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Finding a Market Opportunity in a Poor Economy - Choosing Your Target Customer and Market Wisely
Sally wants to sell her custom designed greeting cards on the web. When asked, "Who will you be selling to?", she replies, "Anyone who wants to buy!" If you ask her, "Where will you find your customers?", she replies "Anywhere they exist. My market is global because I am selling on the Internet." What is wrong with this picture? While Sally has certainly kept her options open, she may have lost something much more precious, an ability to appeal to any customers through a select focus, (which is essential in today's economy). While a small business owner should never turn away a potential customer, choosing a target group of customers and a market area where they are most likely to be found provides a focus that enhances the chances for actually making sales ... to any customer. Choosing to be all things to all people not only increases your potential base of customers; it increases the number of competitors you will need to deal with. In addition, it decreases your chances of appearing to be "special" to any customer. Customers like to do business with those companies that convince them they specialize in taking care of their needs. So, as the number of competitors increases, the chance of actually making sales to these customers decreases. And, a small business just getting started that enters the market with little or no reputation to distinguish itself from competitors, finds it terribly difficult to compete. Find a market "niche" A small business owner, particularly the one just getting started, needs to find a "niche". You need to find a group of customers located in a defined market area who have an intense unsatisfied desire. Otherwise, customers will not be motivated to make a purchase. In addition, these customers you have identified must have the ability to pay. There isn't much sense in trying to sell to people who have no money. And, in today's economy, it has become increasingly difficult to find a customer with money to spend. Finally, you need to identify a group of customers in a market area where the existing competition is failing to adequately meet their demands and will likely not be able to do so in the future. But, your business should be in a unique position to meet their demands, now and into the future. This is the market "niche" |
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How do you find that market niche? You can use the information you learned from your industry research to identify possible "hot spots" of growth. If possible, you want to stay away from choices where customer demand is declining, where competition is intense and possibly growing, and where the resources you need will be difficult to obtain. For example, perhaps Sally learns through her industry research that there is a hot market for custom designed greeting cards among non-profits related to fund-raising. And, Sally learns that income and gift giving continues strong on the east coast of the United States among non-profits serving their local communities. Sally might do well to focus her efforts (at least at first) on landing sales selling greeting cards to these non-profits serving their local communities on the east coast of the United States. She will probably want a web site, but its purpose would be to provide information concerning her work. What she displays on that web site would focus on the interests of these non-profits. Once she has established a reputation with these customers, she can then expand into other markets and adjust her web pages accordingly. But, selling to non-profits on the east coast of the United States is just a promising idea. How does Sally actually know if this idea can be profitable? Determining profit potential Sally must now analyze her idea to determine if it has profit potential. She must examine the competition on the east coast for the business of these non-profits and assess how intense it is. Then, she will need to gain an in-depth knowledge of the issues and concerns faced by these non-profits in attempting to raise funds. She will use this knowledge not only to plan her promotions, more importantly she will use it to design a package of products and services that will convince these non-profits that Sally has the solution to their problem of increasing the funds that they can raise. Finally, Sally will want to test the reaction of these non-profits to what she proposes to offer. Will they actually purchase from her? Why or why not? Sally can then use what she learns from their reactions to make a sales projection that she is confident about. After her test, she will have a good understanding of how many members of her target customer group are likely to become customers, how much they are willing to spend, and how often they will be making a purchase. This allows Sally to decide whether or not she has identified a market niche with sales potential. If so, Sally will then make sure that her business is in a unique position to serve that niche profitably. The importance of finding the right market niche cannot be overstated. However, it takes research and analysis to discover and evaluate the possibilities. This is admittedly hard work. But, it is work that helps you avoid wasting your time on ideas that are unlikely to succeed and focus your efforts on those ideas that have a chance for success. It is time well spent.
Cheryl Davisson Gracie, Attorney, CPA, RCC, has been coaching small business owners for over 20 years. Cheryl is the author of the popular ebook, "Finding Your Market Opportunity" which describes how to perform a Business Concept Evaluation and is available for download on The BCE Bulletin website. The BCE Bulletin is a community of support for those wanting to start and grow a business of their own. At the BCE Bulletin you will find a variety of helpful small business resources. Many are available free of charge. Cheryl owns and manages The BCE Bulletin. At The BCE Bulletin, you will find the entire set of articles "Finding Your Market Opportunity in a Poor Economy".
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More marketing articles
3 Steps to Designing Your Targeted Marketing Plan
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Successful Networking Strategies
Choosing a Niche Market: How and Why?
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