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RESEARCH YOUR TARGET MARKETS
Once you have identified potential target markets, you need to gather data on the following:
- Channel position: Which possible sales channels will your business use? Are certain channels more profitable than others, easier to enter or simpler to work with? Are some channels growing while others are shrinking? Carefully research the costs and potential profit of each channel.
UNDERSTANDING CHANNELS: Channels are how products and services are distributed to the customer. Below are common channels businesses use:
Direct sale to business (b2b): You may sell products or services directly to businesses.
Direct sale to consumer (b2c): You may sell products or services directly to individuals.
Sale to distributor who sells to retailer: If you manufacture or import a product, you may sell it to an agent or middleman, who then sells it to retail outlets.
Internet sales: You may sell to either businesses or consumers online (e-commerce).
Associate or affiliate networks: You may sell your product through a network of associates (offline) or affiliates (online) who keep part of the profits in return for facilitating the sale.
Understanding the various channels helps you see market segments you might have missed, identifies multiple market segments you can target, helps you set prices in such a way as to avoid channel conflicts, and helps you develop your marketing communication strategy.
- Geographic location: If you’re starting a local business such as a restaurant or retail store, you’ll be targeting customers in a specific geographic area. If you’re starting an ecommerce business, you may be selling to customers nationwide and even globally. Wherever your customers will be, gather information about that location.
What local, regional, national and global factors will affect the target market in that location?
- Customer demographics: Drill down into your customer demographic by researching the following:
- Spending: Income is important, but you also want to know how your target market spends that income. What percentage of their income goes to your type of product or service? How much discretionary income do they have?
This series ongoing series handbook prepared by Marjorie Weber was prepared will also be part of the Miami Bayside Foundation to qualify small business owners for the Miami Bayside Foundation loan program.
Handbook series Small Business Start Up Part 1: Small Business Start Ups Making It Legal; Part 2: Small Business Start Up Capital Access Primer and Key Steps ; Part 3: Definitive Steps to Create the Optimal Small Business Growth Team Part 4: Once You Have the Dream Team, It’s About Employee Retention, Part 5: Delegating Responsibilities Policies and Procedures – Letting Go Part 6: Breaking Down the Set Up of Small Business Financial Records Part 7: Three Best Bet Picks for Small Business Accounting Software Part 8: To Lease or To Buy? Issues Relating To Both In Today’s Market part 1 Part 9 Decided on a Business Lease? 20 Lease Provisions Part 10 What Small Business Contracts Are Required and Who Reviews? Part 11 What are the most serious small business risk and coverage issues?
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