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"Marketing Strategies from the Most Successful Small Businesses in America"

Imagine practicing archery with your eyes closed or throwing a football with a blindfold on. In both cases, being prevented from seeing your target would make it nearly impossible to hit it. This concept can easily be applied to business, as well. Doing business without knowing what your target market is will prevent you from reaching your objectives: increased sales, market share or brand awareness.

Where the blanket approach of mass marketing was touted by marketing professionals of years past, today's industry experts are singing the praises of one-to-one, or relationship marketing. And rightfully so. Today's consumers, as you've heard many times, are savvier than ever before. With access to nearly any piece of information they want via the Internet, consumers don't want salespeople spouting off scripted presentations. Rather, they need advocates who are willing to help them find real solutions. How can you do that? By learning who your customers are; by finding out their real needs; and by offering them tailored products and services that work for them. The first step in attaining those lofty goals is to choose a customer base that is appropriate for your business.

Identify Potential Customers

There are two types of customer groups that you can target: individual consumers or other businesses. Individual consumers are somewhat more difficult to target because they are diverse and unpredictable, they typically have small individual budgets, and their buying preferences may change as they age. Businesses as a target market tend to be fairly stable over time and have large budgets to spend on various products and services.

It is not necessary to choose just one customer group. You may choose to target both businesses and individual consumers if it makes sense for your company. However, modifications may need to be made for your product or service if you choose to go this route. For example, the owner of a gift basket business may target mostly individual consumers as her main source of revenue, but have a secondary revenue stream from corporate customers. For the individual consumers, she may offer many customized options to satisfy their diverse tastes, and she would probably charge a higher price to ensure a good profit margin. For her corporate customers, she would likely offer a more limited product line — at quantity discounts — to allow her to mass-produce the baskets for large orders.

Conducting Market Research

There are many sources of market research — much of which is free of cost — that have already been compiled that you can draw from for basic information about your prospective customer group. Search the Internet and your local library for studies and data that have been gathered for your particular industry.

For more specific information on your prospective customer group, you will need to either hire a marketing research firm to conduct formal surveys for you, or you'll need to learn how to do it yourself. Since marketing research firms are rather expensive, most small owners will opt to conduct the research themselves. While the research you gather may not be as structured or in-depth as that of a research firm, you can get sufficient information to identify your customer base at a fraction of the cost of what you would spend otherwise.

The most important objective of conducting market research is to find out what markets your competitors are currently serving, where market opportunities exist, and which markets will be most profitable for your business.

To begin, make a list of all of your competitors, including everything from large corporations to small mom-and-pop shops. If they have Web sites, visit each one and gather as much information about their products and services as you can, including prices, customer service policies, delivery methods, warranties and return policies. If some of your competitors do not have Web sites, it is perfectly legitimate to call the company and ask for the information from one of the customer service representatives.

After gathering the information, compile it into a table or spreadsheet. Identify areas that are weak or absent to identify possible market opportunities. For example, if you find that none or only a few of your competitors currently offer same-day delivery of products, this may mean that there is a market opportunity to serve a group of customers who must have your products the same day they order them. Don't forget: You can charge substantially higher prices for the convenience of same-day delivery of your products.

Ask yourself:

What products or services are my competitors not offering that I could offer profitably?

What competitive advantages do I possess that my competitors can't offer customers even if they wanted to?

What do my competitors offer that I could improve on?

Once you have a handle on your competitors, next you need to focus on your prospective customers. Conducting surveys is an easy way to find out your prospective customers' needs, buying preferences and spending habits, which in turn identify if they will make a good customer base for your company. Keep in mind that you should offer some sort of benefit or inexpensive giveaway to motivate customers and prospects to fill out your questionnaire. Some good examples include coupons or discounts on the next purchase they make from your company.

Your survey must include questions that obtain information on the following aspects of your potential customers:

Demographic information — Includes age, sex, nationality (if necessary), etc.

Psychographic information — Includes lifestyle data like hobbies, interests, opinions, etc.

Geographic information — Includes information about where the subject lives and where he or she purchases products and services.

This can be as broad as the country or state in which they live, or as narrow as the county, city and neighborhood.

Behavioral information — Includes information about how the subject uses products or services.

Benefit information — Includes information about the perceived benefits the subject receives from products and services.

Finding groups of customers to take your survey can sometimes present a challenge. To find prospects, visit Web sites, newsgroups, forums and listservs, or contact non-competing companies that share your prospective target market. For example, if you own a health food store, you may contact a local health club to ask them if you could conduct surveys of their clients on their premises. In exchange for them allowing you to take advantage of their space and goodwill, you could offer their clients some sort of cross-promotional item. For example, give them a generous coupon for your products that is exclusive to members


of that health club.

Here are some sample questions to include in your survey:

What is your age range?

Under 25
25-35
35-45
Over 55

Sex M/F

Occupation:
___________________________________________________________
___________________________________________________________

Household income range:

Less than $50,000
$50,000-70,000
$70,000-100,000
More than $100,000

What is the highest level of education you have completed?

High school
Trade school
Some college
Associate degree
Bachelor's degree
Master's degree
Doctorate degree

What are your favorite hobbies?
___________________________________________________________
___________________________________________________________

Which of the following products do you buy regularly?

Include a listing of your products, as well as products that you are able to add if you uncover a need for them.

What benefits do those products provide for you?
___________________________________________________________
___________________________________________________________

How often do you purchase those products?

Daily
Weekly
Monthly
Bi-annually
Annually

How loyal are you to the particular brand that you purchase?

1. Not loyal (I'll purchase whatever brand is on sale.)
2. Somewhat loyal (I'll usually purchase one brand unless another one offers a good deal.)
3. Pretty loyal (I'll always buy one brand unless it is out of stock or otherwise unavailable.)
4. Extremely loyal (I would never purchase any other brand.)
5. Where do you normally purchase these items?

Include a list of distributors in your area. Also include questions that are specific to your company regarding your products, pricing and service to determine if the survey respondent is a potential customer for you.

Choosing a Target Market

After you have conducted a sufficient number of surveys, compile the results to determine which markets make the most sense for your business to target. Ensure that the market you choose:

has easy access to your products and services, whether it is by visiting your store, or ordering by phone, fax, email or your Web site

is not inundated with other products and services that are indistinguishable from yours

is willing to pay a price for your products and services that allows you a reasonable profit margin

Compiling a Customer Profile

Just as a mission statement guides the operation of your company, a customer profile will guide your sales effort. Develop an overview of your target customers so that you and all of your employees are clear about whom you are selling to.

Demographic Checklist

Ensure that you include the following characteristics in the demographic profile of your target market:

Age
Gender
Profession
Education level
Household income level
Marital status
Geographic location

If your target market is made up of corporate customers, include the following elements:

Company size
Location of headquarters
Types of products and services they provide
Annual revenue
Number, size and location of branches
Year founded

Psychographic Checklist

Which of the following categories fit the psychographic profile of your customers?

Conservative
Liberal
Conformist
Environment-friendly
Socially conscious
Power-wielding
Fun-loving
Cutting-edge
Trend follower
Fashion-forward
Family-oriented

How many family members are typically in your customers' households?
________________________________________________________________________

What hobbies and/or sports do your customers enjoy?
________________________________________________________________________

What types of entertainment do they like? (movies, theater, opera, etc.)
________________________________________________________________________

What publications do they subscribe to?
________________________________________________________________________

How else do they enjoy spending their free time?
________________________________________________________________________

If your target market is made up of corporate customers, which of the following psychographic categories fit them?

Market leader
Innovative or cutting-edge
Liberal
Conservative
Environment-friendly
Employee/family-friendly
Fast growing/adopting new ideas
Stable/set in their ways

What growth stage is the company in? (start-up, growth, stable or decline) ________________________________________________________________________

What is the type of workforce they employ?
________________________________________________________________________

What is the company's culture?
________________________________________________________________________

What is the management style?
________________________________________________________________________

What trade associations do they belong to?
________________________________________________________________________

What publications do they subscribe to?
______________________________________________________________________

Here is an example of a typical customer profile:

Company X, an upscale sporting goods company, targets American male executives between the ages of 25 and 35, with an average household income of greater than $100,000, who enjoy outdoor sports and purchase sporting goods at least twice per year for recreation and travel.

After you have a clear customer profile, you and your staff must learn to think like your target customers to anticipate their needs. You must track the trends and preferences of this group regularly by staying in constant contact with them and altering your products and services accordingly. Good methods for staying on top of your customer base's changing preferences include: informal face-to-face discussions, in-store surveys, direct-mailings, and feedback requests on your Web site, in your store, and included with all products shipped.

The Small Business Marketing Bible



About the Author

Is a creative market executive that helps small business define there place in america. One of the best examples of helping a business grow is teaching a business owner to
"Learn How to Build Your Business Using the Best Marketing Strategies from the Most Successful Small Businesses in America".

 

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