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Live Session - Week 4

Dr. Michael S. Jordan

The Target Market Section
Expands on the Opportunity

First Rationalize your market
segmentation rationale
The purpose of segmentation
is to identify groups of customers that
have a relatively uniform set of needs.

Why is this important?
You want the target customers to
“fire” their solution-in-use and
“hire” your solution

Why would they do that?
Because they perceive your solution
to be the best value

Best Value = Customer Demand

But, what does it
mean to be the
best value?
Your solution satisfies the needs of
targets customers better than the

More precisely, your solution offers
additional value
(differential value)
beyond that of the

Is that all?
Target customers must also be willing
to pay the selling price of your solution
to obtain that additional value.
Best value depends on precisely
defining customer needs
Your Solution
Balancing Act

Differential Value
Possible Price

Design Profitability

Optimal Cost

Competitive Solutions
If there’re significant differences in the
perception of value within a group,
variation is introduced in a set of needs
for the segment.

This makes it next to impossible to satisfy
all those needs without making trade-offs
for the sake of profitability that result in
undershooting some customers needs in
that segment and overshooting others.
Customer characteristics and attributes may
sometimes correlate with needs, but this data
does not explain why customers make the
choices they do.
To understand customer choice, we
must understand what motivates them
and these motivations are rooted in
their circumstance

Jobs to be Done Theory is a useful
way to contextualize customer needs
Customer needs should be used as the
primary segmentation criteria, not
proxies (characteristics).

Needs first, then
Customer Needs
What are the limitations of the

What is the circumstance
that is causing them to
Once customers are segmented on needs,
their characteristic and attributes can be
used as a secondary criteria to profile them.

Then determine the best ways to reach
them and the messaging around your value
Assignment 4.1