courtesy of the Small Business Development Center of Duquesne University
Before you can prepare a marketing strategy detailing how your customers will learn about your business (direct mail, newspaper, sales calls, etc.), you must first answer the questions: Who are my customers? What is the best way to reach them? The answers are assembled through a target market and customer profile.
A target market is one or more groups of potential customers, each group having distinct characteristics, which will be approached through a sales and promotions program.
If you are selling to a consumer market, your customer can be defined by their gender, age, income, occupation, educational level, location, lifestyle characteristics and buying habits.
If you are selling business-to-business, you can define your market by NAICS or SIC Code, location, size, how the business will use the product, service requirements and purchasing policies.
Once you know all you can about potential customers, you can begin to understand how they can be reached effectively. For example, if you sell a service that can be used within several industries you will want to target specific companies within those industries. Rather than spending money sending information and reaching every business in those industries, you should concentrate your efforts on those companies who are more likely to purchase your service. In this example, you describe your market as firms located in Southwestern Pennsylvania with sales under $1 million. You could then purchase a mailing list of similar businesses or buy space in a trade journal that offers regional advertising. This maximizes marketing dollars.
Another important consideration is how many consumers or businesses fall into your target market. You want to answer the question: Is this target market large enough for your company to profit?
Published Sources of Information
Sources to use for information on your target markets:
Trade associations (Many associations survey members and prepare reports on customers)
Other owners outside of your competitive area who are willing to talk with you
The US Census Bureau at www.census.gov has demographic and economic report.
Published information or information from outside sources may not tell you enough about your customers or their buying habits. You might have to go directly to potential customers themselves. You can gather direct customer information through:
Questionnaires distributed by mail, phone, or in person
Informal surveys are fine as long as they give you the information you need.
Using Focus Groups to Gather Market Information
What are Focus Groups? These are small groups of 8 to 12 people who meet for 1.5 to 2 hours answering questions on a specific topic or participating in a general discussion. The session is directed by a moderator and typically is unstructured but oriented to key questions and research objectives.
Why use the Focus Technique? A quick way to gather information, focus groups can be less expensive than interviewing. The technique facilitates in-depth questioning and produces synergy and group dynamics.
Using Surveys and Questionnaires to Gather Market Information
What is a survey? A survey gathers information from a large number of persons in a questionnaire format.
How do I decide the size of the survey? Surveys conducted by market research firms use formulas to determine the survey size so that the results can be considered statistically valid and reliable. Remember that you are trying to produce reasonably convincing information in a less formal way. So you should select a practical number of persons to be surveyed and these persons should represent a demographic diversity of your customer base.
How do I prepare the survey for distribution? Make sure the directions are clear and easy for the respondents to follow. The form should be simple to fill out and for you to tabulate the results. Pretest the survey to make sure the questions are understandable and answers give the information you want. Consider using an incentive.
Target Customer Profile
After you’ve gathered information about your customers, you might want to complete a written profile. Use the "Target Customer Profile" to develop a description of your potential customers.
The Duquesne Small Business Development Center is a member of a statewide consortium of college and university-based centers designed to provide management and technical assistance to the small business community. Visit www.duq.edu/sbdc to learn more about the Duquesne SBDC.
Don't miss the opportunity to sit down one-on-one with an SBDC representative at the INPEX Inventors Resource Center.
The SBDC of Duquesne University contributes to INVENTORS COMMUNITY as an industry expert, but is not employed by or otherwise compensated by INPEX, InventHelp or its affiliates.