Find the unmet market need and define your target customer
Identify Your Target Market
Market research is about understanding the market in which you plan to compete and positioning your product to meet an unmet need. It is about finding an opportunity in the market, determining who are our potential clients and understanding who are the existing players already competing for our business.
- Identify an opportunity in the market
- Identify your target market
- Identify existing competitors
As you begin to consider what kind of business you are going to launch, read Seth Godin’s “8 questions and a why,” then answer the 8 questions based on the business you care most about, and after each answer, ask ‘why?’
Here are the questions:
- Who are you trying to please?
- What are you promising?
- How much money are you trying to make?
- How much freedom are you willing to trade for opportunity?
- What are you trying to change?
- What do you want people to say about you?
- Which people?
- Do we care about you?
(and after each answer, ask ‘why?’)
This will help you begin to understand how you will position your company in the market place.
The goal of market research is to determine the attractiveness of a market, both now and in the future.
Identify Your Target Market –Many businesses make the mistake of trying to be all things to all customers. Customers buy for different reasons, and the business needs to determine why the target market makes its buying decision.
- Who are your customers?
- Where are they?
- What do they want?
- Why do they buy what they buy?
- What is important? Pricing, Customer Service, Location, Financing, Shipping & Returns
- Where do they buy now?
- Are they happy with their options? (Is there an unmet need?)
- Who do they listen to?
- Is this a growing market?
- Is seasonality a factor?
Competitive Analysis – Your competitive analysis should identify your competition by product line or service and market segment. Assess the following characteristics of the competitive landscape:
- What is their market share?
- How do they market?
- How important is their location?
- Strengths and weaknesses
- How important is your target market to your competitors?
- Are there any indirect or secondary competitors who may impact your success?
- What barriers to market are there (e.g., changing technology, high investment cost, lack of quality personnel)?
- How will you differentiate?
SWOT Analysis – Your SWOT analysis identifies your strengths, weaknesses, opportunities and threats. Are you good at numbers? Does networking make you skin crawl? This will help you decide what to keep in house and what to outsource.
- What are your strengths?
- What are your weaknesses?
- What opportunities exist in the market?
- What threats exist in the market?
Threats could include a large entrant with deep pockets enters a highly fragmented market. Think Starbucks entering the mom and pop coffee shop market. Are there pending legislation that could change how you do business? for instance, sales taxes being charged on online purchases.
Identify your target market and typical customer –
- Is there an unmet need in the market?
- Is there a growing need for your product?
- What is the largest opportunity and threat in your industry?
- Describe your typical customer (demographics).
- What motivates how they buy?
- What do they do now?
- Who are your competitors?
- What are their strengths and weaknesses?
- How do you position yourself against your competitors?
Research – Lots of questions, but where are the answers? These are some ideas of where to begin –
- Interview potential clients
- Focus Groups
- Online Groups and Message Boards
- Competitors –
- Their websites
- Visit their location
- Price sheet
- Business collateral – brochures, annual reports, etc.
- Industry/Trade Associations
- Business Chambers and Groups
- Government Agencies – particularly those agencies supporting business may have resources or can direct you where to look.
- Industry specific magazines – many offer media kits that clearly identify their target readers and their demographics.
- Public filings – S1s, annual reports, etc – generally will have good assessments of the market. Maybe a valuable resource if you are pursuing a similar market.
Resources – these articles might shed some additional light on market research.
- How to Uncover Unmet Needs – Duct Tape Marketing
- The small business market research challenge – Duct Tape Marketing
- How to Write a Marketing Analysis – Inc.
- Best Way to Do a Market Analysis? – Inc.
- How to Define Your Target Market – Inc.
- How to Assess the Market Potential of Your New Business Idea – Inc.