Back to: Business Planning 2 Marketing Basics: Video Course
Please note: the sound on this recording is a little low, you may wish to listen through headphones.
Building a precise and tactical marketing plan that always hits the target, first requires building an audience of like-minded potential customers or clients.
From this audience we can then identify real prospects for our services and products, and eventually make sales.
In order to focus marketing in this way, it’s necessary to:
- Identify your ideal customer by asking yourself who has most need for my products or services?
- Then learn as much as you can about them, including their lifestyle, their outlook, their disposable cash, etc.
- Once you understand the specifics of your audience, you can then see how many of them are in your overall market, and quantify your proportion of that market ie your market size or segment.
- Finally, we’ll talk about a few research tips so that you can find your way to some relevant information.
So, let’s look at each of these separately.
Building that audience starts with creating a picture of an ideal or typical client.
Creating an ideal client model helps us pinpoint the BEST example of the customer who is MOST likely to purchase from us. The one that will take a look at our offering, and just say “yes!”. Taking this marketing approach will not prevent you from selling just to them (you can sell to anyone who comes knocking). What it does, is help you refine a marketing strategy that is more likely to hit the target, and is less likely to cause a disappointing scattershot result.
Ideal client marketing will help your business offering stand out among the many businesses who are offering something similar to you but are taking a more generalized approach. It’s the difference between saying “Buy my gym shoes, because you need shoes for the gym” and “Buy my gym shoes, because they will fit you well, suit your style, and are specifically designed for your personal work out needs”.
One way of identifying an ideal or typical client, is to match the specifics of your product or service to the needs of your audience. Or, to put it another way, how does your product offer a solution to a particular problem your client may have? You can then market around this problem.
Generally, a problem is a challenge that needs fixing, and that solution tends to be obvious: my roof leaks so I need it fixed. Some challenges are a little less cut and dried and their could be many potential solutions. A problem like: “I’m tired all the time!” Could be solved with a variety of possible solutions such as: take more exercise, take less exercise, reduce stress, eat better food, lose weight, get more free time, etc. Your business could address the problem of tiredness with any one of these solutions – personal health advice, meal delivery, a service that gives the client more time, like dog walking, etc.
Whether you offer a product or service that solves a very straight forward problem, or is a potential solution to a more complex problem, doesn’t matter, but identifying what that problem/solution relationship is and addressing that in your marketing is the point.
Another way to identify your ideal customer, is to consider who you are most suited to work with. This could be down to your personal choice, your experience of how responds best to your offering, or it could be related to where they are located geographically, or other practicalities.
Let’s look at the next element of figuring out your audience – learning all you can about your ideal customer. Let’s start with learning both demographic and psychographic information about them.
Demographic meaning core statistical details such as geographic location, work history, marital status, salary etc. While Psychographics is about identifying an individual’s psychological profile ie what values do they hold, what personality traits are typical, how has their culture shaped opinions, attitudes, interests, and lifestyles.
So let’s look at a few key questions to ask yourself about your audience as it pertains to the demographic or psychographic data of your ideal client in order to then quantify your target market size – which is the final part of the audience definition piece of the Marketing Strategy.
Looking at the demographic questions, consider:
- How old are they?
- What gender do they identify as?
- Where do they live?
- Do they own or rent their own home?
- What do they do? How much do they earn?
- Are they married? How long? Have children?
- What education do they have?
Depending on your business, you may ask more specific questions in order to drill down further. For example, as a pet services business owner, you’d be interested in what pets they have? If you are selling educational supplies you may want to drill down on the number of children, their ages, where they attend school, etc.
In terms of psychographic questions, the aim is to ask questions which shed light on the personality, values, opinions, attitudes, interests, and lifestyle of the individuals. In the same way as the questions you gather for demographic data collection should be specific to your business, so should psychographic data.
- Where do they go on vacation? What types of vacation do they enjoy?
- What are their personal spiritual beliefs and values?
- What does a “good education” mean to them?
- How would they define “family”?
- What are their hobbies?
- What types of entertainment do they enjoy?
So, some of these points will help us later when we get to branding and communication style, but for now let’s see what information we can use to help us quantify our market size.
There are a few ways to work with market segmentation which I think are overkill for what a small business owner needs to achieve in terms of his/her business plan.
So, in the spirit of keeping is simple, consider taking these steps:
- First identify possible market segments within your overall market.
- Then, find which segment your ideal customer sits within.
- Finally, analyze that segment so you know what is possible in terms of your potential market share (as a sales value).
So in this example:
- We’ve identified our market segments in Spruce Grove (applicable if you have a local business) as being Family Franchises like Tims, Boutique Franchises like Starbucks, and Independently owned coffee shops like Perks.
- Of those, our ideal customer sits most squarely within the Independently owned coffee shop segment.
- Based on data we have researched, we know the overall value of the coffee shop sales market in Spruce Grove. And the percentage size of each segment. Based on our confidence, testing, and research, we can estimate how much of the Independent Market segment we believe we can go after. Here, our potential slice is worth 5% of the total market of $10,000,000 which equates to $500,000 per year.
Things to bear in mind:
- Approach your market size analysis in a way that makes most sense but always end up with the total sales value for the segment you are targeting ie the segment within which your ideal customer sits.
- If you can offer something unique which is currently unaccounted for within your market – you are potentially creating a new segment or poaching from an existing one (this may take a different sort of marketing strategy to achieve). This is the perfect situation “finding a gap in the market”. However, a gap in the market takes even more research to prove and your loan analyst will be looking for an even stronger argument based on fact not hunch.
- You may not be able to find convenient statistics to help you find the overall market value and percentage shares so, instead you could start with population figures, identify the typical age of coffee drinkers who go into coffee shops, then figure out what their average spend per visit is. Sometimes you have to dig to find the stats to help you.
- Combining research techniques will help you get as accurate as possible – you may not find all the statistics you need online or convenient analyses already done.
- Whatever figures you come up with, you’ll need to prove how realistic they are in the other sections of your business plan. So if you say you are going after a segment worth $2m in year one – what does that mean to your Operations? Is it robust enough to cope with that many customers? Do you have an accountant engaged to help you? Etc.
Before we leave this first step of our marketing strategy process, lets have a quick word about research.
Probably one of the most common requests for help I receive from budding business owners is, how do I get the information I need to figure all of this out. This is important because not only do you want to get an accurate view of your target market as you can, but if you’re asking for financial support, you’ll also need to justify your findings.
- Start online and get the most up to date statistics you can – the census is always out of date, but usually you can extrapolate up (or down).
- Use online sources but don’t forget you local library or government offices – often your local government office will produce leaflets about their communities which offers a wealth of information based on census results and other surveys.
- Go to the experts – if you are offering a product or service that appeals to a very specific target market, there may be organisations that can help. For my pet services business it was Pet Sitting International that every year did a survey or members including asking details about their clients.
- Think outside the box. Create or join an online or offline group to learn and ask questions. Stand on the corner with a clipboard the old fashioned way and stop shoppers with some questions. Do an online survey. If you have the money, pay for research (super expensive). Run a focus group.
- Don’t rush. Give yourself time to find out as much as possible about your ideal customer and your market.
- Compare markets. Research a few different ones until you find one that gives you the potential turnover you’re looking for.
- If you make sensible assumptions during your research, log your reasoning.
Now that we’ve looked at the various elements involved in Defining your Audience, let’s moved onto looking at Brand Development.
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