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On Target

Market research can cost you. Hit the mark with these creative, budget-friendly ways to understand your target audience.

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Would you shell out $200 for a pair of shoes without trying them on? Plunge into a steaming bath without dipping a toe in first? Of course not--but people do the business equivalent every day. Many an entrepreneur has found out too late that nobody wants to buy hand-quilted Christmas stockings at $24.99 a pop, or that moneyed customers won't trudge to the unfashionable part of downtown for luxury stationery.

The paradox: Conventional market research is expensive (corporations regularly budget tens or hundreds of thousands of dollars for it), but no one needs it more than a startup entrepreneur. A couple of marketing blunders won't put a giant manufacturer out of business, but just one can sink an entrepreneur with shocking ease.

This article walks you through the basic steps of do-it-yourself market research. We'll skip the tried-and-true but unaffordable techniques--like focus groups, professional surveys and direct-mail questionnaires--and fast forward to ideas for those of us with more creativity than cash. The focus is on startup research, but many of the same techniques can also be used to refine your marketing plan for an existing business or to figure out why it's not flourishing the way you think it should.

You'll start by roughly defining your typical customers, determine if enough of them exist, and, finally, try to decipher their buying habits, preferences and prejudices.

Step 1: Define Your Target Customers

Your "target customers" are those who are most likely to buy from you. Resist the temptation to be too general in the hopes of getting a larger slice of the market. That's like firing 10 bullets in random directions instead of aiming just one dead center of the mark--expensive and dangerous.

Try to describe them with as much detail as you can, based on your knowledge of your product or service. Rope family and friends into visualization exercises ("Describe the typical person who'll hire me to paint the kitchen floor to look like marble . . .") to get different perspectives--the more, the better.

Here are some questions to get you started:

  • Are your target customers male or female?
  • How old are they?
  • Where do they live? Is geography a limiting factor for any reason?
  • What do they do for a living?
  • How much money do they make? This is most significant if you're selling relatively expensive or luxury items. Most people can afford a carob bar. You can't say the same of custom murals.
  • What other aspects of their lives matter? If you're launching a roof-tiling service, your target customers probably own their homes.

Get specific. For example, if you're selling collectible comics through a Web site but aren't willing to brave international export regulations, your customer location can stay in the United States. Or if you're planning to open a custom-tailoring shop and need busy executives to come for three fittings, you may need to limit it to your local area.

Step 2: Decide if You Have a Market

Before you commit hours to researching what customers want fromyou, it makes sense to find out whether you have a viable targetmarket.

The cheapest and simplest way to do this is through"secondary data," or information someone else has alreadygathered for you. Usually, this takes the form of variousstatistics and can only answer closed-ended questions: How many?When? Where? Your own questions will depend on your customerprofile and become more tightly targeted based on what you find outas you go.

You can find answers in a number of ways:

1. Reference librarians: Most are delighted to help youresearch. Often, they'll practically do it for you. These days,they can look up a lot of what you need on computer databases, andyou have a decent chance of walking away with all your answers.Printouts may cost several cents per page.

2. The local field office of the Department of Commerce:It should supply you with free or nearly free information onpopulation, demographics, housing, the economy, market trends,surveys of current businesses, and more.

3. The business libraries of local universities: Theseoften have more specific information on business trends than apublic library. Ask the librarian for help.

4. Your local SBA branch or Small Business DevelopmentCenter: It has a multitude of publications and businessliterature full of advice and market forecasts.

Once you've got all the answers, it's time for ajudgment call: Do you have a working market?

Only you can decide if 14 competitors are too many for 19,000target customers, or if you want to gamble on the fact that yourtarget customer spent 30 percent more last year than three yearsago. If you don't like the numbers, at least you've justsaved yourself a potential financial disaster. Now you're armedwith a much better grasp of market conditions to revamp yourbusiness idea or marketing direction and return to Step 1.

  • How many people in the Denver area are between 29 and 45 yearsold?
  • How many of these are married?
  • How many couples have young children (under age 10)?
  • How many have a combined household income of $60,000 ormore?
  • What percentage of them own their own homes?
  • Are the numbers of homeowners and relatively high-incomefamilies in my area increasing or decreasing?
  • How many decorative painters and faux finishers work in myarea? Who are they?
  • How many were there five years ago, three years ago and lastyear? Are there more of them now than before?
  • How many clients hired them last year?
  • How much did they make on average?
  • Where are they located? Are there more of them in certain areasthan others?

Step 3: Get to Know Your Marketing

Once you decide you have a viable market, it's time to findout more about it.

Secondary research helps you refine your customer profile andgives you broad guidelines for your marketing efforts. But becauseit's all derived from information that focused on others,it's only so much sophisticated guesswork that applies toeverybody in your position. Market research that's donespecifically for your business, or "primary research," iswhere you'll get intimate with your own unique market.

Keep your mind open to any information, but also keep a list ofprimary research questions handy, such as:

  • Who influences your customers and how? Spouses,neighbors, peer groups, professional colleagues, children and themedia can all affect buying decisions. Look for hints that one ormore of these are a factor for you.
  • Why do they buy? Distinguish between the features andthe benefits your product or service offers. Features describe whatit is; benefits are what your customers get out of it. The latteris why your customers pay you. Are they looking for a statussymbol, a savings in time or energy, a personal treat or somethingelse?
  • Why should customers choose you and not yourcompetition? What can you offer that the competitiondoesn't?
  • How do your customers prefer to buy? Many businessesbenefit from the broader market provided by the Internet and mailorder, while others do better with a physical presence. Don'tassume you fall into one category or the other; customers maysurprise you.

Keep those questions in mind as you take the following researchsteps:

1. Read, read, read. Articles, interviews and surveyresults published in trade periodicals reflect specialist knowledgeof your market. Publications that focus on your business type areinvaluable for forecasting upcoming trends and identifyingcustomers' needs. But ads, letters to the editor, and other"extras" can be even more revealing. Study the ads (full-and half-page ones as well as the classifieds) of businessessimilar to yours; watch for features your competitors most want toemphasize or de-emphasize. To get an overview of recent changes,order back issues, or find them in the library. Are there more orfewer ads now than last year or three years ago? Do those that havelasted have anything in common?

Readers' letters often contain information on what yourcustomers like or dislike about certain products or companies.Editorial pieces frequently highlight hot trends, which should havea bearing on your marketing plan. Say you're starting acreative sewing pattern company. If three sewing magazine editorsin as many months mention the plus-size market, and you see half adozen letters complaining about the lack of choices in largersizes, you've just received a hint in neon.

2. Tap the Internet. Newsgroups and discussion lists onthe Internet debate every imaginable topic. Chances are, some ofthem partially match your customer profile. They may be talkingabout the type of product or service you offer--or can beencouraged to do so. Best of all, everything they've ever saidhas been archived. It's like having a ready-made, if somewhatchaotic, focus-group transcript at your disposal.

You can glean information just by finding archived threadsrelevant to your business and paying attention to comments made bythose who fall into your target demographic. As a shortcut, typethe names of your competitors (you found these during yoursecondary research) in the search boxes.

You can also take it one step further and start your own threadto initiate a more tightly focused discussion. A caveat: Some listsand groups don't welcome commercial postings. Always observetheir rules, and phrase your questions discreetly. You can ask anynumber of questions that don't violate their posting etiquetteand still supply you with a wealth of feedback ("What should Ilook for in a good pet-sitter?" "What'severybody's favorite brand of low-carb chocolate?""How much is too much for a handmade harp?""Where's the best place to buy organic babyproducts?"). You can follow up the answers with furtherquestions until you have the level of detail you want.

3. Check out the competition. You can learn about what todo and not to do by studying your competitors. Visit their Websites, and look at their prices, guarantees, testimonials andspecial offers. If they offer newsletters, get on their mailinglists. You'll get free information on improvements, new productlines, trends and even customer responses.

Spend some time analyzing their advertising and salesliterature. What do they emphasize most? What are they notmentioning? Do you see aspects you could improve?

Try calling or e-mailing them to ask about their rates andservices. If they have stores, visit and browse them. Write downyour impressions as soon as you've hung up or left thebuilding. Keep a record of each one, and ask yourself what all ormost of them have in common, why you think that is, and how you canset yourself apart.

4. Get students involved. Call or visit the Web sites oflocal business colleges as well as the faculty of businessdepartments at universities and colleges in your area. Find out whoteaches classes on marketing, preferably small-business marketing.Try to persuade them that your business would make a greatreal-life market research project.

They may agree, especially if you're willing to providesamples and demonstrations on request. You'll have a betterchance at certain times of the year, so if you've caught themat the wrong time, ask when might be better and whether they canrefer you to anyone who runs on a different schedule.

If it pans out, you'll have to work with the professor'steaching plan and timetable, but you'll end up with 100 percentrelevant, thorough, customized research results put together bypeople who intend to make a career out of this.

is a marketing consultant specializing in startupbusiness planning and copywriting.

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