Patagonia Another Way of Doing Business -

Patagonia Another Way of Doing Business

Patagonia Another Way of Doing Business Video

Patagonia Another Way of Doing Business

When planning new products, companies often start by segmenting their markets and positioning their merchandise accordingly.

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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, 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.

Patagonia Another Way of Doing Business

And when faced with a job that needs doing, they essentially Pataonia a product to do that job. To that end, Christensen suggests that companies start segmenting their markets according to "jobs-to-be-done. 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.

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Christensen, who is planning to publish a book on the subject of jobs-to-be-done marketing, explains that there's an important difference Payagonia determining a product's function and its job. 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.

Patagonia Another Way of Doing Business

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 the "job" that customers were "hiring" a milkshake to do.

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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 Businsss. 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.]

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