Most companies segment their markets by customer demographics or product characteristics and differentiate their offerings by adding features and functions. But the consumer has a different view of the marketplace. He simply has a job to be done and is seeking to “hire” the best product or service to do it. Marketers must adopt that perspective.
The way a company views its markets determines what it decides to produce, how it will take those products to market, who it believes its competitors to be, and how large it believes its market opportunities to be. Most companies segment along lines defined by the characteristics of their products (category or price) or customers (age, gender, marital status and income level) because that is the most easily accessible type of data, but product and customer characteristics are poor indicators of customer behavior because that is not how markets are structured from the customer’s perspective. Customers simply need to get things done, whether that be fixing their car, staving off boredom, or finding something fun to do with their kids. These situational needs for which customers are looking to “hire” products or services go unnoticed during traditional market research and segmentation. As a result, the true breadth of competition often goes unnoticed too. When companies understand what they are up against in the mind of the customer, they can piece together the real size of the market in which they compete.
Using examples from the fast food industry, furniture retailing, the automobile industry and health care, and citing a wide variety of companies and brands, including FedEx, Starbucks, Google, Blackberry, TurboTax and OnStar, this article describes the benefits that executives can reap when they segment their markets by job (the risk and cost of innovation is minimized), the methods that those involved in marketing and new-product development can use to identify the job-based structure of a market (interviews, surveys, observation, empathic and co-evolution techniques), and how the details of business plans can be made more coherent and focused when innovators understand the job to be done.