It is wrong to segment customers by their demographic characteristics according to Clay Christensen’s recent article in HBS Working Knowledge called “Milkshake Marketing” by Carmen Nobel Feb 14, 2011.
Marketers tend to segment customers by descriptors: age, income, zip code, but Christensen reminds us, people buy because they have a need to be satisfied. He suggests segmenting markets by jobs-to-be-done instead.
He uses the classic milkshake marketing example to make his point. Market researchers for a fast food company analyzed the demographics of milkshake buyers and asked people who fit the demographics what characteristics they wanted in their milkshakes: chunky, smooth, etc. They then changed the product to match the responses, but milkshake sales remained flat.
They tried watching milkshake buyers in a typical outlet and realized that 40% of the milkshakes were bought in the early morning. Asking those buyers revealed that they faced a long boring commute, wanted a snack, and had only one hand free. Their job-to-be-done was alleviating the boredom while providing calories before lunch. The marketing staff then made the milkshakes thicker to increase the time needed to sip them and more interesting with chunks of fruit. They also created a separate; more liquid product for moms to buy for their kids whose desire to finish was much quicker.
Sales rose. Christensen cites other examples of companies switching to jobs-to-be-done thinking, “FedEx, for example, fulfills the job of getting a package from here to there as fast as possible. Disney does the job of providing warm, safe, fantasy vacations for families. OnStar provides peace of mind.”
Jobs-to-be-done is not a new concept; it is a new term for classic focus on customer needs and desires. But, as Christensen pointed out, 95% of the 30,000 new products introduced each year fail so we need to be reminded of this basic marketing concept. Plus focusing on jobs-to-be-done helps create barriers against competitors, “Nobody, for example, has managed to copy IKEA, which helps its customers do the job of furnishing an apartment right now.”
Your organization can move ahead of its competition if it adopts customer focused thinking. Push your marketing, product management, customer service; indeed, all functions that have contact with customers, to think customer needs and jump forward. Prove the concept with examples from your rivals and out-of-industry success stories such as IKEA and build your success as well as your firm’s.