If you’re going to make a success of your small business, the thing you must understand above all others is your market – the environment you’re selling into. All your decisions have to be made with an eye on how they relate to this market – there is no absolute measure for a good product or a ‘right’ price, only one relative to the market you’re selling into.
There are two major components of the market for any product or business: your competitors in the same space and the customers you’re all selling to.
The Competition
It’s difficult to break into a market without insight into the established players and intelligence about the other startups that are creating a buzz. If you have the resources, commissioning a full competitive strategy analysis from consultants experienced in your sector can be immeasurably useful – a chart to these new waters you’re planning to sail. This first identifies those other brands, describes them, so you know what they’re offering and how they present to customers, and ranks them so you know when you might fit into the ecosystem, and who are specific threats to you and your share of the particular segment of customers you’re targeting.
Your Customers
The other key component of your market is the people you’ll be selling to: your customers. Market research can help here, and it helps to be forensic. You can start with a broad understanding of everyone spending money within your industry – for some businesses this might be very nearly everyone in the world, so it’s not particularly helpful to know who they are. Where this research really helps to shape your business and guide you towards success is in breaking down the different groups (or segments) your market falls into. You can cut many different distinctions through your market, creating groups based on age, on income, on particular life milestones like ‘graduates’ or ‘homeowners’.
From Research to Practice
Understanding your market as being made up of many different groups with their own priorities and interests allows you to be specific in who you target and how you target them. You can shape your product to appeal to a particular segment of the market and then create different specific ad campaigns within it: if you sell furniture, you could have campaigns appealing to the priorities of home-owning groups of different ages, as well as separate ad groups that highlight how your products are good for renters.
It’s important to combine this with your research into the competition to use your marketing to highlight how you’re different from the other brands competing for attention and revenue from the same people. It’s important to communicate not just why your products are good, but why they are specific to you and how your offering stands out attractively.