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New Enterprises · Lecture 9 of 12 · 3:58

Lecture 9: Market Segmentation with SensAble Technologies, Part I

Study guide

What this lecture covers

This lecture applies the market segmentation process from earlier lectures to a real case: SensAble Technologies, a company Aulet co-founded with Thomas Massie around a 3D haptic interface that let users feel virtual objects. He describes how the team built a brainstormed list of possible markets and began organizing it into a structured matrix.

Watching this shows what market segmentation looks like in practice, translating the abstract process into a specific technology and set of candidate customers.

Key ideas

The technology: a robotic 3D interface, similar to a 3D mouse, that let users feel and manipulate virtual objects, enabling gaming, medical simulation, and accessibility uses for blind users.
Brainstorming markets: the team generated a long, sometimes unrealistic, list of possible applications before narrowing it down.
Segmentation matrix: markets were broken down by industry, then further by end user, since the industry level alone was too broad to be useful.
Animator example: within the entertainment industry, the relevant end user was identified as animators at studios such as Pixar, Industrial Light & Magic, and Disney.
Application-level detail: for each end user, the team specified the exact application, such as sculpting or painting in three dimensions, and the specific benefits the device provided.

Before you watch

Watch "How to Do Market Segmentation" and "What is a Beachhead Market" first, since this lecture is a worked example of the process they describe.

Check your understanding

Why was breaking the entertainment industry down to "animator" more useful than stopping at the industry level?
What made the SensAble haptic device applicable to such a wide range of markets?
What categories of information did the team capture for each candidate market in their matrix?

Vocabulary

market segmentation (noun): The process of dividing a large market into smaller groups of similar customers.
The team started their market segmentation process for the haptic device.
haptic (adjective): Related to the sense of touch.
The haptic device let users feel virtual objects with their hands.
interface (noun): A device or system that lets a person interact with a machine.
SensAble built a 3D interface similar to a mouse, but you could feel through it.
co-found (verb): To start a company together with another person.
Aulet co-founded SensAble Technologies with Thomas Massie.
brainstorm (verb): To quickly think of many ideas as a group, without judging them yet.
The team brainstormed a long list of possible markets for the device.
matrix (noun): A table with rows and columns used to organize information.
They put every candidate market into a segmentation matrix.
narrow down (phrasal verb): To reduce a large number of options to a smaller number.
They narrowed down the long list to the most promising markets.
end user (noun): The actual person who uses a product, not just the company that buys it.
The end user in the entertainment industry turned out to be the animator.
candidate (adjective): Being considered as a possible choice.
Animation was one candidate market among many.
sculpt (verb): To shape a solid object, here in a computer program instead of real material.
Animators used the device to sculpt characters in three dimensions.
accessibility (noun): How easily a product can be used by people with disabilities.
The device also had accessibility uses for blind users.
application (noun): A specific way a technology is used to solve a problem.
Sculpting in 3D was one application of the haptic device.
benefit (noun): A positive result or advantage a product gives to its user.
For each end user, the team listed the exact benefit the device provided.
robotic (adjective): Operated by a machine or motor rather than by hand alone.
The interface used a small robotic arm to create resistance.
beachhead market (noun): The first small, specific market a startup focuses on before expanding.
This case study builds on the idea of choosing a beachhead market.
unrealistic (adjective): Not likely to happen or work in real life.
Some ideas on the brainstormed list turned out to be unrealistic.
worked example (noun): A complete example that shows every step of a process in practice.
This lecture is a worked example of market segmentation.
industry (noun): A broad area of business, such as entertainment or medicine.
The team first broke the market down by industry.
breakdown (noun): A division of something into smaller, clearer parts.
The breakdown by end user was more useful than the industry level alone.
confident (adjective): Sure and certain about a decision.
The detailed matrix made the team more confident in their choice.

From the YouTube description

MIT 15.390 New Enterprises, Fall 2013
View the complete course: http://ocw.mit.edu/15-390F13
Instructor: Bill Aulet

Bill Aulet discusses how he and his team at SensAble conducted market segmentation for their novel 3D imaging technology.

License: Creative Commons BY-NC-SA
More information at http://ocw.mit.edu/terms
More courses at http://ocw.mit.edu

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