As firms begin to adopt product family and product platform principles in the beginning stages of the product development process, an essential component is to have a cohesive market segmentation strategy for the product family. Managing innovation throughout the product family can be achieved by leveraging three elements within the organization: (1) the market applications for the technology, (2) the company's product platforms, (3) and the common technical and organization building blocks that form the basis of the product platform (Meyer and Lehnerd, 1997). Implementing this strategy can allow the organization to attack different market segments and gain market share while benefiting from the cost advantage of using product families and sharing key common technological modules. This chapter builds upon the product platform planning methods described in Chapter 2 and explores the history of the market segmentation of product platforms. We describe the principles and tools behind market segmentation and include several examples showing how companies have used this process.
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