by Gordon D. Cook
A brand and a business is just a theory without a market. Indeed, it is the interaction between the business and market that allows a business to exist. The market provides income and without this a business cannot operate
A brand and business develops and attracts a market if its offer is both needed and wanted. Establishing a need can be achieved by doing research as discussed in the first article in this series. So while it may be obvious that we, for example, all need food, different markets want different types of food and even want food to be presented in different environments and in different ways. So finding people who want one’s product and service is a challenge in itself but this becomes more complex when you realise that the demand must be a consistent and sustainable one. It must also be of a size that can enable your business to survive year on year.
So we now get down to the issue that a market must have adequate demand for your offer. A good definition of demand is the willingness and ability to buy. The next issue is, how do you find such a market.
This introduces us to the tool of segmentation and target marketing. It requires us to establish which people are accessible to you, and to whom you can deliver the product and service at a cost you can afford and at a price they are willing to pay.
In theory, one gives consideration to all your potential markets through a segmentation study. This simply means finding like-minded groups of potential consumers and customers. To find such a market we can apply a number of variables.
- 1. Geographic
In other words, can we define the market by where people live or by the routs on which they travel or by the spaces in which they work or study. Therefore, this would make us consider whether we are to perhaps find markets at the coast, or inland; to find markets in northern, southern, eastern or western communities. For some brands and businesses even climate plays a role; for farming products or services it could, for example, depend on where there are herds of cattle.
- 2. Demographic
Here we will consider whether we can identify a market through a common set of considerations such as gender, age, income, education and even race and religion. In other words, for a cosmetic product we might find an audience through demographic and geographic veriables: young ladies between the ages of 20 and 35 who live in townships and suburbs within a 70 kilometer radius of Johannesburg.
One’s ability to distribute obviously imposes some constraints as to your actual versus the potential market.
- 3. Psychographic
Here we can try carve out markets by factoring in what people think and feel, on their value systems, lifestyles and even personality traits. For example, we could form clusters around concepts such as savers, achievers and risk-takers.
- 4. Behavioural
Perhaps it would be relevant to find your markets around events or occasions, loyalty status, sought benefits and even user status.
For example, there can be a market around Christmas, Easter or a National sports event.
You could also analyse the extent of repeat purchasing or loyalty behavior and further segment. We have learnt that in most markets 80% of ones sales comes from 20% of your customers and therefore it is important to establish who those loyal purchases are so special care can be taken of them.
The first task then, is to find all the potential markets using some of the variables indicated above. The next challenge is to select which of those potential markets you are going to serve for, usually, the next financial year. This process will make one realise that you may not have the production capacity, transport capability or personnel resources to serve all your potential markets and therefore you need to select the market or a section of the market that you will target with your communication, your production and delivery.
So we can see that the first tool of research discussed in the first article can assist us to define and resonate with a market. Of course there is an immediate next challenge to make your communication and your offer attractive and competitive otherwise the market won’t buy. This then requires an application of other tools that will be discussed in future articles.