When I decried unnecessary market research, I made the point that you should only bother collecting as much information as you’re capable of taking action on. I used an example: if you’re selling golf equipment, you’re probably going to buy ads in golf publications, so it doesn’t matter how your demographics look – you’ll be targeting by people’s behavior (i.e. playing golf).
I want to delve further into this, because this example assumes you have the resources to reach an entire market for a broad category of goods, which you probably don’t. And if you have to pick some customers to focus on, you naturally have to ignore others, so there becomes such a thing as the “right kind of customer.” Market research can tell you who that person is.
Wait, so now market research is good? Hear me out.
Suppose you sell jewelry. It seems plausible you might promote your business to anyone interested in jewelry. “I sell jewelry,” you think to yourself, “so all I have to do is reach the people who buy jewelry.”
Certainly, you can follow a plan that just says “find people interested in jewelry and sell them jewelry at a profit.” That’s even a step up from the TV campaigns of sellers like Jared, Tiffany & Co, and Kay Jewelers, who follow a plan that says “tell everyone.” This brand marketing is effective – someone without other obvious choices will probably default to the TV-friendly brand – but not efficient. All of those marketing resources could be better spent, but with vast resources, it’s easier to be effective than efficient.
“Okay,” you say smugly, “I know already that I can’t afford a TV campaign. That’s why I use the Internets!”
In the late 1990′s, being present was enough, but these days the Internet is just as broad a medium as TV. If you’re hoping for people to find you on Google, it can be tempting to want the 500 million monthly searches for “jewelry” to end up at your store. But that’s what the other 340 million jewelry websites – including Jared, Tiffany & Co, and Kay Jewelers – want too.
A search for “fair trade jewelry” bypasses these major players, and is the sort of market segmentation a jewelry seller could do, assuming the product really lives up to this promise and the customer really thinks in terms of buying something called “fair trade jewelry”. Google says 3,000 people search for that phrase each month, so there’s at least some market out there.
Of course, if you are Jared, Tiffany & Co, or Kay Jewelers, this seems like a laughably small market (which is exactly the point if you’re a small boutique).
This information can’t all come from sitting at your desk and searching Google. You have to get out of the building, whether that means formal market research or talking to real customers on the street. The key is to get to the bottom of who your customer is and what makes your product uniquely suited to satisfy their needs.
But, again, only do this if you can take action on the information. Don’t try to discover a market for your product unless you’re prepared to change some things – in your marketing or in your product – to suit that market.
Whatever your business, you’re shooting for a customer with high marks in three criteria:
1) Receptivity – How interested would this customer be in what you have to sell?
2) Accessibility – How easy is it to reach this group of customers?
3) Size – How many of these kinds of customers are there?
If you made handmade jewelry, you would look at a website like Etsy.com (slogan: “your place to buy and sell everything handmade”) and think “a large (size!) online shopping mall (accessible!) of people interested in handmade (receptive!) goods? Bingo.”