A New Way to Segment B-T-B Markets – Put Your Product to Work

A group of four academicians and innovation consultants have come up with a new twist on segmentation. Rather than analyze the traditional segmentation dimensions like customer demographics or product characteristics, this team views the product as being “hired” by the customer to do a job.

Members of the team are: Clayton M. Christensen, the often published Harvard Business School professor; Scott D. Anthony, president of Innosight LLC, a Watertown (MA)-based innovation consulting company; Gerald Berstell, a Chicago-based customer case researcher who owns a full-service research and strategy firm focused on revitalizing declining established products and re-launching failed new products, and Denise Nitterhouse, an associate professor of accounting at Chicago-based DePaul University. Their product is an article entitled “Finding the Right Job for Your Product” in the Spring, 2007, issue of the MIT Sloan Management Review.

The basic premise is that “product and customer characteristics are poor indicators of customer behavior, because from a customer’s perspective that is not how markets are structured. Customers’ purchase decisions don’t necessarily conform to those “average” customers….Rather customers just find themselves needing to get things done.”

They point out that most of the “home runs” in marketing history were hit by marketers who saw the world this way and most of the “strike-outs” resulted when product developers and marketers focused on the product “with better features and functions” or attempted to figure out what the average customer in a demographic wants.

They provide a beautiful example of this theory by dissecting the way customers “hire” milkshakes. They begin the example by pointing out the conventional wisdom in fast-food marketing where companies historically segmented markets by product and customer categories.

Using these metrics, a fast food company decided to analyze the market for milkshakes and took the analysis further and profiled customers most likely to buy milkshakes. They went through the traditional motions of finding and interviewing milkshakes buyers to determine what would cause them to buy shakes – like thickness, flavors, chunkiness, price, etc. All this wonderful data and subsequent product improvements had absolutely no affect on sales.

Then the Christensen team reports that new researcher was brought in and spent a day at a fast food outlet and tracked the sale of milkshakes in that store. The researcher was surprised to learn that 40 percent of the shakes were bought in the early morning. The researcher further discovered that these early-morning shake buyers were almost always alone, they bought nothing else but the shake and consumed in their cars.

Probing further, the researcher asked purchasers “Excuse me, but could you please tell me what job you were needing to get done for yourself when you came in here to ‘hire’ that milkshake?” It turned out that most of these customer purchased for the same reason: “they faced a long, boring commute and needed something to keep that extra hand busy and to make the commute more interesting. They weren’t hungry yet but knew they’d be hungry by 10 a.m.; they wanted to consume something now that would stave off hunger until noon.”

When the researcher inquired what other product could perform this task it turned out that the shake did the job better than the alternatives — bagels were dry and with cream cheese or jelly made their hands sticky; donuts or bananas didn’t have the lasting power. “It didn’t matter,” they wrote “that the milkshake wasn’t a particularly healthful food because that wasn’t the job it was being hired to do.”

The writing team asks: How can marketers find out the job-to-be-done segmentation scheme? They answer: “The jobs that customers are trying to get done cannot be deciphered from purchasing databases in the comfort of the marketers’ offices. It requires watching, participating, writing and thinking. It entails knowing where to look, what to look for, how to look for it and how to interpret what you find.”