Segment target market with right factors of PEOPLE instead of “jobs to be done”
Updated: Sep 9, 2018
“About 95 percent of new products fail. The problem often is that their creators are using an ineffective market segmentation mechanism, according to HBS professor Clayton Christensen. “
I agree with the statement made above, even though different companies failed for a different reason; but it is true, many companies did not segment their target market right.
But I do NOT agree with Christensen what he suggests that companies need to start segmenting their markets according to "jobs-to-be-done."
What is the main component of the market? People! It is people who are purchasing the product/services; it is people who make purchase decisions, it is people who use the product/service; it is people who have a feeling on the product/service and then which affect his/her future decision and behavior.
In the article I am quoted (which I have provided the link at the end of this article), the author mentioned some case studies, one of them is the milkshake case. The first group of people, according to Professor Christensen, were “hiring” the milkshake to kill the boringness in a long, boring commute by keeping their extra hand busy. I doubt if that is really the case, because some users may also “hire” a cup of coffee or tea instead of a milkshake to do the same thing. Second, then why people will choose a different flavor of milkshake? Third, I do not think at the end they serve a thicker milkshake with a thin straw had really make customers enjoy better, if the milkshake’s function is just to kill the long boring commute, they could just drink slower, make the break between each sip longer.
Two group of people mentioned in this milkshake case, the commuters and the children. They are both people, they represent different age groups, different lifestyle, different spending/consumption behavior. What Christensen said, "The fact that you're 18 to 35 years old with a college degree does not cause you to buy a product," that was a Paradox and sophistry.
Of course, we do need to define the right segmentation mechanism when we are analyzing the market. But no matter how, it should still always be around people. It is not necessary to always segment people by their age, gender, or income, or education/job background, or geography information, though these factors sometimes do affects people’s purchasing behavior and do generate something among people in common.
So, my statement is that, we need to segment the target market with the right factors of people, instead of “jobs to be done”.
For example, the P&G Procter & Gamble cases, they produce different shampoos not because people want to “hire” these products to do different job, however, that was the result, not the cause. The cause was because different people has different type of head skin, some are oily, some are dry, someone has many dandruffs, someone has serious hair lose… Only because we have different people with these different head and hair conditions, then they will need the product to have different feature/function to do the job. The root cause is still people, and we are segment people by the factors of their head skin and hair conditions. Without understanding on how many percentiles of people of different hair and skin conditions, company can not make right production strategy; without knowing the geographic information of different group of people, company can not make their right distribution plan; without understanding the income and spending model, company can not define the right pricing strategy; without knowing the background of the target group of people (even though for the same hair and skin condition people they may have different background, we still can do a one more level of segmentation); company can not come up with the right marketing strategy...
Another example, at Home Depot, people buy different power drills. Voltage ratings of 4 to 8 volts are sufficient for light-duty cordless screwdrivers, but drills with 12 to 18 volts will meet most homeowners' work needs. A high-power model handles heavier work, but more voltage means the tool has a bigger, heavier battery. It seems like the products were designed based on segmentation of the job to be done? Nope! It still about people. Here people were segmented by their life/working style. For home use, a family man, their income level, their life style, will really affect how company designs the product feature and how company define the price strategy. Or if it is for a professional construction man, then what is his skill level, how much he will be willing to spend… All these are factors about and around people. Without understanding target group of people, and analysis the right factors around them, it will be hard for companies to come up with right product design, market and price strategy.
I still remember when the founders of Alienware plan to manufacturing computers, IBM, Lenovo, Haier, Dell, there were already so many computer brands, no matter for personal use or for business use, so how can a new startup win the market? They segmented the market and find out that one group of people was not satisfied with current products in the market. These group of people are mostly relatively young, love computer games, passionate, care about new technologies, has purchasing power, willing to invest in new tech gadgets, willing to spend more money for better graphic card, sound card, etc. With the understanding the behavior, psychology, and background factors of such a group of people, they successfully did the branding, Alienware, and they successfully applied this market positioning into every piece of their design and strategy. Their product are designed very “alien”, their UI looks very sci-fi, their computer configuration is high, and their price is also higher. With the right segmentation of market, with the correct understand of such group of targeted segment market – group of people, they became very successful in the market and then got acquired by Dell very soon.
So, my point is, no matter how, it is all about people; if ignored people, but only focused on the job itself, then we will lose the truth; right market segmentation is to define the right group of people, categorize them by the correct factors around people, depends on what kind of product/service you are planning to produce. The key is to identify the correct factors around people which will affect/influence how you design/define the product, how you will get into the market and win the attention and loyalty of such group of people.
(Inspired by: https://hbswk.hbs.edu/item/clay-christensens-milkshake-marketing Clay Christensen’s Milkshake Marketing, By Carmen Nobel)