Outling your Target Markets
You can never know too much about your customers and prospects. This calls for market research. Facts and figures elevate your marketing plans from wishful thinking to purposeful action plans. There is no substitute for hard information.
You have to know how your target markets perceive the value of your products and/or services to make good marketing decisions. If you don't know how your company and its products are perceived, you will waste time and aim the wrong products at the wrong markets at the wrong time.
Who are your current customers?You can't specify target markets, segment the markets, or otherwise improve your marketing abilities without detailed knowledge about your current customers.
If you sell to individual consumers, what are they like? What are the demographics of the market? What are the people's age, gender, income, stage in the life cycle, and education level?
If you sell to industrial markets, what markets are they? Who are the prospective customers? What are their sales levels and geographical distributions? Who makes the buying decision? What market segment buys which products - and what information can these people give you?
Market segmentation is a method of organizing and categorizing those people or organizations that you think will buy your products. Look at your customers and note their salient characteristics, then look to wider markets for more groups of people with the same (or similar) characteristics. The usual route is to begin with a fuzzy concept, seek out more detailed information to help define some rough market segments, then refine these into better-defined target markets.
Now look at the major market segments that you currently market to (or intend to market to). First, "define" the market segment by product or service. Who is the customer or prospect? How do you describe those people? For example, you may describe corporate customers by SIC/NAICS code, or size, or membership association; and individual customers by age, income level, educational attainment, or where they live.
Now apply these various segmentation criteria to your markets.
What are their buying habits?Who buys what, where and when are key pieces of marketing information. If you determine the answers to these questions, you will be miles ahead of most of your competitors.
- Who makes the buying decision?
- What's the size of the sale in dollars?
- How many units are sold?
- What is your cost per sale?
- What do your customers buy?
- When do they buy it?
- Why do they buy it?
- Where do they make the buying decision?
- How do they finance their purchases?
How your customers view your products and services is a key research and development question. If you can understand your products from their point of view, you can discover new ways to market your products and services, new target markets, and new profitability.
The key you are looking for is that: People buy solutions to problems. They buy satisfaction of their wants and needs. They don't buy products and services. If your customers have complaints, find out why.
Why do they buy your goods and service?How can you find out why people buy from you? Ask them. It helps if you give your customers a structured survey to work with.
To see how to create your own survey, visit here: Creative Research Systems
When you do a survey make sure to get answers to these three basic questions:
- Where did you hear of our store/product/service?
- What would you like us to offer?
- How can we serve you better?
There are other ways with which you can determine your market's needs and wants. Ask them, observe them. Read - trade magazines are full of articles about why people buy and what triggers their purchasing decisions. Attend trade seminars. Talk with other business owners and managers. Above all, ask your customers, whether prospective, current, or former.
Who are your best customers and prospects?Match the information about the most profitable products with the market segments that purchase those products. If you can figure out why they made these purchases, and can find other groups with similar characteristics, in sufficient numbers, then these new groups become you best prospects. With work, they will turn into your best customers.
The results of this process change over time, as markets, customers, and products change, but the basic five-step process remains constant:
- Identify your profitable products and service, including those which will be profitable in the future.
- Find out as much as you can about the people who buy those products and services. Who are they? What are their buying patterns? How often do they buy? How much do they spend?
- Find other people like them. These are your hot prospects.
- Identify unprofitable products, especially those that take up a disproportionate amount of time and money. These are often either "owner's ego" products, products that management has a special investment in, or old familiar products that have outlived their useful life.
- Find out who buys these unprofitable products and services - and stop marketing to them, or switch them to more profitable products. This may mean leaving a comfortable market for a profitable one.
Remember why you are in business: to create and satisfy your customers, at an acceptable profit.