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New3 circumstance based segmentation 2007 06-29 ver 3

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This document summarizes key points from a presentation by Ziya Boyacigiller on circumstance-based segmentation. It discusses how most new products fail because companies define segments based on customer demographics rather than the circumstances or "jobs to be done" when customers make purchases. Circumstance-based segmentation involves understanding the alternatives, pains, and functional/emotional needs customers have when they encounter different circumstances. Defining segments this way allows companies to create products that truly meet customer needs and pain points.

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Circumstance Based Segmentation Ziya G. Boyacigiller This presentation was created and given by Ziya Boyacigiller who was leading Angel Investor and a loved mentor to many young entrepreneurs in Turkey. We have shared it on the web for everyones benefit. It is free to use but please cite Ziya Boyacigiller as the source when you use any part of this presentation. For more about Ziya Boyacigillers contributions to the start-up Ecosystem of Turkey, please go to www.ziyaboyacigiller.com
Design Thinking & Innovation zyein niversitesi Master in Entrepreneurship 2012 & 2013 To gain a solid foundation in entrepreneurial innovation. Covering the process of developing a business-idea into a viable business opportunity.
Circumstance Based Segmentation Ziya G. Boyac脹giller Sabanci Universitesi Yonetim Bilimleri Fakultesi Ref: Innovators Solution, Christensen et al.
Ziya G. Boyacigiller (c) 2005 EMBA 4 Most Attempts to Create Successful Products Fail 60% fail during development 40% of those making it to market fail 他 of money spent is lost ! Yet failures are not random, they are predictable and avoidable.
Ziya G. Boyacigiller (c) 2005 EMBA 5 Only if marketers define market segments that correspond to the circumstances in which customers find themselves when making purchasing decisions can they accurately theorize which products will (sell) connect with their customers. Otherwise, they fail since they aim their products to phantom targets.
Ziya G. Boyacigiller (c) 2005 EMBA 6 Segments are Created for Convenience Number of Customer Pros & Cons Single (Custom Built Car) Pro - Best if you define your product/service for a single customer. You can include only those features in your product/service that this customer wants, thus achieving complete customer satisfaction. Con You may need more than one customer to run a feasible business. Segment (Rolls-Royce) Pro Creative idea, emerged to define your product/service for a large group of customers with similar needs. Con For some customers the product will be under/over defined. Hard to find a way to group the customers properly. Masses (Ford Model-T) Pro Best to maximize the sales potential of your product/service Con You need to include the common denominator features that will appeal to the masses, and risk leaving out features for some customers.
Ziya G. Boyacigiller (c) 2005 EMBA 7 requires an understanding of the circumstances in which customers buy or use things. Predictable marketing
Ziya G. Boyacigiller (c) 2005 EMBA 8 Milk Shakes
Ziya G. Boyacigiller (c) 2005 EMBA 9 Alternatives & Pains Circumstance Alternatives Pains Morning breakfast 1. Bagels 2. Egg sandwich 3. Coffee 4. Doughnuts 5. Banana 1. Crumbs 2. Greasy 3. Hungry 4. Makes hungry 5. Too fast to eat Snack for child Pick-me-up while shopping .
Ziya G. Boyacigiller (c) 2005 EMBA 10 Summary: Circumstance-Based Segmentation Customers have jobs that need to get done. Then customers look for products or services they can hire to get the job done. The functional, emotional, and social dimensions of jobs constitute the circumstances in which they buy. Circumstances is what we need to analyze in segmentation, to understand if a product will sell, rather than the customers themselves.
Ziya G. Boyacigiller (c) 2005 EMBA 11 Use the question Why? to identify the jobs Example: C: I need a blue fabric. P/M: Why? C: To use next to the yellow fabric. P/M: Why? C: Im sawing a flag. P/M: Why? C: Because I cant find a ready made flag. Conclusion: The underlying need is not for a blue fabric, but for a flag The job is get a flag, alternatives offer no ready-made flag (pain), so what is hired is the closest alternative: saw my own flag. (C: customer, P/M: Product Manager)
Ziya G. Boyacigiller (c) 2005 EMBA 12 How you view the market for handheld devices will determine what product features you consider to be relevant Product View Demographic View Job-to-be-Done View Market Definition Handheld wireless devices Traveling sales person Use small snippets of time productively Competitors Palm, treo, clie, iPaq, wireless phones Notebook PCs, internet access, wireless & wireline telephones Wireless phones, WSJ, CNN Airport News, doing nothing, listening to boring presentations Features to Consider Digital camera, word, excel, outlook, voice phone, organizer, Wireless internet access, downloadable CRM data/functionality, online stock trading, e-books, email, voice Email, voice mail, voice phone, headline news, simple-single player games, entertaining top-ten lists, always on, SMS top news,

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New3 circumstance based segmentation 2007 06-29 ver 3

  • 1. Circumstance Based Segmentation Ziya G. Boyacigiller This presentation was created and given by Ziya Boyacigiller who was leading Angel Investor and a loved mentor to many young entrepreneurs in Turkey. We have shared it on the web for everyones benefit. It is free to use but please cite Ziya Boyacigiller as the source when you use any part of this presentation. For more about Ziya Boyacigillers contributions to the start-up Ecosystem of Turkey, please go to www.ziyaboyacigiller.com
  • 2. Design Thinking & Innovation zyein niversitesi Master in Entrepreneurship 2012 & 2013 To gain a solid foundation in entrepreneurial innovation. Covering the process of developing a business-idea into a viable business opportunity.
  • 3. Circumstance Based Segmentation Ziya G. Boyac脹giller Sabanci Universitesi Yonetim Bilimleri Fakultesi Ref: Innovators Solution, Christensen et al.
  • 4. Ziya G. Boyacigiller (c) 2005 EMBA 4 Most Attempts to Create Successful Products Fail 60% fail during development 40% of those making it to market fail 他 of money spent is lost ! Yet failures are not random, they are predictable and avoidable.
  • 5. Ziya G. Boyacigiller (c) 2005 EMBA 5 Only if marketers define market segments that correspond to the circumstances in which customers find themselves when making purchasing decisions can they accurately theorize which products will (sell) connect with their customers. Otherwise, they fail since they aim their products to phantom targets.
  • 6. Ziya G. Boyacigiller (c) 2005 EMBA 6 Segments are Created for Convenience Number of Customer Pros & Cons Single (Custom Built Car) Pro - Best if you define your product/service for a single customer. You can include only those features in your product/service that this customer wants, thus achieving complete customer satisfaction. Con You may need more than one customer to run a feasible business. Segment (Rolls-Royce) Pro Creative idea, emerged to define your product/service for a large group of customers with similar needs. Con For some customers the product will be under/over defined. Hard to find a way to group the customers properly. Masses (Ford Model-T) Pro Best to maximize the sales potential of your product/service Con You need to include the common denominator features that will appeal to the masses, and risk leaving out features for some customers.
  • 7. Ziya G. Boyacigiller (c) 2005 EMBA 7 requires an understanding of the circumstances in which customers buy or use things. Predictable marketing
  • 8. Ziya G. Boyacigiller (c) 2005 EMBA 8 Milk Shakes
  • 9. Ziya G. Boyacigiller (c) 2005 EMBA 9 Alternatives & Pains Circumstance Alternatives Pains Morning breakfast 1. Bagels 2. Egg sandwich 3. Coffee 4. Doughnuts 5. Banana 1. Crumbs 2. Greasy 3. Hungry 4. Makes hungry 5. Too fast to eat Snack for child Pick-me-up while shopping .
  • 10. Ziya G. Boyacigiller (c) 2005 EMBA 10 Summary: Circumstance-Based Segmentation Customers have jobs that need to get done. Then customers look for products or services they can hire to get the job done. The functional, emotional, and social dimensions of jobs constitute the circumstances in which they buy. Circumstances is what we need to analyze in segmentation, to understand if a product will sell, rather than the customers themselves.
  • 11. Ziya G. Boyacigiller (c) 2005 EMBA 11 Use the question Why? to identify the jobs Example: C: I need a blue fabric. P/M: Why? C: To use next to the yellow fabric. P/M: Why? C: Im sawing a flag. P/M: Why? C: Because I cant find a ready made flag. Conclusion: The underlying need is not for a blue fabric, but for a flag The job is get a flag, alternatives offer no ready-made flag (pain), so what is hired is the closest alternative: saw my own flag. (C: customer, P/M: Product Manager)
  • 12. Ziya G. Boyacigiller (c) 2005 EMBA 12 How you view the market for handheld devices will determine what product features you consider to be relevant Product View Demographic View Job-to-be-Done View Market Definition Handheld wireless devices Traveling sales person Use small snippets of time productively Competitors Palm, treo, clie, iPaq, wireless phones Notebook PCs, internet access, wireless & wireline telephones Wireless phones, WSJ, CNN Airport News, doing nothing, listening to boring presentations Features to Consider Digital camera, word, excel, outlook, voice phone, organizer, Wireless internet access, downloadable CRM data/functionality, online stock trading, e-books, email, voice Email, voice mail, voice phone, headline news, simple-single player games, entertaining top-ten lists, always on, SMS top news,