Market Analysis for Your Online Business, Every online marketing plan should include a clear explanation of the market segmentation, target market focus, and a market forecast. It should include detailed information about each of the target market segments.
To develop an effective plan based on your customers’ needs and nature, you should be able to answer these questions:
- Who are they?
- Where are they?
- What do they need?
- How do they make their buying decisions?
- Where do they buy it?
- How do you reach them with your marketing and sales messages?
Knowing the answers to these questions is critical no matter who your potential customers may be. This is also true when a nonprofit organization goes into a market looking for funding, in-kind contributions, and volunteer participation.
The specific research related to this market analysis begins with statistics that provide the total numbers of households, classrooms, businesses, and workers in a market. These are your basic demographics. What you need depends on whether you’re looking at businesses, households, or individuals as your main target groups. When possible, you should be able to segment households by income level, businesses by size, and workers by job type, education, and other factors. Employment statistics can add information about types of workers and their education and background. You can also divide your target customers into groups according to psychographics. This is your strategic market segmentation, a core element of your marketing strategy.
Building your assumptions
While estimating the total potential market, you must necessarily make some wide-reaching basic assumptions. You have to assume a price level for the new product, a relationship to substitutes, and certain economic justifications. You have to assume that the total market potential is a stable concept, In addition,c not change annually. This assumption allows you to project a gradual increase in penetration.
Research, explore, explain
For each of your market segments, the market analysis should explain as much as possible about the target customers included in that group. That normally includes the segment description, needs and requirements, distribution channels, competitive forces, communications, and keys to success. Each of the following might be a topic in the plan:
You need a basic description of each target segment that includes attributes that characterize the segment, such as the number of potential customers, annual growth rate, annual spending, and market value. The more detail you include, the better.
Needs and requirements
The best marketing always focuses on customer needs. Why do they need your product or service? What is going to make them buy? Don’t get trapped into merely marketing what you have when you should be identifying a customer need and working toward fulfilling it.
What are the standard channels of distribution for this customer segment? How are they different from other segments? This is especially important for product businesses marketing through channels, but in all cases, you need to know where your customers go to satisfy those needs and requirements you’ve identified.
Know the buying process for these target customers. What are the key decision factors? For example, some customers are more sensitive to price than others, some segments are more concerned about quality than price, and some care most about availability and convenience. In each case, those customers are willing to pay to realize the desired benefits.
Where do members of this segment go for information? What kinds of information will be most effective? Know where to send marketing communications, such as advertising and press releases, so that the right customers will find them. Know how to create those messages so that they will generate the right response.
Keys to success
What factors make the most difference to success or failure with this market segment? Key factors will vary between segments and may include price, value, availability, image, features, financing, upgrade or return policies, and customer service. List the most important three or four factors.
Getting market information
A great deal of market information is readily available. Look to the Internet first. This information is accessible, current, and much of it is free. Most of the sources listed should have websites, or publish information through search sites, in addition to more traditional methods of publication. Market research firms and industry experts publish much of their information in trade and business magazines. Reference works index these magazines and libraries stock them. In addition, Trade associations publish many listings and statistics. Public stock laws require detailed reporting of financial results and stock market information sources compile industry statistics from financial reports. You can probably find everything you need at a local library. If not, you can turn to computerized database services, In addition, to professional information brokers, and United States government publications.
Many industries are blessed with an active trade association that serves as a vital source of industry-specific information. Such associations regularly publish member directories and the better ones publish statistical information that tracks industry sales, In addition, profits, economic trends, etc.