Abstract:

When a decision must be made as to whether to initiate or continue research on a specific new product, the nature of that product's anticipated marketing program will usually determine its profitability more than the cost of the proposed research. Marginally profitable opportunities can often be made clearly profitable by market segmentation. Within the national market there are likely to be medical specialty groups, regions or other market segments whose contribution to national sales of a product type is disproportionately greater than the promotion currently allocated to them. If these segments can also be shown to respond to promotion by selecting the promoted products more often, they make possible unusually profitable product introductions which utilise these proven methods of promotion. The paper provides an example of marketing planning for a new product, both with and without the use of market segmentation. Additional examples of United States markets in which segmentation is advantageous are also presented.