Reason #1: Not Knowing Your Market
Trying to market to a large and general population of customers is a recipe for failure. A better approach is to more clearly define your target market so that you can focus your time and resources.
A great way to help identify target markets is to conduct an exercise called market segmentation. By segmenting your sales according to varying criteria – e.g., products, customers, industry type, geographic location, etc. – you may discover specific market segments that you could position yourself to serve well. For example, by segmenting customers, an accounting firm may discover that they have developed a business concentration in providing payroll processing services to small businesses with less than 20 employees.
Once you have determined a market you wish to target, set out to learn everything you can about the needs and preferences of the customers that comprise the market. When you feel you’ve gained a deep understanding of the market, you’re ready to develop a marketing plan with laser-like focus on meeting the specific customer needs and preferences that your marketing research identified.
Several benefits are gained when you identify niche markets that you are uniquely positioned to serve.
Your products and services can be tailored to the specific needs of the market.
You will gain a better ROI on your marketing investment.
A smaller and more defined market allows will allow you to be closer to your customers, allowing you to form deeper relationships and learn even more about the market.
As the noted British industrialist, Sir John Egan, so eloquently said, “The absolute fundamental aim is to make money out of satisfying customers.”