The most successful companies are ones with a well-defined market strategy. When you want a soft drink, you have your go-to brand. When someone says they need an accident attorney, it’s likely a particular person’s name comes to mind. Yet, knowing that and figuring out to do the same for your business are two very different things.
How do you locate your best market strategy when there is no shortage of shiny pennies vying for your attention? For today, set the shiny pennies aside. Instead, think big picture. Focus on grouping types of customers into “market segments”. Who and where are they? What are they looking for? What problem or “pain point” can you help with?
No one buys products or services “just because.” Even for impulse purchases, in that brief moment of decision, people perceive that the item they’re getting will solve a need in some way, whether that’s to make them feel good about a gift purchase or to satisfy a craving for chocolate.
It’s your job to find people that already recognize that they need what you have to offer. To do that, you first have to clearly define who these people are, so that you can find more people like them.
The process for defining your target market is basically the same for both consumer and business audiences, though there will be nuances in the particular questions you need to ask. Here is an overview to guide your exploration.
Look first at your own data. Using the charts above, what insights can you glean? If you don’t have meaningful data at your fingertips, for now ballpark it until you have time for more thorough data collection and analysis.
Next, tap into your sales staff’s expertise. Ask them the same questions above as you begin to build a profile of your best customers and what they have in common.
Last, are there market segments not represented among your customers that could benefit from your offerings, either with the same or a variation of what you currently do? Try to gain a clear understanding of all your potential target markets. That doesn’t mean greenlight them all. Potential means possible.
You may determine that your business has several target markets for your core offering, such as a tech company whose software product can be adapted to the needs of many business verticals. The challenge is to hone in on which verticals offer the most promise and focus on growing those target markets. Stretch yourself too thin, and your staff won’t have time to serve anyone well.
Once you’ve identified several potential target markets, now it’s time to assess niche opportunities. A niche is the particular solution you can bring to each target market and the unique way you do it.
While success can be found in any niche, the two things you must have are a competitive edge that matters to those buyers and the resources to go after them. If either are lacking, your business will struggle to find footing.
For instance, you might need to retool your product offering to better tailor it to a new target market. Is the price of entry in R&D, additional warehousing, extra sales staff, and the required marketing expenses well within the profit potential you see for this market? Or, are the costs too high?
If the long-term growth opportunity is too good to pass up, consider reallocating resources from a less profitable aspect of your business. Or, it may be time to have a talk with your banker about funding a new initiative.
If you can’t figure out a viable solution, delay action until you have enough information to make a confident decision. And where possible, test the market before going for a large-scale launch. In other words, be selective and intentional about acting on shiny pennies.
For each of the targets you are considering (or are already in), ask yourself the following:
- What sets your business apart?
- What demonstrates your uniqueness?
- Is this niche saturated with competitors?
- Is there enough room for you to gain ground?
- What is the size and profit potential for what you offer?
- Is it a high growth market?
- What stage of the life cycle is your product in?
- Do you have the resources to go after this segment?
Together your decisions form your market positioning, driving a clear and focused message about who you are, what you do, and how you want to be perceived in the minds of potential customers.
This streamlined approach enables you to send out more power-packed messages so that your business becomes the go-to choice. It will help you better define how and where to spend your resources in talent, time, and money. The more tightly you can focus your energies on serving one to a few niches well, the more successful you will be.
Remember, the most successful businesses don’t try to be one-size-fits-all. After all, you can’t find someone in a crowd, if you don’t know exactly who you’re looking for. Take your time to carefully define the market and your place in it, and you’ll be a giant step closer to where you want your business to be. And who knows, it might be just the right time to pick up that shiny penny.