Experts frequently focus on their ideas and execution. However, understanding your market’s key concepts can be just as critical.
“If you don’t know where you are going any road will get you there. “ – Mark Twain
As a business owner, there’s just no getting around having clear definitions for both your market and segments. Many of my clients often hate the work necessary to understand their markets. Having the U.S. population, which is made up of about 300 million people, probably won’t get you’re the results you want. In most cases, using segmentation (selecting targets according to sex, geography, income, age, etc.,) can reduce your market to the 5-10 million level, which is a much sounder target to have. Taking the time to define and segment markets can both, save you time and money, and improve results.
Here are the key concepts to consider in evaluating your markets:
Changing Environment and Structures
We are in a state of constant change that requires new and flexible analysis. Labor force, baby boomers, technology, the Internet are all well-known factors affecting most markets. For example, I have been coaching potential high school entrepreneurs and their focus on cell phone opportunities is incredible compared to older consumer’s. A simple Google search of current market trends for your product will help you stay in the know.
Old Paradigms and Structures are Failing
Many of our largest and seemingly most powerful corporations have experienced no growth or minimal growth or, worse yet, failed over the last ten years. Traditional retailers, magazines and newspapers, coal, and lengthy hospital stays are dying. In contrast, the Internet, cell phones, e-retail, and cloud software are growing exponentially. This may happen even faster as automation and Artificial Intelligence become more accessible. To offset stagnation, when growth slows down, try switching your focus to profit.
Changing Demographics Call for Open Systems and Collaborative Models
The greatest need for change is a commitment to open systems and collaborative models; particularly, in an era of ever changing demographic trends. Open systems typically reject bureaucracy, authority, hierarchy, and closed decision making processes. Instead they encourage participation, diversity, new rules, and, to some extent, chaos. For example, social media has greatly expanded communication and equalized communication. United Airlines response to the recent events is a good example of ignoring viral messages online and their impact on a brand’s image.
One of the biggest outcomes from open systems is the collaborative decision model. As decisions become more complex, the need for diversity, internationalism, innovation, and expertise are expanded.
Defining Your Market is also Based on Understanding Operating Characteristics of your Effort
I frequently argue operations can be the most innovative and best marketing tool. These can include customer service, delivery, price, quality, packaging, costs, going green, distribution etc. Amazon, Uber and Airbnb are the best examples of operations creating new market segments. There are many great resources like Shopify for retail, Mailchimp for marketing, Freshbooks for accounting, and Ship Station for shipping are innovative resources to help manage your business. Researching and discovering which model best fits your business, is a great place to start.
You Need to Welcome Measurement and Feedback
Start by observing, understanding, sharing financials, operations report, and sales reports. Adopt a collaborative management style and incorporating more information, data and analysis into your decision making improves performance and reduces mistakes. Tools like Survey Monkey, Google Analytics, and Google search can facilitate the process.
Simple questions to help you understand your market
Start by answering the following question from your own perspective with a little research, rather than any extensive analysis and time consuming reports. Once you’ve completed your initial answers, conduct research, such as, surveys and revisit these questions for a more complete assessment:
- How are your company and its products or services truly different?
- Do enough customers care about these differences?
- How can you most effectively communicate your differences within budget?
Defining your market can identify significant opportunities and help reduce segments with little potential. In the end, you need to ensure that your offerings meet the needs of your consumer. Ignoring key concepts, such as demographics, market innovations, and operations, can put your business at peril. Similarly, understanding the opportunities in your market and needs of your customers can dramatically and positively affect results.
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