Milkshakes & Product Failures: A Lesson on Segmentation

Recently, my friend Eric Sforza, who some of you may remember from my video interview of him, reached out to share an article that he thought would be interesting to my readers. Eric studies a range of business topics, but one of his biggest areas of focus is at the intersection of customer orientation and strategy. In this article, he analyzes a case study of how customer segmentation helped to drive sales of milkshakes and shows how a lighthearted topic can lead to useful business insights.

If you enjoy the guest article below, please check out Eric’s blog at http://esforza.wordpress.com. Thanks again to Eric for his contribution.

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Title: Milkshakes & Product Failures: A Lesson on Segmentation
Author: Eric Sforza
Source: http://esforza.wordpress.com/2011/02/28/milkshakes-product-failures-a-lesson-on-segmentation/

Excerpt from the article:

Christensen goes on to say that the major problem is ineffective market segmentation, a causation/correlation bias. For example, just because a consumer is the 18-35, caucasian male, college educated bracket, it doesn’t mean that consumer will buy the product. There may be a correlation in the demographic that does purchase the product, but being in that demographic alone doesn’t cause it.

What makes a successful startup is one that looks to solve a problem, therefore meeting the needs of a market. In Fact, part of the Lean Startup philosophy is to beta test your product, and if the idea doesn’t work then you need to tweak the business model, or pivot and find a market that matches it. The same is true in regards to launching a new product. What problem is the product trying to solve, and who is it trying to solve it for?