Identifying customer needs and market segmentation | Product management #7

Introduction

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.

Summary

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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