It’s amazing how many people put a statement like the following in their business and/or strategic plan: “The total market for our product is projected to be $1 billion in five years. If we only get 10% of it, we will be a $100 million company in five years.”
This is also known as the China syndrome. There are 20 bazillion Chinese people. If you just sell one tea bag to each of them you’ll make a fortune! Well, the market doesn’t just give you 10% of itself because you’re nice and there’s room for everybody in a growing market.
Your competitors’ goal is to make sure you don’t even get.005% of the market away from them. And then there’s the small matter of marketing and distributing your product. How are you going to go about getting mass numbers of consumers to want your product? How are you going to make it available to them when and where they want to purchase it? Defining who your target market is critical in determining how you’re going to reach them.
Market size is important because it is easier to build a large enterprise in a large and growing market than in a smaller niche market or a stagnant one. But market size is not specifically an indicator of the likelihood of success. You still have to get the customer to buy.
So, before you start down the path of undertaking the tremendous amount of work it takes to write a business or strategic plan, go through the process of basic market research and targeting.
Let’s take a look at how we worked with Sam, one of the members of a CEO peer group I run. I began to support Sam to create a simple marketing plan using this formula. We clarified that Sam’s segment of the huge electrical generator market was home generators. His target was single family homeowners.
Further specified, his target was single family homeowners within a 40-mile radius of his office that might purchase a home generator within the next year. Finally, this target was to be a homeowner that had experienced at least one power outage during the past year.
What should the strategy be? We determined that to reach a narrow target like this, we would best use some type of marketing that would reach only those people who fit his target description exactly. Certainly, the scatter-shot approach of radio advertising was out!
We determined that direct mail, the Internet and possibly niche magazine advertising would work best. Now it was time to look at tactics. What type of magazines would we use, and what type of direct mail? If we used the Web, how would we find those specified prospects and how would we communicate with them?
What specific marketing tactics would you have suggested that Sam use to reach his target?
Use the reflections above to clearly target your marketing, and then build this strategy into your business, strategic and marketing plans.