9.2: Market Sectors and Segments

9.2
Market Sectors and Segments
Essential idea: Designers must research and consider the target market sectors and segments in the design of their products.

By identifying the market sectors and segments a product will be designed for, a designer can gain data directly from the perspective of the potential consumer.

Categories of market sectors
Designers need to clearly be able to identify the needs of the target market and target audience. These can be classified into two categories:

• Geographical sectors

Geographical sectors focus on the values, culture, and characteristics of purchasers in that region along with purchasing power.

• Client-based sectors

Client-based sectors may focus on consumers, industrial, public sector and commercial.

You can divide a market sector into market segments, narrowing it down. Market segmentation: Markets divided in to smaller segments where purchasers have similar characteristics and/or tastes.

Market segmentation introduction

Why do we segment?

• Increased understanding of customer wants and needs
• Different products for different groups
• Better match between customer wants and product benefits
• Maximise the use of available resources
• Focused marketing expenditures
• Competitive advantages

The influence of market sectors

The influence of market sectors

•  if there is a technological advance then the products or services in that sector will change.
• This change will influence the target markets.
• Such as the size of microchips allowing for powerful portable devices leading to iPads and smartphones.

Classifications of consumer market segments: income, profession, age, family, values, behavior
Common segmentation variables for consumer markets:

1. Geographic
• Country
• Region
• City size
• Density
• Climate
2. Demographic
• Age
• Gender
• Family size
• Life-cycle
• Income
• Education
• Religion
• Nationality
3. Psychographic
1. Social class 
2. Lifestyle 
3. Personality
4. Behavioral
1. Loyalty 
2. Attitude
3. Behaviors of customers

Types of Market Segments

• Income (high, middle, and low levels of finance) 

For example, different cars are made for different types of customers. Eg. ' Daewoo and Corolla vehicles for price sensitive customers whereas Mercedes and BMW aim their cars at the more affluent.' 

• Profession (types of jobs one has which can influence social groups or personal interest)

Different products apply to different professions, for example book genres.

• Age (babies, toddlers, tweens, teenagers, young adults, middle aged to the elderly)

Differences in age would generate different products for their specific needs; such as diapers/nappies for babies, toys for children, clothes for teenagers

• Family(single no kids, single with kids, married with two kids, empty nesters, etc.)

For example, a family with kids would purchase furniture that is more family orientated as opposed to a single living alone (trendy furniture).

Ikea offers different types of furniture for different market segments.

• Values (the ethical, worthiness or importance of something that is held by an individual or group, opinions)

Depending on the social demographic, people may have different environmental behaviors, eg buying environmentally friendly products vs a throw away society.

Development of a product family
Product family: A group of products having common classification criteria. Members normally have many common parts, assemblies and/or aesthetic elements.   

Companies and designers will develop a successful product or product range into product families. This further develops a successful market segment that is already familiar with the original product. For example, iPod then iPhone, then iPad.


Designers often develop product families to extend a successful product range and to develop products for market segments that are already familiar with the original product.

4.4: Manufacturing Processes

4.4
Manufacturing Processes
Essential idea: Different manufacturing processes have been developed to innovate existing products and create new products.

Designers sometimes engineer products in such a way that they are easy to manufacture. Design for manufacture (DfM) exists in almost all engineering disciplines, but differs greatly depending on the manufacturing technologies used. This practice not only focuses on the design of a product's components, but also on quality control and assurance.

Additive Techniques
Paper-based rapid prototyping
PRP technology at the moment only used for for prototyping purposes and does not offer the same design freedom and strength as for example, a Selective Laser Sintered (SLS).

Laminated object manufacture (LOM)
LOM is used to make 3D paper/thin polymer models and is a form of 3D printing. It is often used for creating scale models and conceptual prototypes that can be tested for form or design. It can also be used to make patterns for use in traditional manufacturing, such as sand molded casting.

• Materials include paper, plastic or metal
• Design contexts include models, prototypes, vacuum forming molds, pattern (for casting), or one-off products.

3D Printing and Fused Deposition Modelling (FDM)
Fused Deposition Modelling process constructs three-dimensional objects directly from 3D CAD drawings. A temperature controlled head extrudes thermoplastic material layer by layer.

• Importing an STL file of a modelled into horizontal layers , which is then sliced into horizontal layers
• The material used for objects 3D printed by an FDM would generally be PLA - less harmful to the environment, as it is made out of cornstarch. ABS is not as good for the environment because it is synthetically made.

The result of the solidified material laminating into the preceding layer is a plastic 3D model built up one strand at a time.

Stereolithography (SLA)
Stereolithography is an additive manufacturing technology that builds objects one layer at a time by curing a photo-reactive resin with a UV laser or other similar power source.

• Type of liquid or polymer that reacts and hardens to the laser beam
• Liquid material is hardened on contact
• Laser builds from the bottom up

Wasting/Subtractive Techniques
Manufacturing techniques that cut away material in order to create a component.

Cutting
Cutting describes the action sawing, chiseling, and planing which removes material in the process of cutting.

Band Saw

Advantages

• equipment and CNC have a high accuracy
• equipment and CNC produce a high quality finish
• produce very fine details
• minimal distortion

Disadvantages

• equipment and CNC initial costs are high
• special training/skills are required

Machining
Powered machines that shape materials through a variety of cutting processes, machine tools operate on unfinished metal parts, such as rough metal castings or forgings, and perform shaping and finishing operations that produce precisely dimensioned parts. Most machine tools function in one or more several basic categories - drilling, turning, and milling.

Drill Press

Mill machine

Advantages

•  High accuracy can be achieved
• equipment and CNC produce a high quality finish
• produce very fine details
• CNC/CAM allows for 24/7 production

Disadvantages

•  equipment and CNC initial costs are high
• special training/skills are required
• less workers requires in a CNC/CAM work environment

Turning
Turning is most commonly carried out using a lathe or milling machine. Lathes are mostly used for cutting metals or woods. They work on a horizontal axes where the workpiece rotates at speed and tools such as chisels remove waste materials.

Abrading
Abrading involves the use of abrasive materials to wear away the material by friction. This can be done using abrasive papers (eg. sandpaper) or emery cloth. It could also involve the process of grinding use a wheel or abrasive stone. Synthetic materials such as silicon carbide, aluminum oxide or industrial diamond tipped tools can be used. As with cutting the tool must be harder than the material being cut or abraded.


Advantages

• provides a good finish
• takes sharp edges away – safety
• Cheap shaping technique – relatively low capital cost

Disadvantages

• can be noisy so health hazard
• can be dusty so health hazard

Shaping Techniques
Moulding

Thermoforming

Laminating 

Casting

Knitting

Weaving

Permanent Joining Techniques
Fastening

Adhering 

Fusing

Temporary Joining Techniques

9.1: Corporate Strategies

9.1
Corporate Strategies
Essential idea: Companies and businesses can utilize a range of different strategies to develop products, services, and systems.

Pioneering strategy
A pioneering strategy indicates a product led or technology led approach, in other words the product is being pioneered by a designer or design team and an associated manufacturer who may become a product champion. A pioneering style of approach to product design and development may be indicative of the use of new materials, production processes, or technology. 

Being the first to market with a new innovation

Dyson - new vacuum technology

ADVANTAGES - most risk, but highest potential for gains, need strong R&D (research and development)
DISADVANTAGES - risky, may not work. need a lot of money from extensive market research; risky and costly

Imitative strategy
An imitative strategy for a product designer /manufacturer would be to look at and thoroughly research existing products within a sector and use a very similar format (almost copying) for their won product development using similar technology, materials and production techniques. this approach enables the manufacturer to reduce design and development time and therefore cost.

Developing products that are similar to an existing new product.

REVERSE ENGINEERING is a process that imitative manufacturers use to extract knowledge or design information from products & systems and reproduce it. The process often involves dissembling something and analyzing its components and workings in detail.

Market development
This strategy involves looking at the existing market which a product ids placed in and then researching other markets or market segments that the product could be additionally placed in. The product may require minor adjustment or re-packaging. Research is required based around product analysis and consumer awareness.

Increasing sales to existing customers or finding new customers for an existing product.

Starbucks - opening new stores around the world

Product development
This approach involves taking an existing product (maybe one you already produce or a competitors) and doing a significant product analysis and then changing the product or developing it to more appropriately fit a changing market. These could be minor or major design and functionality changes. 

The creation of new, modified or updated products aimed mainly at a company's existing customers.

Variations to a product - Coca-Cola and its variations

Market penetration
Market penetration is a strategy which a business uses for existing products in current market. In this strategy there is no need to produce new products or offer products in new markets - the business will try to sell more products to existing consumers or find new consumers for their product which will increase their sales. 

Increasing sales to existing customers or finding new customers for an existing product. Selling more things

Trying to increase sales to customers that we already have


Product diversification
Increasing sales from new products or markets. Diversifying a product / product offerings

For example, Kelloggs, widely known for breakfast cereals diversified in the mid 80's into cereal snack bars, this meant they could sell a product that could be consumed at any time of the day without milk/bowl/spoon and the product is manufactured using the same or similar raw materials.

• Involves a company both in the development of new products and in selling those products to new companies.

Ansoff Matrix

Hybrid approaches
Hybrid approaches is defined to be using more than one of the previously mentioned strategies in accordance with each other. In actuality, the majority of product developments that are brought to market evolve through elements of the sections listed previously. There is no exact formula than enables a product to succeed in the market, this is why new products from inexperienced designers and manufactures with low capital find it harder to enter significant markets which are already served by large manufacturers/suppliers.

Corporate social responsibility
This can be defined as the corporate belief or objective that a company needs to be responsible for tis actions, socially, ethically, and environmentally. Businesses will publish a CSR report, which describes its efforts in being economically, socially, and environmentally responsible (triple bottom line). 

Corporate social responsibility is a form of self-regulation for a company and centres around the development of goals related to three areas; social, economical, and environmental.

Companies that consider corporate social responsibility as a goal need to assess the impact of their operations in relation to these three areas in order to maximize the benefits and minimize the disadvantages. Students need to consider the ways in which a company might achieve this and the evidence of effective corporate social responsibility for a major multinational corporation.



Nike Sustainability Report
Coca-cola Sustainability Report
Lego CSR Report