In the previous segment, we discussed about being true to yourself and providing a product or service that you would really love. However, what if what you are producing or selling doesn’t manage to make any money? And how would you know from the get go? Here’s some tips and guidance for you in figuring out how to match what you do best with the right market segment.
Who Needs Your Product or Service?
One question that matters more than will there be a need is how many need it? Its time to look at your target market, and since you’re an internet-based business, you can choose to target just about anyone who is able to connect to the web.
- Choose a demographic group: Will it be people in their 30-40′s? Soccer-moms? Gadget geeks? The key is to choose a group that you are MOST familiar with. Don’t choose “Teens” if you have no way of understand them. Your demographic group doesn’t have to be the one you are in. It’s more important that you understand their needs. We’ll show you how to figure out your demographic numbers later, after step #2.
- Choose a regional group: Will it be the United States? California? Your business might just need to target several major cities at first. Try to avoid saying it’s the entire world. You’ll need massive amounts of dedicated resources to cater to hundreds of cultures and languages. (If you do, great!..but then why are you here??) Again, your target region should be a place where you understand the business language and any cultural influences. This applies inside the United States as well. Note: When it comes time to setting up your store’s appearances, consider what appeals to both your targeted demographic and geographic zones.
- If everyone buys just one..: Research statistics by using any search engine, to determine your Market Segment Size. Your Market Segment Size is the Total People in the Market x % with Internet Access. For example, your product targets male and female 25-34 years old living in New York with high speed internet. So using Google, its about 1.3 Million x 46% = 598K. Exact numbers are not important here. What is important is that this means if every one of those people bought your product, that is the MAXIMUM number of people you can reach. Take a look at your numbers and determine if its enough for a start. You can always expand your market size later. Hint: Further expand on the Market Segment Size by including other indicators such as household income to narrow your audience even further.
- Competitors in your Market Segment: Its likely that the market segment you picked is already crowded with similar products. Size up your competition by determining their market share if possible at all. Is their market share still small or are they a dominate player? If they already have the market cornered, then you’ll need to have a product or service that shows people how much better yours is or in be a specialty niche area. One way is to consider how to differentiate your product or service from others. Does your product or service perform in ways that others don’t? On the other hand, if the market space you’re in is quite open, you should use the opportunity for promotion and education. It’ll help you build your brand later on.
Tips for Market Large, Target Small
Now that you’ve assess the competition, don’t forget to assess your own situation as well. One good indicator that you’re on the right track is to show that you have a large market to pursue but you’re starting off targeting a dedicated space. If you find that your product or service cannot withstand the competition in the market segment you chose, the problem may not be in the product or service. Go back to step 1 again and re-evaluate your demographic and regional market segments. If you find that you still want to stick with the same market segments, then determine how you’re going to make your product or service stand out. A niche market could be exactly what you need. Ask yourself if your product can be made unique in any of these ways:
- Go higher (or lower) end
- Choose a different method of delivery
- Be service-based when others are product-based
- Narrow your product purpose
- Include other value-add’s as a package
- Compete on price (A lower price isn’t always the answer but sometimes that’s your advantage.)
Coming up with your starting market segment isn’t easy but once you do, you’ll be glad that you did. By doing your homework ahead of time, you’ll save yourself a lot of headaches and disappointments later on. Good Luck! We’ll focus on how to determine great products and services for your online store in our next installment!