Clay Christensen’s Milkshake Marketing
About 95 percent of new products fail. The problem often is that
their creators are using an ineffective market segmentation mechanism,
according to HBS professor Clayton Christensen. It's time for companies to
look at products the way customers do: as a way to get a job done.
When planning new products, companies often start by segmenting
their markets and positioning their merchandise accordingly. This segmentation
involves either dividing the market into product categories, such as function
or price, or dividing the customer base into target demographics, such as age,
gender, education, or income level.
Unfortunately, neither way works very well, according to Harvard
Business School professor Clayton Christensen, who notes that each year 30,000
new consumer products are launched—and 95 percent of them fail.
The problem is that consumers usually don't go about their
shopping by conforming to particular segments. Rather, they take life as it comes.
And when faced with a job that needs doing, they essentially "hire" a
product to do that job. To that end, Christensen suggests that companies start
segmenting their markets according to "jobs-to-be-done." It's a
concept that he has been honing with several colleagues for more than a decade.
"The fact that you're 18 to 35 years old with a college
degree does not cause you to buy a product," Christensen says. "It
may be correlated with the decision, but it doesn't cause it. We developed this
idea because we wanted to understand what causes us to buy a product, not
what's correlated with it. We realized that the causal mechanism behind a
purchase is, 'Oh, I've got a job to be done.' And it turns out that it's really
effective in allowing a company to build products that people want to
buy."
Christensen, who is planning to publish a book on the subject of
jobs-to-be-done marketing, explains that there's an important difference
between determining a product's function and its job. "Looking at the
market from the function of a product really originates from your competitors
or your own employees deciding what you need," he says. "Whereas the
jobs-to-be-done point of view causes you to crawl into the skin of your
customer and go with her as she goes about her day, always asking the question
as she does something: Why did she do it that way?"
Hiring A Milkshake
In his MBA course, Christensen shares the story of a fast-food
restaurant chain that wanted to improve its milkshake sales. The company
started by segmenting its market both by product (milkshakes) and by
demographics (a marketer's profile of a typical milkshake drinker). Next, the
marketing department asked people who fit the demographic to list the
characteristics of an ideal milkshake (thick, thin, chunky, smooth, fruity,
chocolaty, etc.). The would-be customers answered as honestly as they could,
and the company responded to the feedback. But alas, milkshake sales did not
improve.
The company then enlisted the help of one of Christensen's
fellow researchers, who approached the situation by trying to deduce the
"job" that customers were "hiring" a milkshake to do.
First, he spent a full day in one of the chain's restaurants, carefully
documenting who was buying milkshakes, when they bought them, and whether they
drank them on the premises. He discovered that 40 percent of the milkshakes
were purchased first thing in the morning, by commuters who ordered them to go.
The next morning, he returned to the restaurant and interviewed
customers who left with milkshake in hand, asking them what job they had hired
the milkshake to do. Christensen details the findings in a recent teaching
note, "Integrating Around the Job to be Done."
"Most of them, it turned out, bought [the milkshake] to do
a similar job," he writes. "They faced a long, boring commute and
needed something to keep that extra hand busy and to make the commute more
interesting. They weren't yet hungry, but knew that they'd be hungry by 10
a.m.; they wanted to consume something now that would stave off hunger until
noon. And they faced constraints: They were in a hurry, they were wearing work
clothes, and they had (at most) one free hand."
The milkshake was hired in lieu of a bagel or doughnut because
it was relatively tidy and appetite-quenching, and because trying to suck a
thick liquid through a thin straw gave customers something to do with their
boring commute. Understanding the job to be done, the company could then
respond by creating a morning milkshake that was even thicker (to last through
a long commute) and more interesting (with chunks of fruit) than its
predecessor. The chain could also respond to a separate job that customers
needed milkshakes to do: serve as a special treat for young children—without
making the parents wait a half hour as the children tried to work the milkshake
through a straw. In that case, a different, thinner milkshake was in order.
Proven Success And Purpose Branding
Several major companies that have succeeded with a
jobs-to-be-done mechanism: FedEx, for example, fulfills the job of getting a
package from here to there as fast as possible. Disney does the job of
providing warm, safe, fantasy vacations for families. OnStar provides peace of
mind.
Procter & Gamble's product success rate rose dramatically
when the company started segmenting its markets according to a product's job,
Christensen says. He adds that this marketing paradigm comes with the
additional benefit of being difficult to rip off. Nobody, for example, has
managed to copy IKEA, which helps its customers do the job of furnishing an
apartment right now.
Christensen also cites the importance of "purpose
branding"—building an entire brand around a particular job-to-be-done.
Quite simply, purpose branding involves naming the product after the purpose it
serves.
Kodak, for example, has seen great success with its FunSaver
brand of single-use cameras, which performs the job of preserving fun memories.
Milwaukee Electric Tool Corp. has cornered the market on reciprocating saws
with its trademarked Sawzall, which does the job of helping consumers safely
saw through pretty much anything. Its Hole-Hawg drills, which make big holes
between studs and joists, are also quite popular. The company's other tools,
which rely on the Milwaukee brand, are not nearly as celebrated.
"The word 'Milwaukee' doesn't give you any market
whatsoever," Christensen says.
So, if jobs-to-be-done market segmentation is so effective, why
aren't more companies designing their products accordingly? For one thing,
future product planning usually involves analyzing existing data, and most
existing data is organized by customer demographics or product category.
"I've got a list of mistakes that God made in creating the
world, and one of them is, dang it, he only made data available about the
past!" Christensen says. "All the data is organized by product
category or customer category because that's easy to get. To go out and get
data about a job is really hard. But there are a lot of people who hire
consultants to tell them how big the market is. And because the data is
organized in the wrong way, you start to believe that's how the market should
be organized."
Furthermore, it's difficult for product developers to break the
mold when many of their customers organize their store shelves around
traditional marketing metrics. Christensen gives the example of a company that
developed a novel tool designed to help carpenters with the daunting task of
installing a door in a doorframe, a job that usually took several tools to do.
But a major home goods store refused to sell the tool because its shelves were
organized by product category—and there was no shelf in the store dedicated to
the singular job of hanging a door.
"Most organizations are already organized around product
categories or customer categories," Christensen says, "and therefore
people only see opportunities within this little frame that they've stuck you
in. So you have to think inside of a category as opposed to getting out. You've
just got to make the decision to divorce yourself from the constraints that are
arbitrarily created by the design of the old org chart."
by Carmen Nobel
http://hbswk.hbs.edu/item/clay-christensens-milkshake-marketing?cid=spmailing-16870048-WK%20Newsletter%2009-20-2017%20(1)-September%2020,%202017
