Be specific with your marketing and reap the rewards
As a business coach I’ve talked with a lot of companies who, when asked what their market is, have said “everybody”. Generally speaking they have turned out to be the companies that are struggling – often due to lack of focus. There’s a lot of competition out there and you don’t want to be trying to beat it all so how about taking a more proactive approach to targeting your market? Here are a few quick tips to help you focus in on the most profitable market area for your business.
Market segment and growth potential
A market segment is just a smaller, more specific part of an overall market. For example, the clothing market has a number of segments – children, teens, adults, male, female etc. By focusing on a specific segment you have more chance of becoming a known participant in that field. However, do make sure that you don’t focus down too far and that there is sufficient growth potential for it to be worthwhile.
Profitability of the segment
A segment could be large and growing in size but it could still be unprofitable, or at least very difficult to make profitable. The mobile phone market is still growing exponentially but margins are very low and based on huge sales.
Current and potential competition
The fewer competitors the better, but ask yourself why there are only a few. Is it because it’s a new sector and you’re one of the early ones to move in, or is it because there’s little to be gained from tapping into the segment? Being a ‘first mover’ has it’s advantages but it can be really hard work selling a new product to a new market. And if the barriers to entry are low (ie it doesn’t take much for a competitor to set up in the same market) you could end up doing all the work simply for a flood of people to come rushing in when you’ve established the market.
Capabilities of your organization
Do you have the ability to deal with the market segment you’re aiming at? It’s very easy these days to set up a Web site and advertise your business across the world but do you have the capacity to deal with worldwide sales? Do you have the finance and cashflow to buy sufficient stock? The people to deal with the demand? Sometimes it’s better to start local and expand slowly.
If you’re going to run a small business successfully I would recommend that you look carefully at your offering and then see where and how you can carve out a segment of the market that fits you most closely. Once you’ve done that then profit improvement will follow. However, trying to reach everyone at the start is really a recipe for failure.