DEFINING MARKETS FOR NEW MATERIALS - DEVELOPING A UTILITY METHODOLOGYWITH CASE APPLICATION

A utility methodology to identify profitable market segments for the u se of new materials is presented and illustrated by application to the automobile industry, The method has three parts: empirical, statistic al and analytical, The first measures company preferences for the impo rtant attributes of a use of a material, applying single-attribute uti lity functions. The second identifies market segments, by determining significant differences between measured preferences with t-tests. The third estimates the premium these market segments would pay for a pro duct made of a new material, using multiattributable utilities, and th us determines profitable market segments. The case study of valve trai ns containing ceramic components defined two market segments: companie s with either a broad world market or a narrow speciality. The immedia te buyers of these valve trains are likely to be producers of high-val ue, six-cylinder automobiles, who seem prepared to pay a significant p remium for this product.