Chapter 8: Customer Needs and Market Segmentation Access Chapter 8 templates and tools from The Product Manager’s Desk Reference (3rd Edition). Learn how to analyze customer needs, define market segments, choose target markets, and develop customer value insights. Download the chapter abstract and illustration insights. Core Concepts Customer needs as segmentation drivers Dynamic market segment behavior Target market definition Voice of the Customer techniques Customer journey and personas Mapping customer needs to product features Executive Summary Product managers who can translate data-driven customer insights into solutions with compelling customer value propositions have a greater chance of winning in the market and delivering stellar returns to the business. Product managers need to keep up with shifting customer preferences so they can more appropriately evolve their product strategies. Understanding the benefits that customers value most can help you create the most potent product positioning and devise optimal pricing strategies. Chapter Abstract Understanding customers begins by recognizing how they’re grouped, or segmented. Market segmentation identifies customer groups based on specific categories, such as common needs and usage patterns. The two main market types are consumer and business. Consumer markets are characterized by demographics, geographic indicators, values and beliefs, and loyalty or frequency indicators. Business markets additionally are characterized by geographic areas, company size, industry or industries served, and market segments on which companies focus. Market segments change as a result of changes in demographics, geographic location, and customer preferences. Assessing a target market, or the segment of a market that your company is interested in, involves looking at the degree to which a segment is growing, the number of competitors vying for that segment, the manner in which a segment is accessible by known distribution channels, and the profit to be gained by introducing products or services to that segment. Product managers must gather and analyze data to determine what customers need and how customers use products or services to meet those needs, including unexpressed needs. In targeting a particular customer, product managers must become familiar with that customer’s workflow, or present method of operation (PMO). From that a future method of operation (FMO) can be envisioned. One of the best ways to learn about a customer’s operation is through an on-site visit. A customer visit plan outlines the purpose of the visit, the employees in relevant functions, and proposed structured activities, such as interviews with key employees, tours of facilities, observations of people at work, and presentations by employees of what they do. All of this is done to amplify the voice of the customer (VOC) in order to better understand the customer’s needs and provide solutions. Download the Chapter Abstract > Templates and Diagrams for Chapter 8 Figure 8.1 – Customer Needs Model Figure 8.2 – Market Segmentation Framework Figure 8.3 – Target Market Profile Template Figure 8.4 – Voice of the Customer (VOC) Process Map Figure 8.5 – Customer Journey Map Figure 8.6 – Needs-to-Features Mapping Template How These Templates Help Product Managers The templates in Chapter 8 equip product managers with structured tools to understand customer needs, define meaningful market segments, and analyze how customers use products to get their work done. These diagrams help clarify customer workflows, identify unmet needs, prioritize high-value segments, and translate insights into product requirements. Used together, they strengthen customer understanding and support more accurate product positioning and strategy development. Download Illustration Insights > Why is segmentation important for product managers? Segmentation helps product managers focus on customer groups with shared needs, enabling more precise targeting, positioning, and product design. What is the difference between consumer and business markets? Consumer markets segment based on demographics, geography, values, and behavior, while business markets segment on company size, industry, location, and customer focus. How does the VOC process help product managers? The Voice of the Customer process uncovers expressed and unexpressed needs, enabling product teams to design solutions that deliver meaningful customer value. What is the purpose of mapping the Present Method of Operation (PMO)? They show how industries change over time, helping product managers anticipate shifts and position products for future growth.aPMO analysis helps teams understand how customers currently work so they can envision an improved Future Method of Operation (FMO) that the product will enable. The Product Manager’s Desk Reference, 3e The Product Manager’s Desk Reference, Third Edition is the definitive guide to product management for today’s fast-moving, digital-first business environment. Steven Haines presents a complete, practical body of knowledge covering strategy, execution, cross-functional leadership, and product portfolio management. Updated with modern tools, analytics, and development approaches, it equips product managers and product teams with a repeatable framework to run products as businesses and deliver measurable results. 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