consumers' opinions about current washing machines and also conduct surveys in order to find out what attributes the consumers value the most and which improvements they would like to see. ...read more.


The new washing machine will primarily be launched in those markets that are already strongly penetrated. Doing this they will especially target well-educated, middle-to-high income families who appreciate quality, functionality and design. Marketing Control When launching the new washing machine Dyson calculated a market share of 3% during the first year, a sales level of 50,000 and a profit of �22million. When preparing for the marketing control of this new product they brake down the figures into quarterly estimations, i.e. setting standards. It was estimated that the market share would increase in the following pace: 1st quarter = 0,7%, 2nd quarter = 1.2%, 3rd quarter = 2% and 4th quarter = 3%. If these market shares where to be fulfilled Dyson should reach its target profit. The reason they choose market share as a standard is that it is related to the sales of the competitors. During the first year Dyson continually conducted research in order to collect data referring to their relative market share. The first two quarters where slightly below the forecasted figures, 0,67% and 1,14%, but Dyson did not find this particularly worrying. However, in the third quarter the research showed a rather large difference between forecast and actual results, the market share had barely reached 1,5%. Dyson concluded that this was caused by a general economic slowdown in Europe, of which shopping goods are fairly sensitive. Since the new washing machine was first launched in Europe due to the fact that Dyson had earlier been able to penetrate these markets more strongly they had decided to wait with their launch in the US and Asia. However, with the forecasted market share standards not meeting its target they decided to launch the washing machine in the US and Asia earlier than planned which turned out to succeed since in the second quarter of the second year their revised forecasted market share figures where exceeded. ...read more.

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