Understanding the Market
A key part of operating a business is understanding your industry and the market you are serving. That means analysing the competition, the opportunity for growth and your audience or customer base.
Understand your audience
One of the most important first steps to understanding the market is knowing your customers. You could start by organising your current or potential customers — your target market segments — into different groups based on things they have in common. The characteristics could be based on demographics, such as age or marital status, or behaviour, such as whether they prefer to shop online or in stores. Doing this can help you better understand your customers, an important part of growing your business.
Identifying and narrowing in on your target market segments can help you create and launch effective promotions, which could increase your sales. For example, you may have one type of advertisement targeted at high-income married couples and another targeted at low-income married couples.
This is also an important thing to consider when developing your business plan. As you take on that task, remember to:
- Define your audience. While you may recognise the quality of the products or services that you offer, it is important to make sure the product is also of value to the audience you’re targeting. Ask yourself, will my products or services appeal to them? How much will they be able and willing to pay for my product?
- Target multiple audiences to help grow your business. You can tailor your promotions, communications and sales efforts to each potential audience by speaking to their unique interests and needs. Explain how the product will meet those needs and fit or better their lives.
- Know where you stand compared to the competition. Get familiar with other vendors or companies offering a similar product to yours. Try out their product, look at their packaging, visit their website and research their mission and vision statements, if they have them. How are their products and approach to selling different from yours? If you were a customer, whose product would you buy and why? Considering these elements can help you improve your product and communications.
Once you know who your customer is and what your competition offers, the next step is to decide how much time and funding you can devote to promoting your product. Depending on your budget and audience, you may want to focus on printed coupons, paid advertisements or less expensive social media and email offers.
What is a value proposition?
A value proposition is a statement about how your product or service helps fulfil your customers’ needs. The value proposition describes the uniqueness of what you offer, including the reasons why people should buy from you and not another company.
Consider how your business is different from similar businesses. Knowing this could help you define your value proposition. Some examples are: good customer service, convenience, speed, price, unique products, and product “exclusives” that are only available from your company.
Value propositions can also change over time. Continually analyse your customers’ needs and desires, along with general trends that can impact your industry, and consider how you can alter your products or services to keep and attract customers. Perhaps you could try a new marketing technique, develop a new product, or lower your cost of doing business and pass the savings on to your customers.
Using your value proposition
Once you’ve identified your company’s value proposition, you can use this statement or idea in your marketing.
You might create a sign to put in front of your shop that highlights the value proposition and entices people to come inside. Or, if you have a website, you could create graphics or a short video that show the value proposition.
Knowing your value proposition can also be important if you want to pay for an advertising campaign. You’ve already identified how you help solve others’ problems, and you can use this information to create ads and decide where to place them.