Job based segmentation

23Feb08

There is wealth of information out there on the topic that dives deep into market research, customer behavior observation, measurements, customer satisfaction indexes… the list goes on and on. One of the insightful articles on the topic had a very practical approach: Finding the right job for your product (Christensen et al, MIT Sloan Management Review, Spring 2007). Main idea behind this article is to identify the root cause of the problem customer faces and then developing, enhancing or positioning the product for this particular problem.

Key premise behind the approach is a stance against product functionality enrichment and augmenting the product through well known, cookie-cutter segmentation strategies focusing on demographics, customer size or product usage. The catch: You will not be able to differentiate and/or create a new market through functionality additions or tweaks to make the product addressing the right customer segment; it will simply invite competition and the innovative functionality becomes the part of generic industry offering, simply raising the cost of being in the game.

The buzzword we are offered with the article is “job based segmentation”, job being the fit between customers’ immediate problem and the insightful solution the product offers. A rather eye-opening example we are being provided is the milkshake problem/opportunity a fast-food chain is confronted with: In their first trial in supporting the lackluster sales of the milkshake item on the menu, they organize the good-old focus group approach to engage current users of their products to understand “what other functionalities” would they see fit in their daily milkshake pleasure.

Without surprise, no improvement in top line observed and they decide to dedicate some resources in “observing the customers buying process”. Conclusion: Most of the customers are morning commuters in suits that hop-in to get the drink and move on into their daily driving experience. Having talking to these customers the insight reveals itself: Milkshake is actually an item that they use purchase as quick as possible on the way to office and drink in the car to pass time in heavy traffic by sipping the thick fluid through the tiny straw (getting the boredom job done) and soothe their morning craving (getting the hunger job done).

Therefore the company achieves the expected success by developing a milkshake initiative by offering even thicker milkshakes and a possible fast lane for milkshake purchaser that could make the purchase through swiping the card.

There were other cases provided in the article and I have found the overall content very insightful on the grounds that the conventional methods are challenged and a practical and simple way into the intricate world of customer needs and satisfaction process is introduced.

Filed under: Marketing   |  1 Comment
Tags: Marketing, segmentation, marketing initiatives, product management, customer insights