Understanding the customer is essential for successful product management. And still, not all entrepreneurs remember this rule. Without identifying user needs, even the most innovative and necessary product may not find its place in the market. In a nutshell, you need to know your customers’ needs to be able to meet them. Read on.


Product management is not just about creating and launching new digital products, improving their features, and adding new options. At the center of this process is the customer. Why? Because the customer is the one who drives the success of the product with their choices and preferences.

Identifying customer needs

Identifying customer needs is the process of learning what customers expect from a product or service. A good example can be a smartphone company discovering that a longer battery life is a feature that they want most. Instead of focusing on a new shape of the case or a better camera, a company that listens to its customers will concentrate on developing battery technology. But how to find out what their real expectations are?

How to identify customer needs?

You can identify customer needs in a number of ways. Different organizations rely on various methods, for example:

  • Customer interviews – are useful especially when you have a small group of engaged users. For example, a manufacturer of sports equipment can interview active athletes to find out what their expectations of the equipment are.
  • Data analysis – works best for digital products available to wide audiences. For instance, a clothing store can notice that customers are more likely to buy clothes in natural colors thanks to analyzing data.
  • Surveys – are a proven method of identifying customer needs, but it requires the ability to create surveys and accurately interpret the data they contain. For example, an online training company might survey participants of previous training courses to find out how they would like to deepen their knowledge.

By using these methods, you can better understand your customers’ needs and customize your product or service. However, it is important not to rely on a single method, but to combine them to get a bigger picture. But what to do if your customers’ needs are divergent?

What is market segmentation?

Our customers’ needs are rarely homogenous, so after identifying them, the next step is market segmentation. This is the process of dividing the market into groups with similar expectations or characteristics. For example, a beverage manufacturer may segment the market based on taste preferences – some customers may prefer sweeter drinks, while others choose sugar-free drinks. On the other hand, an app developer might offer a slightly different layout to the youngest audience of its digital product.

Market segmentation strategies

Market segmentation is not just about dividing the market into groups, but understanding which of those groups are most valuable to you. Here are three steps to help you segment the market effectively:

  1. Identify various segments – for example, if you run an online store with smartphone accessories, your segments may encompass different age groups, genders, style preferences, income levels, etc.
  2. Assess segment profitability – not all segments are equally attractive. You need to evaluate which ones have the greatest potential for your business. For example, the youth segment may be attractive because of its large number of potential customers, but it may also be difficult due to strong competition and the young people’s low financial resources.
  3. Choose target segments – finally, you need to decide which segments you want to focus on. You should choose the ones that are most attractive to you and best fit your product and business strategy.

Remember that market segmentation is not a one-time process. The market is constantly changing, and customers may change their preferences. Therefore, it is important to review and update your market segmentation regularly.

Identifying customer needs and market segmentation in product management

Identifying customer needs and market segmentation can help you create your product strategy, design product features, and personalize your marketing communications. For example, if you learn that your customers need more customization options, you can add such features. If you notice that a certain market segment is particularly interested in your product, you can focus your marketing efforts on that segment reducing the cost of reaching other audiences.

customer needs


Identifying customer needs and market segmentation are not just trendy terms, but more importantly, tools that can change the fate of your product. Thanks to them, you can tailor your offer to what your customers really want, which will increase their satisfaction and loyalty.

It’s important for budding entrepreneurs to take the time to understand their customers from the very beginning. Don’t be afraid to ask, analyze and test. Your offer should be like a living organism that adapts to the changing environment. Remember that in today’s world, the one who succeeds is the one who tracks their customers’ needs. Don’t be afraid of this challenge! With market segmentation as your ally, you can achieve the success you deserve.

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Identifying customer needs and market segmentation | Product management #7 andy nichols avatar 1background

Author: Andy Nichols

A problem solver with 5 different degrees and endless reserves of motivation. This makes him a perfect Business Owner & Manager. When searching for employees and partners, openness and curiosity of the world are qualities he values the most.

Product management:

  1. Intro to product management
  2. What is the role of a product manager?
  3. Why is product lifecycle management important?
  4. How to build an efficient product strategy?
  5. OKRs vs SMART goals. Which framework drives better results?
  6. How to define a value proposition?
  7. Identifying customer needs and market segmentation
  8. Crafting a winning product concept. Techniques and steps
  9. Gaining an edge with an effective product roadmap
  10. Prototyping your digital product
  11. How to build an MVP?
  12. MVP vs MMP vs MMF. Key milestones in product development
  13. Mastering hypothesis testing
  14. Proven methods for improving product quality management
  15. Strategies and tactics for a successful product launch
  16. Driving profitability through product optimization
  17. Measuring product success
  18. How to price a product? The most popular pricing strategies
  19. The future of product design. Top trends and predictions
  20. When to retire a product? Key factors influencing EOL decisions
  21. Agile in product management
  22. Scrum and Kanban in product management.
  23. What is lean product management?
  24. Jobs to be Done. Creating products that customers truly need
  25. What is growth hacking?
  26. What is data-driven product management?
  27. A/B testing in product management
  28. Useful product management templates. Where to find them?
  29. Strategyzer tools in product management
  30. 5 useful product management tools
  31. How to create and manage product documentation?
  32. 6 essential tools for product managers
  33. How to use AI in product management