Market Definition
Who is the most important
person to your business? The customer. The confidence you possess
about your business and the belief you have in your products and services
are important to the success of your new business. However, your enthusiasm
for your products and services is only part of the equation. The most
important person to the long-term success of your business is the
customer. You can't know too much about the people who will be a vital
part of your business for a long time.
- Who will your customers
be?
- Will they be a certain
age group?
- Will they have specific
interests?
- Will they be businesses
or individuals?
- Will they have specific
income levels?
- What customer needs
and wants will your product or service fulfill?
- Where will your customers
be located?
- What will be the best
ways to communicate with your potential customers?
These are only some of
the questions you will need to answer about your customers. Your customers
may be a diverse group. They may speak different languages, share
different cultures and values, and live in different places across
the country or around the world. It will be important, in spite of
the differences among your customers, to identify their common needs
and wants that your product or service will meet.
The more sensitive you
are about the needs and concerns of your customers, the more capable
you will be of creating the kinds of products and services which meet
or exceed their expectations. Meeting and exceeding the expectations
of customers is the best marketing strategy you can use to build and
maintain your business.
The profile of your customer
can be specific or very broad. For example, if your product helps
people in wheelchairs, your customer "sample" will probably be very
specific in nature. If you are opening a bakery and coffee shop, your
customer "sample" may be broad, or may be determined more by geographic
location than by specific life style or age.
Once you determine a sample
of your potential customers, you will need to gather additional information
about them and eventually test your product or service with them.
If you find it difficult to locate people who match your sample customer,
you may want to hire an advisor to help you to locate and gain information
about their needs and wants. Marketing advisors and consultants can
be very helpful because they are in the business of finding and studying
customers for other businesses. It will require a financial investment
to use marketing advisors. You will need to add these costs to the
cost of setting up your business. Other organizations, such as Small
Business Development Centers, the Small Business Administration or
the Center for Innovation and Business Development can help you with
your research and planning.
If you can identify your
customers and you can locate them, you can do some of your own research.
The common ways most businesses gather information from their customers
or potential customers are:
- Personal interviews
- Telephone interviews
- Mail surveys
- Focus groups
If you decide to interview
or survey customers and potential customers, it will be important
to be specific about what kind of information you are seeking. Initially
you will be looking for information about what their needs are, whether
or not they use products or services similar to yours, and what is
important to them in making purchasing decisions about products like
yours.
When you are asking questions
of potential customers, either in an interview or written questionnaire,
remember to:
- Be courteous. People
do not have to give you information. They will be helping you if
they do.
- Don't put words in their
mouths or answer questions for them. You want to find out what they
know, not what you know.
- Don't turn your interview
or questionnaire into a sales presentation.
- Be honest and up-front
about what you are doing. If you are considering starting a specialty
travel agency, let people know that is why you are asking them some
questions and you would appreciate their opinions.
- Keep your questions
brief and clear.
- Be open to the answers
you receive. If you don't like what you hear, don't try to change
the data. If you don't believe that the information you are receiving
is valid, reassess your sample group and try again.
The information gathered
in this initial research phase will help you to:
- Design your product
or service
- Determine the unique
features and benefits of your product and service
- Develop features of
your product and service which will be important in meeting the
needs and wants of your customers.
Finally, this initial information
will help to determine objectively whether or not there is a market
for your product or service. If your idea does not line up with the
needs and wants of your potential customers, it may be time to go
back to the drawing board.
Other resources for finding
information about your potential customers are:
- The public library.
At the reference desk you can find magazines, research reports,
census data, associations to which your customers may belong.
- Trade associations in
the particular industry you would be involved in, often track information
about the marketplace.
- Business publications
and magazines.
- Governmental reports
and publications. The U.S. Department of Commerce, the Small Business
Administration as well as various state departments may have pertinent
information.
- The chamber of commerce
in your community as well as other communities in which your potential
customers may live and do business.
- Your own observation
of potential customers.
- Doing research is like
putting together a puzzle. It takes experimentation and patience.
Locate as many pieces as you can about the profile of your customer
before you develop your sample product.
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