In terms of your example, I think it comes down to one of those “it depends” questions.

Will feature A, delivered to these other segments be enough, by itself, to get people to purchase in those segments (and delight them, in your example)? If so, then yes – feature A makes much more sense – you get immediate payback. If feature A is only one of 3 features that each segment must have to really be delighted (and drive exponential / word-of-mouth marketing style growth in those segments), then I am inclined to focus my efforts on a single segment first.

Ultimately it all comes down to the math, right? I guess what I’m trying to highlight is that there is a better-than-linear growth opportunity in each segment, but to achieve it, you have to address all of a particular segment’s “delight” requirements before you can achieve it.

And I guess I’m making the assumption that geometric growth in one segment exceeds a slower, incremental growth across multiple segments.

Ultimately, you should compare the results of the “be some things to all people, and we will slowly grow in all markets” approach with the “be all things to some people, and we will rapidly grow in one segment (at a time)” approach. In any given circumstance, it is possible that one approach is a clear winner where the other is not.

It seems obvious to me that there will be times when the best thing to do will not be the most important segment’s highest priority. Let’s say Feature A is Segment 1’s second priority (perhaps a close second) and everyone else’s first priority… I think I should delight the vast majority and please the minority, rather than delight the minority and ignore the vast majority.

I agree that a value-driven approach may lead to mediocrity, but this is far from inevitable. We need to understand how to mix satisfaction and delight to deliver optimal outcomes.

Great question / interesting twist!

I don’t believe this approach works at all for prioritizing stakeholders, at least in the ways that you’ve defined stakeholders in Outside In Development. In that case, you have insiders, principals, partners, and end-user stakeholders. The insiders, partners, and principals (sponsors) all collaborate to achieve something that is a success with end-users.

And in that case, you are, in my opinion, collaborating as a team to deliver success. You can’t optimize (at least generally speaking) by satisfying all of the most important needs of one stakeholder group in advance of others. I think this only applies when looking at segmentation of the market into mutually exclusive groups. Perhaps, within a body – say partners – you might choose to prioritize one subset of the partners stakeholders in advance of another.

The benefit of attacking markets this way is that you get greater penetration of the market segment by making the customers love your product. I don’t think you get an benefits from having a subset of your principals love your product at the expense of another group. In this case, I think the “numerical best” approach – what I label as least common denominator – would work better.

I’d go on to say, in my experience, that politics within organizations would completely trump any mathematical prioritization for internal stakeholders. So I would only take this semi-quantitative approach when segmenting end users.

You have a lot more experience in dealing with stakeholders and their priorities – what would you expect to see?

Thanks very much for commenting and welcome to Tyner Blain!

You’re right – I didn’t talk at all about how or why you would prefer one segment relative to another – or prioritize one ahead of another. I alluded to this in my previous comment.

I think you’re right also that focusing on a particular market segment not only helps with feature-prioritization, but it also can provide clarity in marketing communications, promotions, branding, and other elements of strategically attacking a market.

You’ve added to the conversation here too, and I appreciate it.

Thanks for commenting!

I think the right approach is to prioritize segments. You can do that based upon a forecast profitability per segment, a strategic objective (say to serve an existing customer base with a new product first, then expand to other market segments), for competitive reasons (to undermine your competitor’s cash cow, or to gain a foothold / economies of scale before attacking), or whatever reason.

The point being that it is far better to be excellent in one segment – even at the expense of other segments, than it is to be pretty good in multiple segments. And by prioritizing the features that are most important to a single segment, you reach that point earliest. I believe that you will have better market penetration in each segment this way, resulting in an improved rate of growth. If you model your market penetration and don’t see this, then it is moot – but I expect you will find this to be true.

As to the “highly profitable, but otherwise mediocre feature” example, I disagree. Let me fall on my sword and say that I should have articulated that prioritization within a market segment would include whatever is important in that segment – if profitability is the driver, then that “highly profitable” feature would be highly prioritized. Sorry for not making that explicitly clear. Given that clarification, I don’t think your example would exist – the highly profitable feature (when prioritizing by profitability, within a segment) would be highly prioritized for all segments where it is highly profitable.

Thanks again!

If I tried to use the approach you describe to handle the overlapping / conflicting needs of different stakeholder groups, what would I need to do differently?

In this case, Group 3 wouldn’t represent the most important market segment, but might represent an important (but maybe not “most”) stakeholder group.

What seems to be missing from this information is how market
segmentation helps to determine the best target market for a product.

It often even enables development of products for specific target
markets. This can bring better profits than developing a generic
product and then trying to find a market for it. Today, people want
products developed specifically to meet their needs.

Market segmentation sometimes involves math, depending on the process
used, but it provides much more than just what features to include in
a product. It also reveals the best appeals to use for a target market, their information needs, concerns, values, and the best media to reach them.

To some extent it seems to beg the question, though. How do you determine the relative importance of your market segments? Let’s assume profit is a key factor. Is your strategy to sell a few high-margin “sports cars” or a lot of lower-margin “eco-chariots”? If the strategy is not a given (constraint) then you can prioritize on the basis of profitability…but how could you do that when profitability depends on the changes you have yet to prioritize?

What you need to do is consider the impact of your optional enhancements on your strategic objectives, in this case profit. You can then be agnostic about which segment you prefer. A feature that no segment ranks highly may well improve profitability across all segments more than any other feature. Why would prioritizing that feature lead to mediocrity? Even if it does, you just need to add a “stunnedness” metric into your strategic objectives…but if you do this, you will need to establish the relative importance of improved “stunnedness” and higher profits (to combine the scalar objectives into an objective function, in some fashion).