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Unformatted text preview: Marketing Malpractice: The Cause and the Cure Marketing executives focus too much on ever-narrower demographic segments and ever-more-trivial product extensions. They should find out, instead, what jobs consumers need to get done. Those jobs will point the way to purposeful products— and genuine innovation. by Clayton M. Christensen , Scott Cook , and Taddy Hall Thirty thousand new consumer products are launched each year. But over 90% of them fail—and that’s after marketing professionals have spent massive amounts of money trying to understand what their customers want. What’s wrong with this picture? Is it that market researchers aren’t smart enough? That advertising agencies aren’t creative enough? That consumers have become too difficult to understand? We don’t think so. We believe, instead, that some of the fundamental paradigms of marketing—the methods that most of us learned to segment markets, build brands, and understand customers—are broken. We’re not alone in that judgment. Even Procter & Gamble CEO A.G. Lafley, arguably the best-positioned person in the world to make this call, says, “We need to reinvent the way we market to consumers. We need a new model.” To build brands that mean something to customers, you need to attach them to products that mean something to customers. And to do that, you need to segment markets in ways that reflect how customers actually live their lives. In this article, we will propose a way to reconfigure the principles of market segmentation. We’ll describe how to create products that customers will consistently value. And finally, we will describe how new, valuable brands can be built to truly deliver sustained, profitable growth. Broken Paradigms of Market Segmentation The great Harvard marketing professor Theodore Levitt used to tell his students, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” Every marketer we know agrees with Levitt’s insight. Yet these same people segment their markets by type of drill and by price point; they measure market share of drills, not holes; and they benchmark the features and functions of their drill, not their hole, against those of rivals. They then set to work offering more features and functions in the belief that these will translate into better pricing and market share. When marketers do this, they often solve the wrong problems, improving their products in ways that are irrelevant to their customers’ needs. Segmenting markets by type of customer is no better. Having sliced business clients into small, medium, and large enterprises—or having shoehorned consumers into age, gender, or lifestyle brackets—marketers busy themselves with trying to understand the needs of representative customers in those segments and then create products that address those needs. The problem is that customers don’t conform their desires to match those of the average consumer in their demographic segment. When marketers match those of the average consumer in their demographic segment....
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This note was uploaded on 10/14/2010 for the course MGMT 551 taught by Professor Chrisdoran during the Spring '10 term at HKUST.
- Spring '10