A practical guide on how to analyze segments of customers during consulting projects
If you are participating in a consulting project devoted to Sales & Marketing or Strategy most likely you will have to either do segmentation or analyze existing segments of customers. You will try to achieve it on the basis of internal data, market research as well as other external data. In this course, I will teach how to rapidly and efficiently segment customers and analyze existing segments during consulting projects.
In the course you will learn the following things:
1. How you can segment customers?
2. When to use a specific segmentation technique?
3. Crucial Excel formulas you will need to do segmentation
4. How to do simple segmentations in Excel using internal or external data
5. How the B2B segmentation differs from B2C segmentation
This course is based on my 15 years of experience as a consultant in top consulting firms and as a Board Member responsible for strategy, performance improvement, and turn-arounds in the biggest firms from Retail, FMCG, SMG, B2B, and services sectors that I worked for. I have carried or supervised over 90 different performance improvement projects in different industries that generated in total 2 billion of additional EBITDA. On the basis of what you will find in this course I have trained in person over 100 consultants, business analysts and managers who now are Partners in PE and VC funds, Investment Directors and Business Analysts in PE and VC, Operational Directors, COO, CRO, CEO, Directors in Consulting Companies, Board Members, etc. On top of that my courses on Udemy were already taken by more than 103 000 students including people working in EY, Walmart, Booz Allen Hamilton, Adidas, Naspers, Alvarez & Marsal, PwC, Dell, Walgreens, Orange, and many others.
For more check the following course:
https://bit.ly/SegmentationMC
2. 2
If you are participating in a consulting project devoted to Sales & Marketing or Strategy most
likely you will have to either do segmentation or analyze existing segments of customers.
3. 3
You will try to achieve it on the bases of internal data,
market research as well as other external data.
4. 4
In this presentation, I will show you how to perform fast and efficiently segmentation
of customers and analysis of existing segments during consulting projects.
5. 5
Target Group What you will learn What you will get
Management Consultants &
Business Analysts
Analysts working in Strategic
Departments, Marketing
Departments
Analysts working in PE, VC funds
How you can segment customers?
Crucial Excel formulas you will
need to do segmentation
How to do simple segmentations
in Excel using internal or external
data
Ready made analyses in Excel
List of Recommended readings
(articles, books)
7. 7
This course will help you perform fast and
efficiently segmentation and analysis of customer
segments on the level of top management
consultants
8. 8
What you will see in this presentation is a part of my online course where you
can find case studies showing analyses along with detailed calculations in Excel
Segmentation for Management
Consultants & Business Analysts
$190
$19
Click here to check my course
11. 11
Segmentation is vital for every business. It helps you make decisions on strategy, products,
branding. In this section, we will have a look at essential methods used to segment the B2C market.
12. 12
In this section we will talk about the following things
Process of segmentation Methods for segmentation
Why we want to segment?
Case studies in
segmentation
Examples of segmentation Segmentation vs Targeting
Targeting vs Products
14. 14
Segmentation allows us to do a lot of things
Understand customers
Measure segments
Define your strategy
Target customers
Helps you pick the right 4P Mix
(Product, Place, Price,
Promotion)
Notice opportunities
Notice threats
16. 16
The process of preparing segmentation consist of 5 main stages
Check what data are
available
Choose
segmentation
method
Create segmentation
sample
Analyze segments
Do necessary
changes
Segmentation can
only be done if you
have specific type
of data
Check what data
you have
Check what data
you can gather to
help you with the
segmentation
Data will determine
what segmentation
you can do
Check how top
firms in a specific
industry are
segmenting the
market
Based on available
data define criteria
that will help you
select optimal
segmentation
method
The segmentation
method that you
have selected may
not give you the
desired results
Check the selected
segmentation
method on a
sample of
customers
Check whether the
segmentation
generates expected
results and is useful
Analyze needs and
expectations of
targeted segments
and customers
Using data from the
segmentation
analysis define if
and what should be
changed to adjust
appropriate
business areas to
meet the needs and
expectations of
customers
Do necessary
changes to your
business model
Adjust strategy,
product, price or
promotion,
positioning, brand
structure
17. 17
Check the video on YouTube for more details
Click here to go to the video
19. 19
Let’s have a look at the main methods of segmentation used in B2C
Segmentation
Geographic
segmentation
Demographic
segmentation
Behavioral
segmentation
Psychographic
segmentation
Mixed
20. 20
Check the video on YouTube for more details
Click here to go to the video
22. 22
One of the first types of segmentation used is geographic
segmentation. Let’s see how and when we use it in practice.
23. 23
In geographic segmentation we divide customers by physical areas
Country
Region
Size of city
Location in the city
Density
Climate
24. 24
Let’s have a look at geographic segmentation used by many FMCG firms
Northern Europe
Russia, Ukraine Belarus
Eastern Europe
Southeast Europe
Southern Europe
Western Europe
25. 25
Below we have an example of customer segmentation by size of cities used by
Retailers and B2C Services
Above 800
800 - 600
600 - 400
400 - 200
200 - 50
Population per city
In thousand
> 50
Warsaw
Lodz
Krakow
Wroclaw
Poznan
Szczecin
Gdansk
Lublin
Bydgoszcz
Zielona Gora
Elblag
Olsztyn
Bialystok
Radom
Rzeszow
Katowice
26. 26
0.00 - 0.02
Cost of transportation
EUR/l
Below example of customer segmentation in B2B based on cost of transport
used in commodity
0.02 - 0.04
0.04 - 0.06
0.06 - 0.09
> 0.9
27. 27
Let’s see when the geographic segmentation is a good choice
Geography or location impacts
customer choices
We need a simple method that
we can use to scale the business
We have a limited budget for in-
depth analyses
We can get better sales if we
differentiate the product
Legal systems & legal
requirements are different in
every location
We want to organize the
business around the segments
28. 28
Let’s see in what industries this method is most often used
Restaurants
B2C Services
Retail
FMCG
Hotels
Some marketplaces i.e. for
doctors, cabs
29. 29
Check the video on YouTube for more details
Click here to go to the video
31. 31
Let’s imagine that we were asked to analyze the geographic segmentation of customers
who make purchases in convenience stores. Let’s have a look at assumptions and data.
32. 32
A few information about the firm that we will be analyzing
Based on consumer research we have
identify segments
We have defined also 3 purchasing
missions
We know how many customers are in
every segment
Calculate customer value per segment
and size of every segment
33. 33
Based on discussion with the Managers and interviews with customers we have
divided the market into 4 segments
Total market
Street locations
Shopping Malls
locations
Office locations Local stores
Customers buying in
stores located in large
shopping centers
Customers buying in
stores located in the
Office parks
Customers buying in
stores located near
small housing estates
Customers buying in
stores located on the
main streets in city
centers
34. 34
On top of that we can distinguish the following 3 buying missions
Small purchases
Big purchases
Hot Foods & Ready
Meals
Description of the mission
During this mission the customer buys small number of products
It can be linked to impulse buying, buying missing item that was not bough during visit to supermarket or finding a snack to
help him survive till lunch
Average number of products bought: from 1 to 3
During this mission customers buy mainly: sweets, chewing gums, yoghurts, small bottles of juice, chips, protein bars etc.
Purchases of bigger number of products
It can be linked to impulse or everyday buying
Average number of products bought: more than 3
During this mission customers buy everyday products (bread, milk, diary products, meats, water in big bottles etc) as well as
impulse products ( sweets, chewing gums as well as yogurts, etc.).
Alternative to having a lunch at a restaurant or cafeteria
Average number of products bought: from 1 to 5
During this mission customers buy mainly: take-out coffee or tea, hotdog, fast-food, ready meals, soups, snacks, fresh juice etc.
35. 35
Let’s have a look at some general data for every segment by missions
Street locations
Shopping Malls
locations
Office locations
Local stores
# of products bought: 3 items
ATV: EUR 50
Product range: First need products
# of products in basket: 10 items
ATV: EUR 40
Product range: Everyday products
# of products in basket: 2 items
ATV: EUR 30
Product range: Take away
Small purchases Big purchases
Hot Foods & Ready
Meals
* ATV – Average Transaction value
# of products bought: 1 items
ATV: EUR 15
Product range: First need products
# of products in basket: 50 items
ATV: EUR 100
Product range: Everyday products
# of products in basket: 1 items
ATV: EUR 10
Product range: Take away
# of products bought: 1 items
ATV: EUR 35
Product range: First need products
# of products in basket: 10 items
ATV: EUR 20
Product range: First need or
Everyday products
# of products in basket: 3 items
ATV: EUR 45
Product range: Take away
# of products bought: 1 items
ATV: EUR 40
Product range: First need products
or Everyday products
# of products in basket: 15 items
ATV: EUR 50
Product range: First need and
Everyday products
# of products in basket: 1 items
ATV: EUR 10
Product range: Take away or First
need products
36. 36
Based on consumer research we have information on how often people
from different segments perform specific mission
Share of purchasing missions in following segments
In %
65%
35%
45%
20%
20%
40% 15% 65%
15%
25%
40%
15%
Street locations Shopping Malls locations Office locations Local stores
Small purchases Big purchases Hot Foods & Ready Meals
37. 37
Weighted Average Transaction Value (ATV) by segments
In EUR
Weighted Average Item Per Transaction (IPT) by segments
# of items
45 48
37
42
Street locations Shopping Malls locations Office locations Local stores
6
13
2 6
Street locations Shopping Malls locations Office locations Local stores
Below the results that we got from our estimations
39. 39
One of the most popular and commonly used types of market segmentation is
demographic segmentation. Let’s see when and how it is used.
40. 40
In the demographic segmentation, we use the following characteristics
to divide customers into groups
Age
Gender
Family size
The lifecycle of the family
Income
Occupation
Education
Nationality
41. 41
16%
9%
Below are examples of dividing customer by age and price sensitivity in
a cosmetic company
Total for the age group 70% 24% 6%
Age
Segment
Price segment
EUR 20
20 - 30 30 - 50 50 +
30%
70%
Total for the
price range:
5%
8%
61% 6%
42. 42
Let’s have a look at example of segmentation used for SMCG like furniture, cars,
accessories for the home
Less than 40
Age
NO
YES
Married? Employed?
NO
YES
NO
YES
Kids at home?
NO
YES
NO
YES
More than 40
NO
YES
NO
YES
NO
YES
Segments
Supported
persons
Adult singles
Young Family
Mature Family
Empty Nest
43. 43
Below are examples of differentiating client types by age and income for
furniture markets
Young and
free
customers
Age Groups
15 – 24 25 – 34 45 – 54 Above 55
Less than 1 000
1 000 – 3 000
3 000 – 5 000
5 000 – 7 000
Above 7 000
Experimenting
customers
Aspiring
customers
Conservatives
customers
35 – 34
Premium
customers
Young, single people not living at home
Newly married couples young, no children
Married couples with children, looking for
new experiences
Settled, disliking change, middle age
customers
Wealthy customers of all ages
Income
44. 44
Below an example of segmentation used by Home Improvement / DIY retailers
Amateur buyers
Experienced buyers
Renovating firms
Wanderers
(Just looking around)
20%
35%
40%
0%
15%
35%
30%
0%
15%
15%
10%
0%
40%
10%
10%
0%
1 room renovation
Apartment
renovation
House Moving
Decorations and
accessories
No specific reason
10%
5%
10%
100%
Clients types Mission
45. 45
Let’s see when the Demographic Segmentation is a good choice
Choice of product is mainly
influenced by demographics
You gather demographic data on
your customer
You cannot measure customer
behavior directly
Customer behavior is pretty
stable
Geography / location will be less
important
46. 46
Let’s see in what industries is most often used
FMCG
SMCG
Retail
B2C Services
Financial Services
47. 47
Check the video on YouTube for more details
Click here to go to the video
49. 49
You were hired by a Fashion Retailer to segment the market and analyze the value of
customers as well as the size of segments. Let’s look at the assumptions and data.
50. 50
A few information about the firm that we will be analyzing
You have decided to use demographic
segmentation
Based on data you have identified 4
buying missions
We know how many customers are in
every segment
Calculate customer value per segment
and size of every segment
51. 51
We first divided the market by gender. Kids are put in a separate group
Customers
Woman Man Kids
52. 52
We also add the age criteria. In this way, we got 5 segments.
Description
Kids
Client age: less than 15
Occupation: students
Purchasing power: Small. At younger age purchases are driven by parents. Later on they buy more independently mainly inexpensive
products, gadgets, basics
Young women
Older women
Young men
Older men
Clients age: 16 – 34
Occupation: mainly high school and university students, some of them do some part-time work
Purchasing power: Medium. They spends their money mainly on standard clothes, like: t-shirts, jeans, jackets, dresses but also buy a lot of
cheap accessories
Clients age: 35 +
Occupation: Office workers, service workers, factory workers
Purchasing power: High. They buy both basic clothes for everyday use as well as premium clothes. Some also buy clothes from designers
Clients age: 16 – 34
Occupation: mainly high school and university students, some of them do some part-time work
Purchasing power: Medium. They spends their money mainly on standard clothes, like: t-shirts, jeans, jackets, dresses, caps
Clients age: 35 +
Occupation: Office workers, service workers, factory workers, farmers
Purchasing power: High. They spends their money mainly on suits, shirts, sport clothes, causal business clothes
53. 53
In the example we can distinguish the following buying missions.
Special occasion
buying
Standard buying
Description of the mission
Purchase of products for special occasions like: wedding, party, festival, vacation
During this mission consumers are willing to pay more for clothes and accessories than they usually spend
During this mission customers buy mainly: dresses, suits, shirts, pants, shoes, accessories
Purchase of everyday use products
During this mission customers buy only this products that they really need
During this mission customers buy mainly: underwear, socks, t-shirts, jeans, hoodies
Exchange wardrobe
During this mission the customers buys products because of changes in life like: getting pregnant, change of taste, losing or gaining
weight, breaking up with your boyfriend or girlfriend, ,
During this mission the customer will buy many different products
Impulse buying
During this mission, the customers buys products under the influence of emotions
They often decide to buy products because of current promotions or sale
During this mission customers buy manly: shoes, bags, branded clothes or accessories
54. 54
Let’s have a look at examples of demographic segmentation of customers who
buy in fashion stores
* ATV – Average Transaction value
Special occasion
buying
Kids
Young women
Older women
Young men
Older men
# of products bought:
2 items
ATV: EUR 40
# of products bought:
3 items
ATV: EUR 70
# of products bought:
1 items
ATV: EUR 50
# of products bought:
1 items
ATV: EUR 60
# of products bought:
1 items
ATV*: EUR 15
Standard buying Impulse buying Exchange wardrobe
# of products bought:
2 items
ATV: EUR 30
# of products bought:
3 items
ATV: EUR 60
# of products bought:
2 items
ATV: EUR 30
# of products bought:
2 items
ATV: EUR 40
# of products bought:
1 items
ATV: EUR 10
# of products bought:
2 items
ATV: EUR 25
# of products bought:
3 items
ATV: EUR 60
# of products bought:
1 items
ATV: EUR 15
# of products bought:
2 items
ATV: EUR 40
# of products bought:
1 items
ATV: EUR 10
# of products bought:
5 items
ATV: EUR 60
# of products bought:
4 items
ATV: EUR 70
# of products bought:
3 items
ATV: EUR 40
# of products bought:
5 items
ATV: EUR 55
# of products bought:
10 items
ATV: EUR 60
55. 55
Based on consumer research we have information on how often people
from different segments perform specific missions.
Share of shopping missions in following segments
In %
20% 20%
15%
20%
30%
50%
25%
25%
65% 45%
10%
20% 30%
5%
10%
20%
35%
30%
10%
15%
Kids Young women Older women Young men Older men
Special occasion buying Standard buying Impulse buying Exchange buying
56. 56
21
42
65
34
48
Kids Young women Older women Young men Older men
Let’s have a look at ATV and IPT in following segments
2,8 3,1 3,3
1,9
2,2
Kids Young women Older women Young men Older men
Weighted Average Transaction Value (ATV) by segments
In EUR
Weighted Average Item Per Transaction (IPT) by segments
# of items
57. 57
Check the video on YouTube for more details
Click here to go to the video
59. 59
If you gather a lot of information on customer behavior you can consider
using behavioral segmentation. Let’s see when and how it is used.
60. 60
In the behavioral segmentation, we divide customers by following
characteristics
Product usage rate
Loyalty status
Benefit sought
Historical behavior
Ready to buy stage
User / Customer status
61. 61
Below is an example of behavioral segmentation of mobile games users
Frequency of use
Long
Short
Length of use
High
Low
Heavy users –
customers who use
product constantly
Non users – customers
who do not use
product
Medium users –
customers who use
product very often but
in short sessions
Light users –
customers who use
product from time to
time but in long
sessions
62. 62
Let’s have a look at customers segmentation for consumer goods based on their
satisfaction and loyalty
Customers
BIG
SMALL
Satisfaction Loyalty
HIGH
LOW
Segments
Promoters
Hesitant
Detractors
HIGH
LOW
Future Ex
63. 63
Let’s see when the behavioral segmentation is a good choice
Customer behavior is a good
indication of his needs
You can track a customer behavior
in real time
You can provide product the
customer needs based on his
behavior
Geographical and demographical
data does not suffice to segment
the market
Behavior may be used to adjust not
the product but rather messaging
64. 64
Let’s see in what industries is most often used
E-commerce
Marketplaces
SaaS
Consumer goods
Multichannel Retailers
Financial Services
Airlines
65. 65
Check the video on YouTube for more details
Click here to go to the video
67. 67
Imagine that you were hired to prepare a behavioral segmentation for
a multichannel apparel firm. Let’s have a look at how you can do that.
68. 68
Let’s have a look at the firm
You have defined 3 main segments
You have also identified 4 main
purchasing missions
We know how many customers are in
every segment
Calculate customer value per segment
and size of every segment
69. 69
Let’s have a look at how we can divide the segments of the company
Total Market
Pure Online Pure Offline Multichannel
Customers who prefer
shopping in physical
stores with the
opportunity to see and
try the products
Customers who use
both channels
Customers who prefer
online shopping
They never use the
offline stores
70. 70
In the example we can distinguish the following buying missions
Special occasion
buying
Standard buying
Description of the mission
Purchase of products for special occasions like: wedding, party, festival, vacation
During this mission consumers are willing to pay more for clothes and accessories than they usually spend
During this mission customers buy mainly: dresses, suits, shirts, pants, shoes, accessories
Purchase of everyday use products
During this mission customers buy only this products that they really need
During this mission customers buy mainly: underwear, socks, t-shirts, jeans, hoodies
Exchange wardrobe
During this mission the customers buys products because of changes in life like: getting pregnant, change of taste, losing or gaining
weight, breaking up with your boyfriend or girlfriend,
During this mission the customer will buy many different products
Impulse buying
During this mission the customers buys products under the influence of emotions
They often decide to buy products because of current promotions or sale
During this mission customers buy manly: shoes, bags, branded clothes or accessories
71. 71
Let’s have a look at examples of behavioral segmentation
Pure Online
Pure Offline
Multichannel
Special occasion
buying Standard buying Impulse buying
Exchange wardrobe
buying
2 items
EUR 52
+ 1 item
2 items
EUR 38
+ 1 item
2 items
EUR 37
+ 1 item
5 items
EUR 65
+2 item
1 items
EUR 30
+ 0 item
2 items
EUR 25
+ 1 item
1 items
EUR 20
+ 0 item
4 items
EUR 35
+ 1 item
2 items
EUR 50
+ 1 item
3 items
EUR 40
+ 1 item
2 items
EUR 32
+ 1 item
6 items
EUR 50
+1 item
IPT – Item Per Transaction ATV – Average Transaction Value # of additional items added to the basket
72. 72
Share of purchasing missions in following segments
In %
Based on consumer research we have information on how often people
from different segments perform specific missions.
30%
35%
20%
20%
30%
40%
15%
20%
20%
35%
15%
20%
Pure Online Pure Offline Multichannel
Special occasion buying Standard buying Impulse buying Exchange wardrobe buying
73. 73
86
29
3
Pure Online Pure Offline Multichannel
Let’s have a look on ATV and IPT in following segment
2 2 3
Pure Online Pure Offline Multichannel
Weighted Average Transaction Value (ATV) by segments
In EUR per transaction
Weighted Average Item Per Transaction (IPT) by segments
# of items per transaction
75. 75
People within the same demographic group may still make different choices.
Let’s have a look at how and when to use psychographic segmentation.
76. 76
In psychographic segmentation, we divide customers by following
characteristics
Attitude
Believes
Lifestyle
Interests
Opinions
Values
Social Class
77. 77
Below an example of segmentation of customers by their lifestyle in car
industry
Customers interested in
luxury
Segment
Expectations of the
product
Eco-friendly /
Environmentally friendly
customers
Eco sustainable (made from
recyclable materials)
Zero or low emission
Eco friendly equipment
Durable so can be used for
many years
Advanced software improving
car after the purchase
Customers looking for safety
High quality of materials yet
nothing fancy
Reliable and durable car
Safe equipment:
o Safe front airbags
o Special side – curtain
airbags
o Electronic stability control
Speed
Easy to drive
Product description Big interior space
Spacious trunk
Easy to drive
High performance
Special materials used for the
interior design
Advanced software and added
services
Simplicity
High technology
Caring about environment and
minimizing his impact
Safety
Comfort
Self-fulfillment and enjoyment
Values Caring for others and what
surrounds us
Safety of family and others
78. 78
Below are examples of differentiating client types by their personality in
fashion company
14%
30%
30%
16%
10%
Ambitious Functional Conservative Aesthetic Fullfield
79. 79
Below are examples of differentiating client types by their personality in
fashion company
Customers strongly involved in the purchase of new clothes
They don't like shopping, which is why they like to do buy more at once, to limit visits to shopping malls
They attach importance to appearance, therefore they choose expensive and good quality things that will stay for longer
with them
Fulfilled
Customers who are the most involved in the purchase of new clothes
Appearance is the most important for them, therefore they are ready to spend any money on clothes
They love when others admire them or pay attention to things they wear
They follow all new trends from the fashion world
Ambitious
Customers with the lowest involvement in the purchase of new clothes
They don't like any changes in their look
They don’t like shopping or spending money on that
Clothes and accessories are irrelevant to them, so they buy cheap and low-quality products
Conservative
Customers with a moderate level of involvement in the purchases of new clothes
They like good looking, functional and comfortable clothes that are reflection of their personality
They are skeptical to big changes, so they buy clothes of similar colors or cut
Functional
Clients strongly involved in the purchase of new clothes but with the limited budget
They attach importance to appearance, but because of the limited budget they are waiting for discounts and promotions
They like nice products and they will hunt them until they get them
Aesthetic
Description
80. 80
Below are examples of segmentation of customers in terms of their
beliefs and approaches to organic food
Segment
Description
Health oriented
customers
Environmentally
oriented customers
Food quality oriented
customers
Local production
oriented customers
Customers who buy
organic food because
they believe it’s
healthier for
themselves or their
families
Customers who buy
organic food because
they believe its better
for environment for
example if it comes
about amount of water
consumption to all
production processes
Customers who buy
organic food because
they look for natural
taste and high quality
of food
Customers who buy
organic food because
they want to support
local farmers and their
business
81. 81
Below are examples of segmentation of customers by their personality
profiles and characteristics used in consumer goods
Personality profiles Personality characteristics
Assertiveness
Openness to experience
Openness to others
Leadership
Empathy
Emotionality
Dominant customer
Timid customer
Seeker customer
Average customer
82. 82
Below are examples of differentiating customers by their personality
profile and characteristics used for consumer goods
4,4
4
4,2
5
3,2
2,8
2,6
2,8
3,4 3,4
4
4,8
3,6
4
5
4,2
4,4
3,1
3
2,8
3,1
3,2
3
3,1
Assertiveness Openness to
experience
Openness to others Leadership Empathy Emotionality
Dominant Timid Seeker Average
Personality characteristic
Personality profiles
83. 83
Let’s see when the psychographic segmentation is a good choice
Choice of product is driven rather
by values, status etc.
Psychographic segmentation is
used when demographic is not
sufficient
Psychographic segmentation is
used when geographical is not
sufficient
Requires consistency in choices
based on values, lifestyle
Not good for impulse products
A great choice for products that
express your status
84. 84
Let’s see in what industries is most often used
FMCG esp. products related to
status
SMCG esp. cars
Retail especially Fashion
Some B2C services
Entertainment
Travel
86. 86
Let’s start with a short definition
In targeting you evaluate segments and you decide which you will
concentrate on
You can pick 1 segment, a few segments, or attack all segments at
once
In evaluation, you look at: the size of the segments, profitability of
segments, and how easy it is to conquer a specific segment
Certain segments may require modification of the product, different
sales channels, different marketing
Targeting
=
87. 87
16%
9%
Let’s have a look at an example of segmentation from cosmetics
industry
Total for the age group 70% 24% 6%
Age
Segment
Price segment
EUR 20
20 - 30 30 - 50 50 +
30%
70%
Total for the
price range:
5%
8%
61% 6%
88. 88
16%
9%
Let’s assume that we have decided to target only the 30-50 segments
Total for the age group 70% 24% 6%
Age
Segment
Price segment
EUR 20
20 - 30 30 - 50 50 +
30%
70%
Total for the
price range:
5%
8%
61% 6%
89. 89
Apart from providing 1 same product to the whole market we have 5
different potential approaches*
M1 M3
M2
P1
P2
P3
M1 M3
M2
P1
P2
P3
M1 M3
M2
P1
P2
P3
M1 M3
M2
P1
P2
P3
M1 M3
M2
P1
P2
P3
Single – Segment
Concentration
Selective
Specialization
Market
Specialization
Product
Specialization
Full Market
Coverage
Mx Market
Px Product
*Philip Kotler “Marketing Management”
90. 90
We can also group the approaches in 2 groups
Targeting
Selective
Focus strategy
Market specialization strategy
Niche strategy
Extensive
Full coverage
Mass marketing
Product specialization
92. 92
There are 3 main approaches when it comes to adjusting your product
to segments
Targeting vs product
No segmentation
One segment
One product
One marketing mix
Segmentation with no
adjustments
Many segments
One product
One marketing mix
Segmentation with
adjustments
Many segments
Many products
Many marketing mix
93. 93
Let’s have a look at how targeting looks like for example in airlines
Targeting vs product
No segmentation
Segmentation with no
adjustments
Segmentation with
adjustments
Airlines at the beginning Low cost carriers Traditional airlines
Southwest Airlines Lufthansa
Emirates
Delta
Ryanair
95. 95
To segment the market you need data. Let’s see
where you can look for the data that you will need.
96. 96
Let’s have a look at the main sources of data for segmentation
Surveys & Consumer Research
Data from your website /
social media
Internal Transactional Data Public Data
Loyalty Program
Ready-made consumer reports
and consumer surveys i.e. TGI
Customer Reviews
Market Data Aggregators i.e.
AC Nielsen
Data gathered on the behavior
of customers
97. 97
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Segmentation for Management
Consultants & Business Analysts
$190
$19
Click here to check my course
103. 103
Let’s have a look at how B2C segmentation differs from B2B
segmentation
B2C Segmentation B2B Segmentation
Geographic Geographic
Demographic Firmographic
Behavioral Behavioral
Psychographic Psychographic / Role
104. 104
Let’s have a look at the main methods of segmentation used in B2B
Segmentation
Geographic
segmentation
Firmographic
segmentation
Behavioral
segmentation
Psychographic / Role
segmentation
Continent
Country
State
Industry
Number of employees
Revenue
City Market position
Sales channels
How much they buy
Usage rate of the product
User status
Attitude towards the
product/ service
105. 105
Check the video on YouTube for more details
Click here to go to the video
106. 106
0.00 - 0.02
Cost of transportation
EUR/l
Below example of customer segmentation in B2B based on cost of transport
used in commodity
0.02 - 0.04
0.04 - 0.06
0.06 - 0.09
> 0.9
107. 107
Let’s have a look at how we can use firmographic segmentation to analyze the
industries in which the alcohol producer operates
Alcohol
producer
Pharmaceutical
industry
Food industry
Cosmetics
industry
Fuel industry Others industry
11% 22% 31% 4% 32%
Shares in
Revenues
13% 17% 32% 3% 35%
Shares in
Gross Margin
13% 17% 32% 3% 35%
Shares in
Net Margin
108. 108
Let’s have a look at how we can divide the (B2B) customers by channels if
you were working for FMCG producer
FMCG Producer
Traditional
Stores
Convenience
Retail Chain
Supermarkets Discounts stores
E-commerces &
Marketplaces
Own
e-commerce
109. 109
Let’s have a look at the main methods of segmentation used in B2B
Segmentation
Geographic
segmentation
Firmographic
segmentation
Behavioral
segmentation
Psychographic / Role
segmentation
Continent
Country
State
Industry
Number of employees
Revenue
City Market position
Sales channels
How much they buy
Usage rate of the product
User status
Sales
Marketing
Research
Attitude towards the
product/ service
111. 111
If you operate more than 1 business you should have
a separate segmentation for every business unit.
112. 112
Let’s have a look at an example of furniture producer
Furniture Producer
B2B Sales B2C Sales
Retail chains in Western
Europe
E – Commerce in Western
Europe
Marketplace in Western
Europe
HORECA in Western Europe
Retail chains in Eastern
Europe
E – Commerce in Eastern
Europe
Ambitious
Fulfilled
Functional
Aesthetic
Marketplace in Eastern
Europe
HORECA in Eastern Europe
113. 113
Check the video on YouTube for more details
Click here to go to the video
116. 116
One of the most often used tools for segmentation is Excel. In this section, I will show
you the essential formulas that will help you segment customers and analyze them.
117. 117
In this section we will talk about the following things
How to assign categories
using HLOOKUP, VLOOKUP,
MATCH
How to assign categories
using SUMIFS
VLOOKUP function
Pivot Charts
Pivot Tables Slicers
119. 119
… A function is a preset formula in Excel and that is intended to carry
out specific calculations. Let’s have a look at how we can use it.
120. 120
In order to work correctly in Excel, a function must be written in a
specific way. Below example of SUM function that adds up 2 elements
SUM (
= A1 A5
; )
Equals sign Function name Arguments
121. 121
Let’s have a look at how we can define the following formula elements
SUM (
= A1 A5
; )
Equals sign Function name Arguments
Value in cell A1 Value in cell A5
Separator
122. 122
When writing the formula, it is worth to remember that we can use two
different separators between values, which affect the final result of the
formula
SUM (
= A1 A5
; )
Equals
sign
Function name Arguments
SUM (
= A1 A5
: )
Equals
sign
Function name Arguments
We use “;” which we call a semicolon, in order to
separate different values. In this case the function
would sum values in cell A1 and in cell A5
We use “:” which we call a colon, in order to
suggest a range of arguments from the beginning
(A1) till the end (A5). In other words here we ask
Excel, to add values in cells from A1 to A5
123. 123
If you have USA setting then instead of the semicolon you may have as a
separating sign coma
SUM (
= A1 A5
, )
Equals
sign
Function name Arguments
SUM (
= A1 A5
: )
Equals
sign
Function name Arguments
We use “,” in other words a comma, in order to
separate different values. In this case the function
would sum values in cell A1 and in cell A5
We use “:” which we call a colon, in order to
suggest a range of arguments from the beginning
(A1) till the end (A5). In other words here we ask
Excel, to add values in cells from A1 to A5
124. 124
Below the basic Excel functions that you will be using
=SUM(number1; [number2]; …))
SUM
=AVERAGE(number1; [number2]; …)
AVERAGE
=COUNT(value1; [value2]; …)
COUNT
=MIN(value1; [value2]; …)
MIN
=MAX(value1; [value2]; …)
MAX
Formula in Excel
Function Description
Function that adds all numbers
in a range of cells and returns
the result
Function that calculates
the average (arithmetic mean) of
a group of numbers
Function that counts the number
of cells that contain numbers,
and counts numbers within the
list of arguments
Function that returns the
smallest numeric value in a
range of values
Function returns the largest
value from the numbers
provided
=SUM(A1:A5)
=AVERAGE(A1:A5)
=COUNT(A1:A5)
=MIN(A1:A5)
=MAX(A1:A5)
Example
126. 126
Excel is not standardized when it comes to separators it uses. This will depend
on your settings. I use the continental European settings (Semicolons)
Semicolon Comma
This separator is used in the
continental Europe to separate
elements in the function
; ,
This separator is used in the
USA to separate elements in
the function
127. 127
That is why when you watch my movies in my formulas you will see
semicolons
SUM (
= A1 A5
; )
Equals
sign
Function name Arguments
SUM (
= A1 A5
, )
Equals
sign
Function name Arguments
This is what you will see if you have the continental
European settings if you open Excel files
We use “;” in other words a semicolon, in order to
separate different values. In this case the function
would sum values in cell A1 and in cell A5
This is what you will see if you have the continental
USA settings if you open Excel files
We use “,” in other words a comma, in order to
separate different values. In this case the function
would sum values in cell A1 and in cell A5
128. 128
Luckily if you open Excel files attached to lecture he will automatically
translate my settings to settings used by yours
Semicolon Comma
This separator you will see if
you have European settings
; ,
This separator you will see if
you have USA or similar
settings
130. 130
If you copy a formula and you don’t block it, Excel will alter the formula
using your current position
= SUM(A2:C2)
= SUM(A4:C4)
= SUM(A1:A6) = SUM(C1:C6)
131. 131
To avoid that you should block the address. We can block the address by
putting sign $ before the element you want to block
$A1
You have blocked the column A
A$1
You have blocked the row 1
$A$1
You have blocked the cell A1
132. 132
Let’s go to our example of copying a formula from D2 to D4. As you can
see the formula has adjusted – it changed the row from 2 to 4
= SUM(A2:C2)
= SUM(A4:C4)
133. 133
If we block the column and copy the formula to another row nothing
will change. Since the row was not block it will change from 2 to 4
= SUM($A2:$C2)
= SUM($A4:$C4)
134. 134
However, if you block the row with a $ before copying from D2 to D4
you will see that in D4 we will have a sum of row 2 not 4
= SUM(A$2:C$2)
= SUM(A$2:C$2)
135. 135
Now let’s use the second example in A9 we have a sum of all the cells in
column A that are between row 1 and 6
= SUM(A1:A6)
136. 136
When you copy the formula from A9 to C9 without blocking, Excel will
adjust the formula. In C9 you will be summing elements from column C
= SUM(A1:A6) = SUM(C1:C6)
137. 137
If you block the rows nothing will happen when you copy the formula from A9
to C9. The Excel will change the column from A to C as it was not blocked
= SUM(A$1:A$6) = SUM(C$1:C$6)
138. 138
However, if you block the column and copy the formula from A9 to C9 you will
see that we will be still summing up elements from column A not C.
= SUM($A1:$A6) = SUM($A1:$A6)
140. 140
Imagine we got a list of products to buy. We would like to calculate how
much we should spend to buy them.
Product
Product 1
Product 2
Product 3
Product 4
Product 5
Product 6
Quantity
10
8
3
22
4
37
Price per unit
$ 50
$ 89
$ 130
$ 90
$ 17
$ 76
141. 141
Of course, we can try do it manually, but with a large number of records
it becomes really complicated
Product
Product 1
Product 2
Product 3
Product 4
Product 5
Product 6
Quantity
10
8
3
22
4
37
Price per unit
$ 50
$ 89
$ 130
$ 90
$ 17
$ 76
10
8
3
22
4
37
x
x
x
x
x
x
50
89
130
90
17
76
=
=
=
=
=
=
500
712
390
1 980
68
2 812
6 462
142. 142
To improve this process, we can use SUMPRODUCT formula, which will do
the calculations by us and return the sum of the products of corresponding
ranges or arrays
Product
Product 1
Product 2
Product 3
Product 4
Product 5
Product 6
Quantity
10
8
3
22
4
37
Price per unit
$ 50
$ 89
$ 130
$ 90
$ 17
$ 76
143. 143
Let’s see how the SUMPRODUCT function works
Array 1 Array 2
;
(
(
= SUMPRODUCT
The first array argument whose
components you want to multiply
and then add
The second array argument whose
components you want to multiply
and then add
145. 145
What rules should be used when building analysis in Excel
Usage of colors
Consistency between sheets
Pyramid principle
1-source rule
Repetition of variables
Shortcuts
No mouse
Description
Data source
Master sheet
146. 146
The most useful functions
Basic functions Financial / Mathematical Others
SUMIF / SUMIFS
COUNTIF / COUNTIFS
HLOOKUP
VLOOKUP
MATCH
SUMPRODUCT
IF
AND / OR
IFERROR
AVERAGEIF
LEFT / RIGH / MID
FIND
CONCATENATE
YEAR / MONTH / DAY
ROUND / ROUNDUP /
ROUNDDOWN
TODAY
VALUE
WEEKDAY
RAND / RANDBETWEEN
MOD
NPV
IRR
ABS
MAX / MIN
CORREL
Pivot
Slicer
Relative addresses
Formats
Hyperlink
Remove Duplicates
Filters
Sorting
Data Validation
Trace Dependents / Precedent
Analysis Tool Pack
148. 148
Let’s start with a short definition
Vertical lookup also known as VLOOKUP is one of the most popular
functions in Excel
It’s specifically designed to navigate through database sources and
tables to retrieve data
The function performs vertical searches down a specific column by
looking for a value in the first column of a table and returning a
value on the same row in a specific column
VLOOKUP only works by looking to the right for matching
information and returns the first match only
VLOOKUP
=
149. 149
Let’s imagine that we have 2 tables in separate sheets
Table 1
Name &
Surname
Basic Salary
Person 1 $ 1 300
Person 2 $ 1 500
Person 3 $ 1 600
Person 4 $ 1 900
Person 5 $ 1 700
Person 6 $ 1 400
Bonuses
$300
$200
$550
$400
$900
$400
Table 2
Name &
Surname
Department
Person 1 Marketing
Person 2 HR
Person 3 Operations
Person 4 Finnace
Person 5 Accounting
Person 6 IT
150. 150
We would like to combine data using VLOOKUP function. To do that, we
should transfer data from column “Department” from Table 2 to Table 1
Table 1
Name &
Surname
Basic Salary
Person 1 $ 1 300
Person 2 $ 1 500
Person 3 $ 1 600
Person 4 $ 1 900
Person 5 $ 1 700
Person 6 $ 1 400
Bonuses
$300
$200
$550
$400
$900
$400
Table 2
Name &
Surname
Department
Person 1 Marketing
Person 2 HR
Person 3 Operations
Person 4 Finnace
Person 5 Accounting
Person 6 IT
Department
151. 151
Once you apply the VLOOKUP function the right values will appear in
Table 1
Table 1
Name &
Surname
Basic Salary
Person 1 $ 1 300
Person 2 $ 1 500
Person 3 $ 1 600
Person 4 $ 1 900
Person 5 $ 1 700
Person 6 $ 1 400
Bonuses
$300
$200
$550
$400
$900
$400
Table 2
Name &
Surname
Department
Person 1 Marketing
Person 2 HR
Person 3 Operations
Person 4 Finnace
Person 5 Accounting
Person 6 IT
Department
Department
152. 152
Once you apply the VLOOKUP function the right values will appear in
Table 1
Table 1
Name &
Surname
Basic Salary
Person 1 $ 1 300
Person 2 $ 1 500
Person 3 $ 1 600
Person 4 $ 1 900
Person 5 $ 1 700
Person 6 $ 1 400
Bonuses
$300
$200
$550
$400
$900
$400
Table 2
Name &
Surname
Department
Person 1 Marketing
Person 2 HR
Person 3 Operations
Person 4 Finnace
Person 5 Accounting
Person 6 IT
Department
Department
Marketing
HR
Operations
Finnace
Accounting
IT
153. 153
The Department column can be inserted in different places in the original
table. Below examples of 2 options.
Option 1 Option 2
Name &
Surname
Basic Salary
Person 1 $ 1 300
Person 2 $ 1 500
Person 3 $ 1 600
Person 4 $ 1 900
Person 5 $ 1 700
Person 6 $ 1 400
Bonuses
$300
$200
$550
$400
$900
$400
Department
Marketing
HR
Operations
Finnace
Accounting
IT
Name &
Surname
Basic Salary
Person 1 $ 1 300
Person 2 $ 1 500
Person 3 $ 1 600
Person 4 $ 1 900
Person 5 $ 1 700
Person 6 $ 1 400
Bonuses
$300
$200
$550
$400
$900
$400
Basic Salary
$ 1 300
$ 1 500
$ 1 600
$ 1 900
$ 1 700
$ 1 400
Bonuses
$300
$200
$550
$400
$900
$400
Department
Marketing
HR
Operations
Finnace
Accounting
IT
154. 154
Let’s see what the VLOOKUP function looks like
The record you
want to look for
= VLOOKUP
Table where we can
find the record
;
From which column
should the formula
get the data
;
(
(
Type of match
;
155. 155
For our example it would roughly look like this
Name & surname of
the person I’m
looking for
Table 2 with the
departments
;
In which column (in
Table 2) is the
department
;
(
(
0
;
The record you
want to look for
Table where we can
find the record
;
From which column
should the formula
get the data
;
(
(
Type of match
;
= VLOOKUP
= VLOOKUP
156. 156
What is exact or approximate match in VLOOKUP and how to use it
Type of match
Exact match
(„0” or „False”)
Approximate match
(„1” or „True”)
Means an exact match
If there is no value that is equal
to the searched value, the
error # N / A is returned! (no
data)
Stands for approximate match
It’s useful when you will be
looking for a value within
certain intervals
Approximate match is the
default range lookup in the
formula
When no instruction is given,
Excel assumes the lookup
refers to an approximate
match
158. 158
Let’s imagine that we have 2 tables in separate sheets. We want to
assign the grade to a person based on his performance on a test
Name &
Surname
Test results
Person 1 10%
Person 2 55%
Person 3 79%
Person 4 80%
Person 5 93%
Person 6 42%
Grade
Table 1 Table 2
Points from … Points to …
0% 20%
21% 40%
41% 60%
61% 80%
81% 90%
91%
Grade
F
E
D
C
B
A
159. 159
In Table 1 we have results of test for every person
Name &
Surname
Test results
Person 1 10%
Person 2 55%
Person 3 79%
Person 4 80%
Person 5 93%
Person 6 42%
Grade
Table 1 Table 2
Points from.. Points to..
0% 20%
21% 40%
41% 60%
61% 80%
81% 90%
91%
Grade
F
E
D
C
B
A
160. 160
Grades are defined by intervals in Table 2. For example a person will get
a grade E, if the test result is between 21% to 40%
Name &
Surname
Test results
Person 1 10%
Person 2 55%
Person 3 79%
Person 4 80%
Person 5 93%
Person 6 42%
Grade
Table 1 Table 2
Points from.. Points to..
0% 20%
21% 40%
41% 60%
61% 80%
81% 90%
91%
Grade
F
E
D
C
B
A
161. 161
If he or she got between 61% and 80% we would give him or her C
Name &
Surname
Test results
Person 1 10%
Person 2 55%
Person 3 79%
Person 4 80%
Person 5 93%
Person 6 42%
Grade
Table 1 Table 2
Points from.. Points to..
0% 20%
21% 40%
41% 60%
61% 80%
81% 90%
91%
Grade
F
E
D
C
B
A
162. 162
We would like to combine data using VLOOKUP function with ranges. At the
end we would like to transfer grades from Table 2 to Table 1
Name &
Surname
Test results
Person 1 10%
Person 2 55%
Person 3 79%
Person 4 80%
Person 5 93%
Person 6 42%
Grade
Table 1 Table 2
Points from.. Points to..
0% 20%
21% 40%
41% 60%
61% 80%
81% 90%
91%
Grade
F
E
D
C
B
A
163. 163
Since here we have intervals that define our choices in the VLOOKUP
function in the end for the type of Match we should put 1
Test result
Table with rules for
grades
;
In which column
are the grades?
;
(
(
1
;
The record you
want to look for
Table where we can
find the record
;
From which column
should the formula
get the data
;
(
(
Type of match
;
= VLOOKUP
= VLOOKUP
164. 164
Check the video on YouTube for more details
Click here to go to the video
168. 172
Let’s imagine that we have 2 tables in separate sheets
Table 2
Commission Interest rate
2% 1,5%
Bank C
Bank A
$ 20 000
Bank B
$ 30 000
Bank C
$ 25 000
Loan
amount
Table 1
Commission
0%
1%
Interest rate
5%
2%
Bank A
Bank B
2% 1,5%
Bank C
169. 173
We would like to combine data using HLOOKUP function. To do that, we
should transfer data from row “Loan amount” from Table 2 to Table 1
Table 2
Commission Interest rate
2% 1,5%
Bank C
Bank A
$ 20 000
Bank B
$ 30 000
Bank C
$ 25 000
Loan
amount
Table 1
Commission
0%
1%
Interest rate
5%
2%
Bank A
Bank B
2% 1,5%
Bank C
Loan
amount
170. 174
Let’s see what the HLOOKUP function will do
The cell where we
have the Bank
name
Table 2 with loan
amounts
;
From which raw I
should get the data
;
(
(
Value you want to
lookup
Where you want to
find lookup value
;
From where you
want to fetch the
resulting value
;
(
(
0
;
Type of match to
perform; exact or
approximate
;
= HLOOKUP
= HLOOKUP
172. 176
Imagine that you have a list with names of fruits. If you are looking for
pineapple, the MATCH function will allow you to identify its position on the list
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
A
1
2
3
4
5
6
7
174. 178
Let’s see how the MATCH function works
What I’m looking
for?
Where I’m looking
for
; ;
(
(
Match type
The word
“pineapple”
The fruit list
; ;
(
(
0
= MATCH
= MATCH
175. 179
Below the examples what kind of match type we can we can distinguish
in MATCH function
Type of match
Match type „1” Match type „0”
Searches for a value greater
than the lookup value
Returns the exact match
Match type „-1”
Returns the value less than the
lookup value
176. 180
Check the video on YouTube for more details
Click here to go to the video
178. 182
Imagine that to the list with the names of fruits, we have added data
related to quarterly sales
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Sales in Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Sales in Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Sales in Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Sales in Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
179. 183
The INDEX function returns a value in a table based on a set of
coordinates for the column and row
180. 184
We can use INDEX function for example to find out what was the
pineapple sales in the second quarter
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Sales in Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Sales in Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Sales in Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Sales in Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
181. 185
Let’s see how the INDEX function works
Table with the data
In what row is the
data I’m looking for
; ;
(
(
In what column is the
data I’m looking for
Table with sales data
Row in which we
have result for
pineapples
; ;
(
(
Column in which we
have Sales in Q2
= INDEX
= INDEX
182. 186
Knowing how this function works, let's see how we can describe it using
following cell addresses as example
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Sales in Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Sales in Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Sales in Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Sales in Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
183. 187
Let’s see how the INDEX function works
Table with the data
In what row is the
data I’m looking for
; ;
(
(
In what column is the
data I’m looking for
A1:E7 5
; ;
(
(
3
= INDEX
= INDEX
184. 188
But what we should do in case we want to create a dynamic lookup? We can
combine functions INDEX and MATCH – let’s see how it works in next lecture
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Sales in Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Sales in Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Sales in Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Sales in Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
186. 190
Now that we've covered the basics of INDEX and MATCH, let’s have a
look at how we can combine the two functions in a single formula
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
187. 191
Let’s start with a short example. Imagine that we want to write a
formula that returns the sales number in Q3 for a peach
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
188. 192
From the last section we know, that we can use INDEX formula to find a
looking value, but we have to complete the information about the column
and row ourselves
Table with the data
In what row is the
data I’m looking for
; ;
(
(
In what column is the
data I’m looking for
A1:E7 4
; ;
(
(
4
= INDEX
= INDEX
189. 193
If we don't want to hardcode numbers, we should create
a dynamic lookup and combine INDEX formula with MATCH formula
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
190. 194
Let’s try using INDEX and MATCH formula, find out in which row the
searched value is located
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
Fruit Peach
Q3 $ 12 456
F G H
191. 195
Let’s see how the INDEX & MATCH formulas works together when we
look for the row using the match function
Table with the
data ;
(
= INDEX
In what column is
the data I’m
looking for
; )
In what row is the data I’m looking for
(in this case the fruit)
Table with the
data
What fruit I’m
looking for
; ;
(
Where I’m
looking for it
= INDEX ; Match type
MATCH ( )
In what column is
the data I’m
looking for
; )
192. 196
Let’s see how the INDEX & MATCH formulas works together when we
look for the row using the match function
Table with the
data
What fruit I’m
looking for
; ;
(
Where I’m
looking for it
= INDEX ; Match type
MATCH ( )
In what column is
the data I’m
looking for
; )
A1:E7 “Peach”
; ;
( A1:A7
= INDEX ; 0
MATCH ( ) 4
; )
A1:E7 H1
; ;
( A1:A7
= INDEX ; 0
MATCH ( ) 4
; )
193. 197
For the Peach selected in H1, the MATCH function would return that it is in row
4 (in range A1:A7). This information would be used by INDEX function. If you
change the fruit in H1 it would automatically adjust
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
Fruit Peach
Sales in Q3 $ 12 456
F G H
194. 198
If you change to Banana in H1 we would return the sales in Q3 for Banana
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
Fruit Banana
Sales in Q3 $ 6 776
F G H
195. 199
Sales
Having information in which row the searched value is located. Let's try
to do the same with the column.
Type of fruit
Orange
Grapefruit
Peach
Pineapple
Raspberry
Banana
Q1
$ 3 456
$ 2 386
$ 3 456
$ 6 776
$ 10 562
$ 17 253
Q2
$ 6 776
$ 2 386
$ 3 456
$ 3 456
$ 2 386
$ 15 253
Q3
$ 7 253
$ 3 456
$ 12 456
$ 6 765
$ 2 386
$ 6 776
Q4
$ 3 456
$ 2 373
$ 3 456
$ 6 476
$ 2 386
$ 12 253
A B C D E
1
2
3
4
5
6
7
Fruit Peach
Quarter Q3
F G H
$ 12 456
196. 200
Once we change the formula we don’t have to type in the row and column.
They will be found by MATCH function once we select in H1 the fruit type and
H2 Quarter we are interested in
Table with the
data
= MATCH
; (
(
Where I’m
looking for it
Match type
What fruit I’m
looking for ; ; ) MATCH (
Where I’m
looking for it
Match type
What quarter
I’m interested
in
; ; )
;
INDEX
Table with the
data
= MATCH
; (
(
Where I’m
looking for it
Match type
What fruit I’m
looking for ; ; ) )
;
INDEX In what column is the data I’m looking for
197. 201
Once we change the formula we don’t have to type in the row and column.
They will be found by MATCH function once we select in H1 the fruit type and
H2 Quarter we are interested in
Table with the
data
= MATCH
; (
(
Where I’m
looking for it
Match type
What fruit I’m
looking for ; ; ) MATCH (
Where I’m
looking for it
Match type
What quarter
I’m interested
in
; ; )
;
INDEX
A1:E7
= MATCH
; (
( A1:A7 0
“Peach” ; ; ) MATCH ( A1:E1 0
“Q3” ; ; )
;
INDEX
A1:E7
= MATCH
; (
( A1:A7 0
H1 ; ; ) MATCH ( A1:E1 0
H2 ; ; )
;
INDEX
198. 202
To sum up instead of putting specific row and column number I can make the
whole formula dynamic using 2 MATCH functions
Table with the
data
= ;
( )
;
INDEX
Table with the
data
= MATCH
; (
(
Where I’m
looking for it
Match type
What fruit I’m
looking for ; ; ) MATCH (
Where I’m
looking for it
Match type
What quarter
I’m interested
in
; ; )
;
INDEX
In what column is the data I’m looking for
(in our case the quarter of the year)
In what row is the data I’m looking for
(in our case the fruit)
199. 203
Let’s imagine that you work fro producer of milk products. The producer has decided
to use demographic market segmentation. Assign specific customers to segments
200. 204
The firm operates on many markets
They want to invest in new
products
To do that they have to segment
the market
A few information about the firm
They have decide to choose
demographic segmentation
201. 205
Let’s see how they have defined the segments
Less than 40
Age
NO
YES
Married? Employed?
NO
YES
NO
YES
Kids at home?
NO
YES
NO
YES
More than 40
NO
YES
NO
YES
NO
YES
Segments
Supported
persons
Adult singles
Young Family
Mature Family
Empty Nest
202. 206
A small tip how to do it in Excel
You list all options
To every option you
assign a number and
the name of the
segment
Use SUMIFS function
to assign the number
representing the
segment
Use VLOOKUP function
to translate the
number into name
Analyze Segments
204. 208
Pivot Tables enable you do to a lot of things
Pivot Tables
Fast analytics Filter things
Group big tables into
categories
Dashboards of KPIs
From general to specific
analyses
205. 209
For some purposes can be replaced with other functions
Pivot Tables
COUNTIFS
SUMIFS
AVERAGEIFS
206. 210
Essential Excel for Management
Consultants
A practical Guide
Post
For more on Excel check my post on Essential Excel for Management
Consultants
207. 211
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Segmentation for Management
Consultants & Business Analysts
$190
$19
Click here to check my course
212. 216
Imagine that you were hired to help the alcohol producer analyze customer
segments and check their shares in revenues as well as margin generation.
213. 217
The manufacturer operates in many
European markets
The company produce and sales 3 products:
Ethanol 95, Ethanol 99 and Vodka
They have segmented customers by
industries
A few information about the firm
Analyze segments
215. 219
Let’s imagine that you were asked to analyze customer segments and
baskets using selected receipts from your client – a chain of gift stores.
216. 220
A few information about the firm that we will be analyzing
The firm has a chain of gift stores
They offer small gifts, books, stationery and
fashion items
You were asked to analyze behavior of
different segments
You also have to analyze different types of
baskets
219. 223
In some cases, you have no access to internal data, and you have to attempt to segment
customers just by looking at external data. Let’s have a look at how it can be done in practice.
220. 224
In this section we will talk about the following things
Customer review analysis –
case study
Sites for comparing
products
Online store-checks
analysis – case study
222. 226
In many cases you will have to do not only store checks in physical stores
but also in online stores. We will discuss this subject in this lecture.
223. 227
Before going deeper into this lecture I would recommend revising the
lecture on offline store-checks
Offline store-check
224. 228
In the online store checks you can compare different types of stores
Compare different
online stores
Compare offline to
online for the same
brand
Compare offline to
online for different
brands
For example H&M online to
Zara online
For example H&M online to
H&M offline
For example H&M online to
Zara offline
Understand difference in
product range and pricing
used in the online world
Understand difference in
product range and pricing
policy used by the same
brand in offline and online
worlds.
Do they have the same policy
or they use different sets of
rules for the online and
offline world
You want to compare 2
brands
For one of them you don’t
have the offline data i.e.
from another country. In this
case you can use the online
data as a proxy to make the
comparison.
This will require adjustments
so you can trulely ompare
the 2 brands
Compare different
offline stores
For example H&M offline to
Zara offline
Understand difference in
product range and pricing
used in the offline world
Example
Purpose
225. 229
Below the main methods you can use to do the online store-check
Create a script to
automate the
process
Use data scraping
tools
Do the store-check
manually
Buy data from the
3rd party
Use the API or ask
for data the
provider
227. 231
During online store-check you most likely will be gathering the following
information
Name, photos of the product &
assigned categories
Prices of specific products
Available quantity
# of reviews
Rules for organizing data on the
webpage
Rules for presenting data
Additional information on the
availability in offline stores
Discounts on the product
229. 233
Let’s see how you can use the online store-checks to analyze the market.
This time around we will do a store-check for cosmetics
230. 234
A few information about what you have to do
You will concentrate only on
cosmetics for the face
You have data on 200 SKUs
You have information on the
brand, price, group, size
Analyze the data from the online
store-check
232. 236
The information from customers is extremely important. Nowadays we have plenty of sites
that gather customers reviews. We will discuss how you can use them in market research
233. 237
Below a short summary of what you can learn from sites with review
What customers pay attention
to
Customer Segments
What current players are good
at
What current players don’t do
too well
You can estimate NPS (Net
Promoter Score)
You can check how popular
certain brands / solutions are
In some cases you can contact
the reviewer
You learn the language used by
the customers
237. 241
Imagine that you were hired by a firm to analyze the emailing software market and to tell
them whether there is a niche for them to create a new product. Use the customer reviews
238. 242
A few information about what you have and what are your goals
You decided to concentrate on the
Mailchimp customers
Your boss proposed to concentrate
only on the users that have 3 stars
You have gathered data from 900
users by data scraping
Propose on which aspect they
should concentrate
241. 245
Let’s now have a look at segmentation for restaurants. We will also talk
about things that you should do before you start the segmentation.
242. 246
In this section we will talk about the following things
Example of customer
segmentation
Introduction to analyzing
the target group
How to define segments for
the restaurant market
Overview of some
techqniues that you can
use to research customers
244. 248
Type for criteria you can use
Gender
Age
Location
Money spend per meal
Frequency of visits
Type of cuisine you are serving
Examples
• Usually men and women
• 0-12-year-old
• 13-18-year-old
• 19-25-year-old
• 26-35-year-old etc.
• The capital
• Big city, Average size city
• Suburbs, Center
• By states, provinces, districts
• Etc.
• 10-20 USDmax
• 21-35 USD
• 36-60 USD etc.
• Italian
• Fast food
• Sushi etc.
• daily
• 1 a week
• 1 a month
• From time to time (a few times a year)
There are number of criteria you can use to segment your market
245. 249
We recommend choosing 2 criteria to create sensible segmentation. Below an
example of such an attempt – we took the frequency of visit and the spending per 1
visit to divide the whole market into understandable pieces
Casual
dating
Wealthy
nomads
Stay at
home
Fast food
freaks
Frequency of visits
Spending per 1 visit
246. 250
After you have looked at the market it makes sense to pick 1 segment that will
become your primary target. For them you will be building the restaurant, so
you should know their preferences and needs
Casual
dating
Wealthy
nomads
Stay at
home
Fast food
freaks
Frequency of visits
Spending per 1 visit
247. 251
Age:
Expectation to design:
Frequency of dining out
Average Spending
Couples age 25-35 with higher
salaries
Cozy, with little resemblance to
chains
1 time every 2 months
100 USD / visit
Expectation to location: Interesting, unique
Expected CAC 200 USD
Time spend in the restaurant on a
1 single visit
They spend a lot – on average
1.5 h per visit
Prices sensitivity Small
After choosing the segment describe your ideal customer from this
segment
249. 253
Who you concentrate on?
What is their socio and demographic
profile?
What is important to them
How do they communicate?
What is their consumption level?
What they like and dislike in the
concept?
You cannot build everything for everybody so you should rather try to be
something for somebody – in this case specific segment. Therefore, you have to
answer some questions
250. 254
Targeted customer
segment
Off-line interviews
On-line interviews
Marketplaces with recommendations
Facebook Audience Insights
Analyze profiles of your customers on
social media
Ready made reports on customer
segments
Food Bloggers
The last group of on-line tools puts at your disposal numerous solutions giving
you in-depth knowledge of your competitors and markets
252. 256
You can watch someone that does not necessarily have to reply with the
same;
Do not spam these people, only when they mentioned about an interesting
question you can speak to them;
It allows you to reach a large demographic data;
You do not have to have their in your contacts;
There are specific groups you can join. They focus on specific topics
All contacts are mutual
By searching you can specify the size of the market, i.e. restaurants,
because they have own pages
You can also join groups and invite them to participate in the tests or
interview
Family, Friends, Neighbours
Where Type of business Comments
Twitter
LinkedIn
Facebook
Limited number of respondents;
Small differences in demographics;
The answers may be subjective;
On the other hand, you can count on friends for honest answers
Mobile application
Site media
Retail
B2C Products
B2C Services
UGC
SaaS
SaaS
Site media
B2B Services
B2B Products
B2B
Mobile application
SaaS
Site media
all
Where you can find respondents?
253. 257
Minimum of 15 respondents
Talking face to face
Neutral place
Do not record - take notes
Prepare script of the interview with
ready questions
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
There are a few rules of interviewing to keep in mind:
254. 258
Do not show
your
emotions
Ask specific
questions
Dwell on a
subject
Watch for
signals
Avoid biased expressions like: "Do you agree with that ..." – it may lead them to the answer you expect; ask questions in
reverse, so that he has to disagree with you to show that he cares about the problem
When the respondent knows something about you, i.e. you're a vegetarian, he will be inclined to positively respond to
questions about the protection of the environment
Look neutral, do not send signals, and do not suggest any point of view
We get an honest answer when we put the respondent in uncomfortable situations, for example ask for prepayment of 100
EUR
The more specific questions, the more realistic answer
Ask about friends. Do not ask him if he "smokes pot", but "what percentage of your friends are doing it" – reflects his approach
Ask 5 times the question "why"
You can interview accompanied by a partner who will follow body language of respondents; maybe something causes nervous
ticks and indicates a sense of discomfort
Columbo-style question: unexpected question that asked after you had already said goodbye to the respondent. In this way, you
can surprise and confirm or deny something important, what has been said earlier in an interview
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
People say what they think the other person wants to hear, so use
the 4 measures to prevent "guiding the witness" (push polling)
256. 260
Find a problem worth SOLVING Find a solution that someone will WANT
TO PAY for
This will determine the features and functionalities of
the MVP
As a part of the market research you have to define what characteristics should
have in your MVP. Off-line interviews are perfect for this purpose
258. 262
Minimum of 15 respondents
Talking face to face
Neutral place
Do not record - take notes
Prepare script of the interview with
ready questions
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
There are a few rules of interviewing to keep in mind:
259. 263
Set the stage
Identify the
segment
Introduce the
problem
Test the
problem
Verify the
solution
Ask for
something
Highlight the aim of the meeting
Explain what you will talk about and what you will ask him to do
Check which segment he/she belongs to
Collect the demographic data and specify the segment to which belongs the respondent
Explain the problem
Explain how you came across the problem and why you believe it is important
Sometimes not to lead the witness speak generally about problems in the respondent field or skip this stage entirely
/move it to the end of the interview
Ask the respondent to rank problems from the most important to the least important
Ask about other related issues / problems they think are worth mentioning
Try to understand respondent ‘s point of view
Discuss problems in the order of importance and how the respondent solves them what solution he is using
If he does not show interest this it means that there is a discrepancy between your business model and the reality
Ask for another meeting to discuss the solution (in the future this may be one of the first customers) once you have
something that shows
Ask for several contacts to his friends to also perform a conversation with them
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
While interviewing have in mind the following advices:
260. 264
YES
Money
Did they already
try to solve the
problem?
How interested
is he?
Nonverbal
communication
The responder wants to pay for
your solution right away
The respondent tried himself to
solve this problem
The respondent has a strong interest and
passion in talking about the problem
The respondent is animated and
leaning forward (positive body
language)
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
Pay attention to the signs saying that your idea is a good one:
261. 265
NO
Focus
Did they already
try to solve the
problem?
How interested
is he?
Nonverbal
communication
Respondent is not focused on
the conversation and the
topic; seems distracted
Respondent did not
undertake any attempts to
solve the problem
The respondent talks a lot
about everything but not
about the problem
The respondent is slouching in his
chair of his shoulders are slumped;
shows a lack of any interest (negative
boy language
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
Disturbing signs that may show that the idea is not entirely good:
262. 266
Is the problem serious?
Does the problem affect a
large number of people?
How the problem has been
solved so far?
or
or
Use interviews to answer 3 important questions:
263. 267
Design assessment criteria Define responses Assign points
4-10 criteria 3-4 closed replies Fore example. use scoring system
from 0 to 10 points per answer
Come up with at least 4 criteria for
scoring respondent's behavior
during the meeting
Come up with 3 types of answers, to
which you can assign your
observations, for example:
Yes
More or less,
No,
or
Yes, by itself,
Yes, at my request,
No
Assign scores to answers for
example:
Yes-10 points ,
More or less-5 points,
No-0 points
Set the threshold for judging
whether it makes sense to solve
the problem or not – should be
around 75% of Maximal Total Score
# options
Description
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
You need to assess all interviews according to standardized
scores
264. 268
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
Is the total score above the
threshold?
YES
Proceed with market
research
NO
Abandon the idea
Look for a subset of
interviewee for which the
total score was much
higher
If the total score is below set threshold then you should
reconsider what to do next
265. 269
Did the respondent sort by importance the problems
presented by you?
Has the respondent been undertaking any active steps to
solve his problem?
Was the respondent focused during the interview and engaged
in the conversation?
Did the respondent agree to another meeting related to the
presentation solution?
Did the respondent refer you to other people with whom you
could talk?
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
Below you can find some examples of evaluation criteria allowing you
to check what is the attitude of the respondent to the problem
266. 270
TOP-DOWN ANALYSIS OF AVERAGE RESTAURANT REVENUES
The total amount spend by people in the USA on eating in
restaurants
The percentage of the amount spend in NY
The number of restaurants
The calculation of revenues per one restaurant
BOTTOM-UP ANALYSIS OF AVERAGE RESTAURANT REVENUES
The average number of tables in a restaurant
The percentage of reservation of tables and average price per
table
Multiplying the number of days in the year (including seasonal
effects)
Using the top-down and bottom-up analysis you can calculate for how many people
the problem is interesting enough so they can spend some money on the solution
270. 274
Do not show
your
emotions
Ask specific
questions
Dwell on a
subject
Watch for
signals
Avoid biased expressions like: "Do you agree with that ..." – it may lead them to the answer you expect; ask questions in
reverse, so that he has to disagree with you to show that he cares about the problem
When the respondent knows something about you, i.e. you're a vegetarian, he will be inclined to positively respond to
questions about the protection of the environment
Look neutral, do not send signals, and do not suggest any point of view
We get an honest answer when we put the respondent in uncomfortable situations, for example ask for prepayment of 100
EUR
The more specific questions, the more realistic answer
Ask about friends. Do not ask him if he "smokes pot", but "what percentage of your friends are doing it" – reflects his approach
Ask 5 times the question "why"
You can interview accompanied by a partner who will follow body language of respondents; maybe something causes nervous
ticks and indicates a sense of discomfort
Columbo-style question: unexpected question that asked after you had already said goodbye to the respondent. In this way, you
can surprise and confirm or deny something important, what has been said earlier in an interview
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz; Running Lean, Ash Maurya
People say what they think the other person wants to hear, so use
the 4 measures to prevent "guiding the witness" (push polling)
271. 275
You can watch someone that does not necessarily have to reply with the
same;
Do not spam these people, only when they mentioned about an interesting
question you can speak to them;
It allows you to reach a large demographic data;
You do not have to have their in your contacts;
There are specific groups you can join. They focus on specific topics
All contacts are mutual
By searching you can specify the size of the market, i.e. restaurants,
because they have own pages
You can also join groups and invite them to participate in the tests or
interview
Family, Friends, Neighbours
Where Type of business Comments
Twitter
LinkedIn
Facebook
Limited number of respondents;
Small differences in demographics;
The answers may be subjective;
On the other hand, you can count on friends for honest answers
Mobile application
Site media
Retail
B2C Products
B2C Services
UGC
SaaS
SaaS
Site media
B2B Services
B2B Products
B2B
Mobile application
SaaS
Site media
all
Where you can find respondents?
272. 276
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Segmentation for Management
Consultants & Business Analysts
$190
$19
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275. 279
The Jobs to Be Done concept is a great tool to find a way to improve your
business or create a new business. That’s why we will discuss it in this section
276. 280
In this section we will talk about the following things
Jobs To Be Done –
Examples
Jobs to Be Done – How to
use it to improve a product
Jobs To Be Done –
Definition
Who is your competitor?
Jobs to Be Done – How to
find them
Jobs to Be Done – How to
use it to create a new
product
278. 282
Let’s start with a short definition
When we buy a product we essentially hire the product to get a
specific job done.
We define the “job” as the progress that the person is trying to
make in particular circumstances and area
The very same job can be done by totally different products or
services
Therefore, don’t fall in fall with your product and don’t look too
narrowly at the competitive landscape
Be obsessed with the problem and the job that the customer hires
you to do
The same product for the specific customer can perform different
jobs in different circumstances
Jobs To Be Done
Theory =
279. 283
Let’s see the process that will help you understand the Job To Be Done
for specific group of customers
What progress the
person is trying to
achieve
What are the
circumstances of the
struggle
What are the
obstacles preventing
the customer from
progress
Are consumers
making do with
imperfect solutions?
How customers
defines a better
solution?
You have to
understand what
are the functional,
social and
emotional
dimensions of the
desired progress
In other words how
the end result
should look like so
the customer is
happy
You have to
understand the
circumstances in
which the struggle
is happening
In other words you
have to understand
the specific context
of the customer
When and where it
happens, what is
doing in the
meantime and with
whom
You have to
understand what
the customers
struggles with, what
obstacles prevent
him from achieving
the progress
In other words what
is stopping him
from achieving the
progress he desires
You want to know
whether the
customers are using
imperfect solutions
to their problem.
Some customers
will use some sort
of workaround,
combine 2-3
separate products
or services to get
the job done
There may be also
some sort of
compensating
behavior
You should find out
how customers
define “quality”, in
what dimensions
the new product or
services has to be
You should also
understand the
tradeoffs he is
willing to make to
get this better
performance
280. 284
Bear in mind that the customer hires the product more than one time
Big Hire
First moment of truth
This is the moment when you decide
to buy the product or a service in the
hope that he will get the job done
Little Hires
Second moments of truth
This is the moment (after the
purchase) when he puts the product
to use and can either get the
progress that he was hopping for or
he main be disappointed with the
result
If the disappointment is big and there
is a better alternative on the horizon
he will fire the product
282. 286
Coffee
Let’s try to define what jobs does the coffee
Helps me become
focused
I like the taste
It is an opportunity to
meet people
Acceptable break at
work
Warms me up
Wakes me up
283. 287
Facebook
Let’s try to define what jobs does Facebook for an average customer
Stay in touch with
people
Efficient way to
communicate
I use it to kill boredom
I can show off
I can see what my ex-
boyfriend does
Gives me adrenaline
boost
284. 288
Check the video on YouTube for more details
Click here to go to the video
285. 289
Jobs to Be Done – How to use it
to improve an existing product
286. 290
Let’s see the process that will help you understand the Job To Be Done
for a specific group of customers
Understand the Jobs
to Be Done
Define the changes
to your product
Implement the
changes and adjust
the organization
Change the
positioning and the
messaging
Keep Focused on the
Jobs to Be Done
Define what
progress the
customers desires,
what he hires you
to do with your
product or a service
Try to understand
also the
experiences the
customers seeks in
order to make the
progress
Analyze the
functional,
emotional and
social dimension of
their desire for
progress
List the obstacles
that are preventing
the customer from
the achieving the
desired progress
Estimate what is the
cost and benefit of
implementing it
Decide which things
you will do in the
first order / what
obstacles you will
remove
Start one by one
removing the
obstacles
preventing the
customer from the
desired progress
Change the
organization of the
firm to be centered
around the Jobs to
Be Done
Change the way you
communicate with
the customers
Adjust your
messaging /
marketing towards
the job that you are
solving, the
progress you are
helping the
customer to achieve
Adjust customer
experience
Make sure that you
don’t try to satisfy
too many jobs
Don’t dilute too
much your brand by
adding too many
new products and
services that are
not linked to the
main job
Design the KPI
system to measure
how well you do the
job
Adjust your
processes
Adjust your
organizational chart
Pay attention to
leading input KPIs
287. 291
Jobs to Be Done – How to use it
to create a new product
288. 292
Let’s see the process that will help you understand the Job To Be Done
for specific group of customers
Understand the Jobs
to Be Done
Identify who is
currently doing the
Job
Create the prototype
of the product
Start selling &
marketing
Keep Focused on the
Jobs to Be Done
Define what
progress the
customers desires,
what he hires you
to do with your
product or a service
Try to understand
also the
experiences the
customers seeks in
order to make the
progress
Analyze the
functional,
emotional and
social dimension of
their desire for
progress
List the firms that
deliver the progress
/ do the job
Identify in what way
they fail the
customer
Identify the non-
users that have the
problem but don’t
hire any product at
all
Identify the
workaround used
by the customers
Create the
prototype of the
product that you
can use to learn in
practices with the
customer
Modify the solution
till you reach
product-market fit –
your product does
the job so well that
we majority of
customers would be
unhappy if your
product disappears
Define what the
customers have to
fire to hire you
Adjust the
positioning and the
messaging to the
jobs you have
identify
Organize the firm
around the delivery
of the job much
better than current
alternatives
Identify and use to
your advantage the
push and pull forces
that may support
the adoption of
your product
Adjust customer
experience
Make sure that you
don’t try to satisfy
too many jobs
Don’t dilute too
much your brand by
adding too many
new products and
services that are
not linked to the
main job
Design the KPI
system to measure
how well you do the
job
Adjust your
processes
Adjust your
organizational chart
Pay attention to
leading input KPIs
289. 293
Check the video on YouTube for more details
Click here to go to the video
291. 295
There are 5 main ways to find the Jobs to Be Done
Observe jobs in your
own life
Find a problem, a job that
is poorly solved or not
solved at all
If you observe a small
number of customers
most likely there will be
others as well
Analyze
non-consumption
In this method we
concentrate on people
that don’t hire any
product or service
In some cases it may
suggest that the existing
solutions are not
sufficiently good so the
customers choose to do
nothing instead
In other words Jobs to Be
Done exists but the
solutions are crappy
Ask yourself a question
who is not using your
product and why?
You can use a top-down
approach for that
Analyze
workarounds &
compensating behaviors
In this method you analyze
cases where a lot of
people are using some
sort of workarounds to
solve their problem and
achieve progress
The workaround suggests
that the jobs is really
important to the customer
so he is using substitutes
or combining together
different products to get
the job done
Negative jobs
Look for what people
DON’T want to do
People are able to pay for
totally removing certain
things from their life
Spot unusual usage of
the product
You can learn a lot by
observing how customer
use your product,
especially if the product is
used in a different way
than the company has
envisioned
292. 296
Let’s have a look at some examples
Observe jobs in your
own life
Analyze
non-consumption
Analyze
workarounds &
compensating behaviors
Negative jobs
Spot unusual usage of
the product
Khan Academy
Sony Walkman
Airbnb hosts
Kimberly-Clark & briefs
(diapers for adults)
Open Table
ING Direct – accounts for
low net worth people
Procedures in Healthcare
(vaccination)
Udemy Teachers
Podcasters / YouTuber /
Bloggers
Cosmetics for men
Arm & Hammer –
Baking Soda
Arm & Hammer –
Baking Soda
GM – OnStar system
Autopilot in airplanes
294. 298
Netflix
Let’s guess the main competitors of Netflix
HBO GO
Disney +
Hulu
Amazon Video
Amazon Prime
Other streaming platform
Cable channels
Traditional TV
providers
Traditional TV
Cinema
Cinema
Video on demand
Online platforms of
traditional TV
YouTube
Facebook
Games including
Twitch
Others
Other online entertainment
295. 299
Coffee at Starbucks
Let’s guess the main competitors of a coffee at Starbucks
Tea
Juice
Water
Shakes
Other beverages at
Starbucks
Coffee at home
Coffee at work
Coffee at other places Other places for a meeting
Coffee at other
restaurant
Vending Machine
Working at home
Office
Co-work space
Others
Other places to work
Cinema
Restaurant
Walk in the park
Others
296. 300
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Segmentation for Management
Consultants & Business Analysts
$190
$19
Click here to check my course