One of the first questions to ask when putting up a business is who is your market? Sometimes, it can easily be answered by saying ‘a specific group of people’ or ‘a broad range of markets’. But the real question goes beyond that… How well do you know your market?
To address this question, the best thing to do is to conduct Market Research.
Market Research: The process of gathering, analyzing and interpreting information about a market, product or service to be offered for sale in that market; and about the past, present and potential customers for the product or service; and research into the characteristics, spending habits, location and needs of your business’ target market/s, the industry as a whole, and the particular competitors you face.
While most successful entrepreneurs are visionaries, it is vital that their visions must be supported by market research for them to come up with the right strategy. Knowing the demographic, geographic, psychographic and buying behaviour of your market would be a big chunk in helping you know your market very well.
An article published by Entrepreneur Press said that there are just 7 steps to define your market:
- Make a wish list – Identify the geographic range and the types of businesses or customers you want your business to target. If you don’t know whom you want to do business with, you can’t make contact. “You must recognize that you can’t do business with everybody,” cautions Falkenstein. Otherwise, you risk exhausting yourself and confusing your customers.
- Focus. – Clarify what you want to sell, and remember:
a) You can’t be all things to all people
b) “smaller is bigger”
Your niche is not the same as the field in which you work. To begin this focusing process, Falkenstein suggests using these techniques to help you:
- Make a list of things you do best and the skills implicit in each of them.
- List your achievements.
- Identify the most important lessons you have learned in life.
- Look for patterns that reveal your style or approach to resolving problems.
Your niche should arise naturally from your interests and experience.
- Describe the customer’s worldview. – A successful business uses what Falkenstein calls the Platinum Rule: “Do unto others as they would do unto themselves.” When you look at the world from your prospective customers’ perspective, you can identify their needs or wants. The best way to do this is to talk to prospective customers and identify their main concerns.
- Synthesize. – At this stage, your niche should begin to take shape as your ideas and the client’s needs and wants unite to create something new. A good niche has five qualities:
- It takes you where you want to go — in other words, it conforms to your long-term vision.
- Somebody else wants it — namely, customers.
- It’s carefully planned.
- It’s one-of-a-kind, the “only game in town.”
- It evolves, allowing you to develop different profit centers and still retain the core business, thus ensuring long-term success.
- Evaluate. – Now it’s time to evaluate your proposed product or service against the five criteria in Step 4. Perhaps you’ll find that the niche you had in mind requires more business travel than you’re ready for. That means it doesn’t fulfill one of the above criteria — it won’t take you where you want to go. So scrap it, and move on to the next idea.
- Test. – Once you have a match between niche and product, test-market it. “Give people an opportunity to buy your product or service — not just theoretically, but actually putting it out there,” suggests Falkenstein. This can be done by offering samples, such as a free mini-seminar or a sample copy of your newsletter. The test shouldn’t cost you a lot of money: “If you spend huge amounts of money on the initial market test, you are probably doing it wrong,” she says.
- Go for it. – It’s time to implement your idea. For many entrepreneurs, this is the most difficult stage. But fear not. If you did your homework, entering the market will be a calculated risk, not just a gamble.