4. Market Understanding

According to Clayton Christensen, 95% of new products fail. The reason is a lacking understanding of the market, as by using an ineffective market segmentation mechanism (in Nobel 2011). The root problem is not even a missing understanding about customers per se, but about the “job” that the customer is trying to get done by “hiring” a product (Christensen, Hall, Dillon, & Duncan, 2016). When unaware or oblivious to also more hidden customer needs, we run danger of designing products that do not help customers effortlessly get their “job done” at all, because we just don’t address what they care about. We consequentially run into non-harmonious states when missing the overall purpose of product design, being to build solutions that customers love. Of course it is in our human nature to falsely believe that we belong to the 5% that do most things right, intuitively sense and know what customers really need… but what a surprise, reality often teaches us otherwise! Reality is that often we actually do not know what jobs customers are hiring a product for. We misunderstand or miss entirely what their foundational needs are, measure them along the wrong dimensions, or mix them up with more delighting nice to haves. This chapter aims to show the multi-faceted ways in which a market segmentation can be used along all phases of product development, from strategic to architecturally relevant decisions, and how to do a market segmentation. Using a structured approach to unearth customers’ jobs to be done, the used methodology has been developed from rich experience gathered by our consulting teams whilst working in various industries. Of course the concepts explored here perfectly complement the focus of Design Thinking on empathically understanding customers, in order to create a comprehensive picture of what is going on in a dedicated market as a whole.