Circumstance Based SegmentationZiya 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 everyone’s 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 Boyacigiller’s contributions to the start-up Ecosystem of Turkey, please go to www.ziyaboyacigiller.com

Design Thinking & Innovation

Özyeğin ÜniversitesiMaster 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. BoyacıgillerSabanci UniversitesiYonetim Bilimleri Fakultesi

Ref: Innovator’s 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

¾ 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 & PainsCircumstance Alternatives Pains

Morning breakfast

1. Bagels2. Egg sandwich3. Coffee4. Doughnuts5. Banana

1. Crumbs2. Greasy3. Hungry4. Makes hungry5. 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 jobsExample:

C: I need a blue fabric.P/M: Why?C: To use next to the yellow fabric.P/M: Why?C: I’m sawing a flag.P/M: Why?C: Because I can’t 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

MarketDefinition

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, …