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 market segmentation scheme that a company chooses to adopt is a decision of vast consequence. It determines what that company 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. Yet many managers give little thought to whether their segmentation of the market is leading their marketing efforts in the right direction. Most companies segment along lines defined by the characteristics of their products (category or price) or customers (age, gender, marital status and income level). Some business-to-business companies slice their markets by industry; others by size of business. The problem with such segmentation schemes is that they are static. Customers’ buying behaviors change far more often than their demographics, psychographics or attitudes. Demographic data cannot explain why a man takes a date to a movie on one night but orders in pizza to watch a DVD from Netflix Inc. the next.

Product and customer characteristics are poor indicators of customer behavior, because from the customer’s perspective that is not how markets are structured. Customers’ purchase decisions don’t necessarily conform to those of the “average” customer in their demographic; nor do they confine the search for solutions within a product category. Rather, customers just find themselves needing to get things done. When customers find that they need to get a job done, they “hire” products or services to do the job. This means that marketers need to understand the jobs that arise in customers’ lives for which their products might be hired. Most of the “home runs” of marketing history were hit by marketers who saw the world this way. The “strike outs” of marketing history, in contrast, generally have been the result of focusing on developing products with better features and functions or of attempting to decipher what the average customer in a demographic wants.

This article has three purposes: The first is to describe the benefits that executives can reap when they segment their markets by job. The second is to describe the methods that those involved in marketing and new-product development can use to identify the job-based structure of a market. And, finally, the third is to show how the details of business plans become coherent when innovators understand the job to be done.

Hiring Milkshakes

A “job” is the fundamental problem a customer needs to resolve in a given situation.

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References

1. The descriptions of the product and company in this example have been disguised.

2. There are other job segments in the auto industry. The key reason why DaimlerChrysler AG’s early minivans were such a hit with customers was, we believe, that they were positioned on a job that arose in the lives of families — to interact easily and safely with each other while traveling together from here to there. Creating a job-focused product does not guarantee a perpetual monopoly, of course, and other automakers ultimately introduced their own minivans. It is noteworthy, however, that it took competitors years to introduce performance-competitive minivans. Because they were organized by product category rather than job, the minivans just didn’t fit with the way they were structured or thought about in the market. As a result, Chrysler’s market-share leadership persisted for over a decade. Another job that people hire a car to do is to express care and love for a spouse or a child. No car has the features and associated services bundled with it to do this job well.

3. See T. Levitt, “Marketing Success Through Differentiation – of Anything,” Harvard Business Review 58 (January–February 1980): 2–9 for a classic description of the augmented product concept. Harvard Business School professor Youngme Moon has written and taught extensively about the concepts in this section, and we thank her for “augmenting” our own understanding of this phenomenon through her articles, cases and teaching notes.

4. IKEA founder Ingvar Kamprad had a partial, intuitive sense of what some fraction of furniture buyers needed to do when they walked into a store. As he and his associates started the company and tried to help their customers, understanding of the job coalesced piece by piece. IKEA executives probably do not articulate their strategy as being focused on this job — most likely this insight resides in a tacit, cultural understanding. Our hope is that by articulating this model of jobs-to-be-done segmentation and illustrating it with companies like IKEA, whose strategies de facto mirror this model, we might help students and managers who weren’t blessed with the intuition (and luck) of Kamprad to deliberately find opportunities such as these.

5. P.F. Drucker, “Managing For Results” (New York: Harper & Row, 1964), 94.

6. These methods are recounted in C.M. Christensen, “Hospital Equipment Corporation,” Harvard Business School case no. 9-697-086 (Boston: Harvard Business School Publishing, 1997).

7. This information was provided by Michael Schulhof, former Sony board member and CEO of Sony Corp. of America for 20 years, during an interview in New York City in 2001.

8. Leonard, William J. Abernathy Professor of Business Administration Emerita at Harvard Business School, called this method empathic design. See D. Leonard and J. Rayport, “Spark Innovation Through Empathic Design,” Harvard Business Review 75 (November–December 1997): 102–113.

9. See E. von Hippel, “Democratizing Innovation” (Cambridge, Massachusetts: The MIT Press, 2006). This is the latest in a stream of insightful work from von Hippel.

10. The customer case-research method is described in detail in two articles by G. Berstell and D. Nitterhouse: “Looking ‘Outside the Box:’ Customer Cases Help Researchers Predict the Unpredictable,” Marketing Research 9, no. 2 (summer 1997): 5–13, describes the research process; and “Asking All the Right Questions: Exploring Customer Purchase Stories Can Yield Surprising Insights,” Marketing Research 13, no. 3 (fall 2001): 14–20, lays out the questions and interviewing approaches that customer case researchers use to develop case studies.

11. A. Bhide, “The Origin and Evolution of New Businesses” (New York: Oxford University Press, 2000).

12. For one such estimate, see D. Leonard-Barton, “Wellsprings of Knowledge” (Boston: Harvard Business School Press, 1995).

13. In many ways, this is a key message of high-tech marketing consultant Geoffrey A. Moore’s books. He contends that instead of selling a “product” at the outset, emerging companies need to find a customer who will pay a lot of money to the company to solve a critical problem for him. Then, and only then, does it have the privilege of “crossing the chasm.” In addition to his landmark book, “Crossing the Chasm: Selling High-Tech Products to Mainstream Customers” (New York: HarperBusiness, 1999), Moore’s other book that describes this most clearly is “Living On the Fault Line: Managing For Shareholder Value in Any Economy” (New York: CollinsBusiness, 2000).

14. This branding dimension of the jobs-do-be-done theory is described more fully in C.M. Christensen, S. Cook and T. Hall, “Marketing Malpractice: The Cause and the Cure,” Harvard Business Review 83 (December 2005): 74–83.

15. Unfortunately, subsequent to the educational experiences that in 1999 to 2000 enabled Kodak’s management team to take the digital business in this direction, Antonio Perez was brought in as the new chief executive officer after the retirement of CEO Dan Carp. With a more conventional mindset and no understanding of the problem of disruption, Perez combined Kodak’s film and consumer digital businesses into a single business unit. By 2006, the company’s share had dropped to an unprofitable 12%.

16. T. Levitt, “Marketing Myopia,” Harvard Business Review 53 (September–October 1975): 26–180.

17. We thank our friend Armando Luna, vice president of corporate marketing for Blue Cross and Blue Shield of Florida, for teaching us about the origins of market-segmentation theory, which we summarize here in our own language: The theory of market segmentation has its roots in economic theory relating to monopolistic competition; see W. Alderson, “Marketing Behavior and Executive Action” (Homewood, Illinois: Irwin, 1957); and H.J. Claycamp and W.F. Massy, “A Theory of Market Segmentation,” Journal of Marketing Research 5, no. 4 (November 1968): 388–394. The concepts of product differentiation and differential advantage emerged from this background and underpinned early market-segmentation theory. Because most economists’ analytical tools consist of techniques for analyzing large data sets, market researchers with this training spent their careers trying to show relationships between the attributes of customers and their buying behaviors. They would conclude that the variables or characteristics in the regression equations whose coefficients were statistically significant comprised the salient boundaries for dividing consumers into groups. The availability of data and the tools of analysis, in other words, shaped the insights to be sought. In the process, many marketers have forgotten what the theory of market segmentation was based upon from the beginning: that different people have varying needs that change from time to time.

Acknowledgments

We thank Bob Leahey of InfoTrends Research Group Inc., Armando Luna of Blue Cross and Blue Shield of Florida Inc., Emily Sawtell of The McGraw Hill Cos. and Steven Wunker of Innosight LLC for their comments on drafts of this paper. We also thank Rick Pedi and Bob Moesta of Pedi, Moesta & Associates Inc. for allowing us to use disguised insights and examples from their work with these ideas.

1 Comment On: Finding the Right Job For Your Product

  • Sundar Nadimpalli | August 1, 2014

    This is one of the most profound pieces of product design advice I have read anywhere. I have see the Milkshake case study video and have attended a workshop of JTBD earlier. This article trumped all my exposure to JTBD and has given me a much deeper understanding and much higher appreciation of the importance of the subject. I whole heartedly thank the authors for writing this article.

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