This is the second of a three-part series on "Marketing From the Inside Out." In part one, I offered four guidelines for marketing: express your passion, honor your values, use common sense, and find a need and fill it. In this article, I will explore market analysis.
One of my marketing maxims over the years has been "Know your audience (before you open your mouth)." People will hear your message a lot better if you are speaking their language. You don't communicate with your doctor like you would with a toddler, and you don't assume a Russian speaks Japanese. Communications that rely solely on cleverness, chest-thumping superlatives or jargon are often missing the target.
Step 1: Conduct Customer Analysis
Most businesspeople have heard of the concept of communicating benefits, not just features. To identify benefits, you must first understand your customers, their motivations and needs, and how well they are being served.
I've met many people in my career who identify their market as everyone or anyone. Well, it's pretty difficult, not to mention expensive, to let everyone know about your product or service. So you need to find the people most likely to buy your product. Answer the following questions (use your gut if you don't have hard data):
- Why would someone want your product or service? What need does it fill? List the benefits and the problems it solves. In what way does it improve the life of the user?
- Would you personally buy this product? Why or why not? The "why nots" may give you an insight into potential weaknesses.
- Who, in your opinion, is most likely to buy it? Be as specific as you can. How old are they? Male or female? Where do they live? Where do they work? These people are your primary target market. It doesn't mean that you don't have second- or third-tier markets.
- How does your primary target market currently go about buying existing products or services of this type? What are their sources of information? Word-of-mouth? Trade publications? Yellow pages? The Internet?
Step 2: Survey the Competition & Other Hurdles
So you have a pretty good idea of whom you will go after first. This is your market segment. And you're not alone. As you look around, there are lots of other companies vying for your customer's attention. Your goal is to create value, a reflection of worth rather than cost. This is where you have to differentiate yourself. If there is no difference between you and the next guy, it all comes down to price.
It is also important to understand what the competition is. The competition is the method by which your prospective customer is meeting his needs now. To a landscape service, the competition might be a lawn-mower manufacturer whose new self-propelled Mower 9000 makes it look so easy to do it yourself. To a company selling tax software, the competitive landscape includes other software products as well as CPAs, storefront tax services and the prospect's brother-in-law.
The following questions can help you get a clearer picture of where you fit in:
- Who and what is the competition? Include every way a person currently solves the problem your product or service addresses.
- Is there room for another competitor in your primary market segment? If the answer is no, you might look to see if there is another segment where you could add value. If the answer is yes, go to the next question.
- Why would a customer come to you vs. one of your competitors? This is defining your value proposition. They might come to you for a number of reasons: convenience, price, reputation, quality, expertise, recommendations, etc.
In addition to the competition, it is useful to understand the bigger industry you are playing in as well as the environmental and regulatory climate.