Product Strategy as Segmented Outcomes

Readers of the Innovator’s Solution should be familiar with outcome-based segmentation as a key technique to identify customers for a breakthrough product.  The essence of the technique is to think through “outcomes” that existing or potential customers want to derive from a product or a service, and tailor existing or new offerings to align with those outcomes. In simple terms, outcomes map directly to  customers’ value proposition for your product.

I think this technique should be an essential part of a product manager’s toolkit when you:

• plan your roadmap
• think of product extensions
• assess build vs buy opportunities
• map the competitive landscape
• identify segments to NOT focus on
• figure out positioning, messaging and value proposition for your products

An Illustrative Example

Imagine you have a product that allows non-technical users to build websites quickly. While such products have been around for a long time for building static/”brochure-ware” sites, you want to assess underserved/unaddressed opportunities. In particular, you believe online marketers might be an opportunity worth exploring further. The table below depicts the types of outcomes online marketers would be interested in, along with features that would support those outcomes.

	Target Market: Online Marketers
	SEGMENT: “Converters”	SEGMENT: “Conversationists”	SEGMENT: “Product Launchers”
Outcomes desired by segment	Drive conversions for an existing product or service through a website. Simply put, this segment values demand generation.	Allow brand managers to converse with brand enthusiasts and learn about brand strengths, weaknesses, threats and opportunities via a web destination. Simply put, this segment values engagement with consumers.	Create buzz for a brand new product or service through a website. Simply put, this segment values awareness.
Top Level Features (Examples)	Landing page templates based on conversion best practices SEO features A/B testing Support online forms for registration, surveys etc Tracking visits and conversions	Support various forms of user expressions such as video/photo uploads, comments, ratings, reviews etc Tracking user engagement (e.g. number of user-contributed videos, comments, reviews etc)	Support for premium/celebrity videos, high quality images “Virality” features (e.g sharing, syndication) Tracking overall awareness of product including page views, number of times videos/images are shared etc

The most important takeaway from this table is the value proposition that different segments derive from your product. For “converters”, it is all about creating a website that drives revenues. For “conversationists”, the value is around providing a destination for the brand manager to engage with brand loyalists. For “product launchers”, the value is primarily around generating awareness for a new product. You can use this table to drive the roadmap for your product. For example, you might want to focus first on the “converter” segment. You might decide to partner for the tracking/web-analytics feature which is common to all the segments. Similarly, you would want to map out the competitive landscape to this segmentation.