“If you’re not thinking segments, you’re not thinking” – Anthony Ulwick
Tony Ulwick is the pioneer of jobs-to-be-done theory, the inventor of the Outcome-Driven Innovation® (ODI) process, and the founder of the strategy and innovation consulting firm Strategyn.
He is the author of Jobs to be Done: Theory to Practice (IDEA BITE PRESS, October 2016), “What Customers Want” (McGraw-Hill) and numerous articles in Harvard Business Review and Sloan Management Review.
“If you’re not thinking segments, you’re not thinking.” – Theodore Levitt
Here’s a brief history of market segmentation:
1950s: Segmentation started with basic demographics—age, location, gender—because that was the easiest data to collect and analyze.
1960s: Marketers began adding psychographics, gathering insights into customer attitudes and traits to create more specific profiles.
1970s: The rise of large transaction databases enabled real-time point-of-purchase data collection, leading to segments based on purchase behavior.
1980s: Needs-based segmentation emerged, driven by powerful computers and advanced clustering techniques. This allowed researchers to group customers based on desired product features and benefits.
While needs-based segmentation was a step forward, it often missed the mark because customers aren’t product engineers.
They struggle to articulate what specific products or features they need.
But here’s the thing:
Customers excel at describing the outcomes they want to achieve when using a product to get a “job” done.
When discussing their desired outcomes, they can identify 100 to 150 different metrics to describe success at a granular level.
Today’s most effective market segmentation?
It focuses on understanding how customers rate the importance and satisfaction of each outcome.
This insight allows marketers to craft targeted messages and develop products that resonate deeply with each segment.
Here’s 3 examples of Outcome-Based Segmentation in action:
1. J.R. Simplot Company identified a segment of restauranteurs who needed a French fry that stays appealing longer in holding, leading to a tailored product solution.
2. Dentsply found a segment of dentists who believed that the quality of a tooth restoration depended on consistently achieving solid bonds, allowing them to tailor their products to this need.
3. Bosch discovered a segment of drill–driver users who primarily wanted a tool optimized for driving, rarely using it as a drill. This insight helped Bosch create targeted and effective marketing strategies.
Outcome-based segmentation represents a significant leap forward.
It focuses on real opportunities…
…and measurable activities that are underserved by the competition.
Outcome-based segments provide a clear path to innovation and market success.
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