To build brands that mean something to customers, you need to attach them to products that mean something to customers. And to do that, you need to segment markets in ways that reflect how customers actually live their lives. In this article, we will propose a way to reconfigure the principles of market segmentation. And finally, we will describe how new, valuable brands can be built to truly deliver sustained, profitable growth.
They want a quarter-inch hole! Yet these same people segment their markets by type of drill and by price point; they measure market share of drills, not holes; and they benchmark the features and functions of their drill, not their hole, against those of rivals.
They then set to work offering more features and functions in the belief that these will translate into better pricing and market share. Segmenting markets by type of customer is no better. Having sliced business clients into small, medium, and large enterprises—or having shoehorned consumers into age, gender, or lifestyle brackets—marketers busy themselves with trying to understand the needs of representative customers in those segments and then create products that address those needs.
When marketers design a product to address the needs of a typical customer in a demographically defined segment, therefore, they cannot know whether any specific individual will buy the product—they can only express a likelihood of purchase in probabilistic terms.
Thus the prevailing methods of segmentation that budding managers learn in business schools and then practice in the marketing departments of good companies are actually a key reason that new product innovation has become a gamble in which the odds of winning are horrifyingly low.
There is a better way to think about market segmentation and new product innovation. When people find themselves needing to get a job done, they essentially hire products to do that job for them. If a marketer can understand the job, design a product and associated experiences in purchase and use to do that job, and deliver it in a way that reinforces its intended use, then when customers find themselves needing to get that job done, they will hire that product.
In the mids, Scott Cook presided over the launch of a software product called the Quicken Financial Planner, which helped customers create a retirement plan. It flopped. What happened? Did the product need to be easier to use? Making it easier and cheaper for customers to do things that they are not trying to do rarely leads to success. With few exceptions, every job people need or want to do has a social, a functional, and an emotional dimension.
In other words, the job, not the customer, is the fundamental unit of analysis for a marketer who hopes to develop products that customers will buy. In this example, both the company and the product have been disguised. Its marketers first defined the market segment by product—milk shakes—and then segmented it further by profiling the demographic and personality characteristics of those customers who frequently bought milk shakes.
Next, they invited people who fit this profile to evaluate whether making the shakes thicker, more chocolaty, cheaper, or chunkier would satisfy them better. The panelists gave clear feedback, but the consequent improvements to the product had no impact on sales.
A new researcher then spent a long day in a restaurant seeking to understand the jobs that customers were trying to get done when they hired a milk shake. He chronicled when each milk shake was bought, what other products the customers purchased, whether these consumers were alone or with a group, whether they consumed the shake on the premises or drove off with it, and so on. Most often, these early-morning customers were alone; they did not buy anything else; and they consumed their shakes in their cars.
The researcher then returned to interview the morning customers as they left the restaurant, shake in hand, in an effort to understand what caused them to hire a milk shake. Most bought it to do a similar job: They faced a long, boring commute and needed something to make the drive more interesting.
And they faced constraints: They were in a hurry, they were wearing work clothes, and they had at most one free hand. What did you buy instead? But bagels were too dry. Bagels with cream cheese or jam resulted in sticky fingers and gooey steering wheels.
The milk shake, it turned out, did the job better than any of these competitors. It took people 20 minutes to suck the viscous milk shake through the thin straw, addressing the boring-commute problem. They could consume it cleanly with one hand. By , they felt less hungry than when they tried the alternatives. The researcher observed that at other times of the day parents often bought milk shakes, in addition to complete meals, for their children.
What job were the parents trying to do? They hired milk shakes as an innocuous way to placate their children and feel like loving parents. He saw parents waiting impatiently after they had finished their own meals while their children struggled to suck the thick shakes up through the thin straws.
Customers were hiring milk shakes for two very different jobs. But when marketers had originally asked individual customers who hired a milk shake for either or both jobs which of its attributes they should improve—and when these responses were averaged with those of other customers in the targeted demographic segment—it led to a one-size-fits-none product.
Once they understood the jobs the customers were trying to do, however, it became very clear which improvements to the milk shake would get those jobs done even better and which were irrelevant. How could they tackle the boring-commute job? Make the milk shake even thicker, so it would last longer. And swirl in tiny chunks of fruit, adding a dimension of unpredictability and anticipation to the monotonous morning routine. Addressing the midday and evening job to be done would entail a very different product, of course.
This would grow the category, which brings us to an important point: Job-defined markets are generally much larger than product category—defined markets. It came from understanding the job. Need more evidence? Why do so many marketers try to understand the consumer rather than the job?
One reason may be purely historical: In some of the markets in which the tools of modern market research were formulated and tested, such as feminine hygiene or baby care, the job was so closely aligned with the customer demographic that if you understood the customer, you would also understand the job. This coincidence is rare, however.
New growth markets are created when innovating companies design a product and position its brand on a job for which no optimal product yet exists. In fact, companies that historically have segmented and measured the size of their markets by product category generally find that when they instead segment by job, their market is much larger and their current share of the job is much smaller than they had thought. This is great news for smart companies hungry for growth. We have written elsewhere about how to harness the potential of disruptive innovations to create growth.
Because disruptive innovations are products or services whose performance is not as good as mainstream products, executives of leading companies often hesitate to introduce them for fear of destroying the value of their brands.
This fear is generally unfounded, provided that companies attach a unique purpose brand to their disruptive innovations. The first was its single-use camera, a classic disruptive technology.
The corporation finally gave responsibility for the opportunity to a completely different organizational unit, which launched single-use cameras with a purpose brand—the Kodak FunSaver.
Creating a purpose brand for a disruptive job differentiated the product, clarified its intended use, delighted the customers, and thereby strengthened the endorsing power of the Kodak brand. Quality, after all, can only be measured relative to the job that needs to be done and the alternatives that can be hired to do it.
Kodak scored another purpose-branding victory with its disruptive EasyShare digital camera. The company initially had struggled for differentiation and market share in the head-on megapixel and megazoom race against Japanese digital camera makers all of whom aggressively advertised their corporate brands but had no purpose brands.
Kodak then adopted a disruptive strategy that was focused on a job—sharing fun. Kodak is now the market share leader in digital cameras in the United States. Morita never did conventional market research. Morita would have badly misjudged the size of his market had he simply analyzed trends in the number of tape players being sold before he launched his Walkman.
They found a few consumers adding the product to laundry detergent, a few others mixing it into toothpaste, some sprinkling it on the carpet, and still others placing open boxes in the refrigerator. These jobs include:. Sometimes, the discovery that one needs to get a job done is conscious, rational, and explicit. Either way, if consumers are lucky, when they discover the job they need to do, a branded product will exist that is perfectly and unambiguously suited to do it.
We call the brand of a product that is tightly associated with the job for which it is meant to be hired a purpose brand. The history of Federal Express illustrates how successful purpose brands are built.
A job had existed practically forever: the I-need-to-send-this-from-here-to-there-with-perfect-certainty-as-fast-as-possible job.
Some U. Others even went so far as to plan ahead so they could ship via UPS trucks. But each of these alternatives was kludgy, expensive, uncertain, or inconvenient.
Because nobody had yet designed a service to do this job well, the brands of the unsatisfactory alternative services became tarnished when they were hired for this purpose. FedEx became a purpose brand—in fact, it became a verb in the international language of business that is inextricably linked with that specific job. It is a very valuable brand as a result. The product did the job, and customers talked about it.
This is how brand equity is built. When they seek to build a general brand that does not signal to customers when they should and should not buy the product, marketers run the risk that people might hire their product to do a job it was not designed to do.
This causes customers to distrust the brand—as was the case for years with the post office. A clear purpose brand is like a two-sided compass. One side guides customers to the right products. A good purpose brand clarifies which features and functions are relevant to the job and which potential improvements will prove irrelevant. The price premium that the brand commands is the wage that customers are willing to pay the brand for providing this guidance on both sides of the compass. The need to feel a certain way—to feel macho, sassy, pampered, or prestigious—is a job that arises in many of our lives on occasion.
When we find ourselves needing to do one of these jobs, we can hire a branded product whose purpose is to provide such feelings.
Gucci, Absolut, Montblanc, and Virgin, for example, are purpose brands. They link customers who have one of these jobs to do with experiences in purchase and use that do those jobs well. These might be called aspirational jobs. In some aspirational situations, it is the brand itself, more than the functional dimensions of the product, that gets the job done. Much advertising is wasted in the mistaken belief that it alone can build brands.
Drained of physical and emotional energy, people still had to get a lot done before their workday ended. They needed something to boost their productivity, and they were hiring a range of caffeinated drinks, candy bars, stretch breaks, and conversation to do this job, with mixed results. Unilever designed a microwavable soup whose properties were tailored to that job—quick to fix, nutritious but not too filling, it can be consumed at your desk but gives you a bit of a break when you go to heat it up.
It was launched into the workplace under the descriptive brand Soupy Snax. The results were mediocre. The tagline and ads transformed a brand that had been a simple description of a product into a purpose brand that clarified the nature of the job and the product that was designed to do it, and the product has become very successful. Note the role that advertising played in this process.
Advertising clarified the nature of the job and helped more people realize that they had the job to do. It informed people that there was a product designed to do that job and gave the product a name people could remember. Advertising is not a substitute for designing products that do specific jobs and ensuring that improvements in their features and functions are relevant to that job.
The fact is that most great brands were built before their owners started advertising. Each brand developed a sterling reputation before much was spent on advertising. These firms have few purpose brands in their portfolios and no apparent strategies to create them. Their managers are unintentionally transferring billions in profits to branding agencies in the vain hope that they can buy their way to glory. In fact, companies that historically have segmented and measured markets by product categories generally find that when they instead segment by job, their market is much larger and their current share much smaller than they had thought.
This is great news for smart companies hungry for growth. To discover techniques for identifying consumer needs and developing products that fulfill those needs, clarifying product purpose through effective advertising, and extending brands without confusing or annoying consumers.
Brought to you by:. Article Classic. What's included: Educator Copy. Not teaching at a university? Register as a student Register as an individual. Overview Included Materials. Learning Objectives To discover techniques for identifying consumer needs and developing products that fulfill those needs, clarifying product purpose through effective advertising, and extending brands without confusing or annoying consumers.
Details Pub Date: Dec 1, Discipline: Marketing. Source: Harvard Business Review. Length: 12 page s. X We use cookies to understand how you use our site and to improve your experience, including personalizing content.
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