(2006-12-31) Mace Market Segmentation

Michael Mace on using quantitative Market Research techniques for Market Segmentation. It’s better to use quantitative research – at least then you’ll know you have a representative sample of customers. But there are still two major drawbacks to this sort of research, which I call the possibility gap and the blender... I think the way to get past the blender and the possibility gap is not to try to design the actual products through research. Instead, focus on understanding the needs and psychology of the customers, so you can anticipate the way they’d react to new features.

He applies that more to new-Product Development, but even there his example smells a little too incremental. You should optimize the product to make one segment of customers deleriously happy, and not worry about the rest. Unfortunately, segmenting the market for a new type of product is a lot harder than you might expect... The reality is that market segments for a new category of product don’t exist until that product is delivered. Segments gradually coalesce from a feedback loop between the desires of customers and the products that companies offer to them... When you're defining a new market I think you need to turn the traditional research process on its head. Your goal isn’t to gradually build up a fine understanding of the market, it’s to get a general idea of the opportunities as quickly as possible so the engineers can start work. Then you refine your understanding of the market as they refine their product.