||Segment Your Market: Divide the market into
workable segments for which you are collecting data. Ways of segmenting the market might
include age, income, product type, geography, buying patterns, customer needs, lifestyle,
psychographics or other classifications.
For example, when a local computer store defines its customer segments as high-end
home office and high-technology small business, its segmentation says a
lot about its customers. In developing segments, consider what factors make a difference
in the purchasing, media and value patterns of your target groups. Does age matter in
choice of restaurants, or are style and food preference more important? Is income level a
Market Segments: You should also understand and explain market growth in each
segment. Discuss why your business is focusing on these specific target market groups.
What makes them more interesting than groups youve ruled out? Why are the
characteristics you specify important?
This is more crucial for some businesses than others. A clothing boutique, for example,
might focus on one set of upper-income customers instead of another for strategic reasons.
An office equipment store might focus on certain business people whose needs match the
firms expertise. Some fast-food restaurants focus on families with children under
Organize Internal Data: Critical to understanding your competition is
understanding your companys numbers. Develop a process for tracking and reporting
all relevant sales trends.
Information on Your External Environment: You can glean a lot
about competitors and industry trends by doing your homework. Check:
- Annual reports and 10 K reports on public companies
- Internet search engines by competitors' names or key words
- Trade associations and publications
- Business and general press as well as press releases
- Government agencies
- Private research firms, including online computer databases
here to view the resource guide for more information.
||Shop the Competition: If youre in the
restaurant business, patronize your competition once a month, rotating through different
establishments. If you own a shoe store, shop your competition monthly and visit different
stores. Park across the street and count the customers who go in. Note how long they stay
inside, and how many come out with purchases. Browse the store and look at prices. If you
cant shop the competition, ask your customers and suppliers about them.
||Conduct Your Own
Research: When you need specific information that doesn't exist about your
customers and prospects, conduct your own primary research. There are two
types of research: qualitative and quantitative. Qualitative research is used to
understand why customers behave as they or to develop hypotheses about that behavior. Personal interviews and focus groups (a group of
8-12 carefully selected people held in a neutral location) are two examples of this
semi-structured type of survey. Quantitative research is a very structured form that
attempts to answer how much. Numbers can be
projected to the universe that the sample represents. Telephone, online and mail surveys
are examples of this type of research.
Needs, Growth, and Trends: All marketing should be based on underlying needs. For
each market segment, explain those needs that lead this group into buying your service.
Did the need exist before the business? Are there other products, services or stores that
offer different ways to satisfy this same need? Do you have market research related to
this market need? Its always a good idea to try to define your retail offering in
terms of target market needs, so you focus on the buyer needs you satisfy rather than what you have to sell. Are there
really underlying needs such as style and prestige for fashion footwear, padding
for runners, or jumping for basketball players that relate to selling shoes?
Understand and explain market trends. What factors seem to be changing your business or
your market? What developing trends could make a difference? Depending on what business
youre in, market trends could be caused by changes in demographics, customer needs,
fashion styles or something else entirely.
to Compare Your Company to the Competition: Compile a list of factors that are
important in your industry. Criteria may include:
growth, market share, distribution methods, size of sales force, effectiveness of sales
force, sales training, selling expenses, prices, advertising effectiveness, advertising
budget, inventory levels, delivery time, distribution expenses, gross margins, product
quality, customer retention rates
plant capacity, plant locations, age of plant(s), age of equipment, ability to expand
capacity, skill of labor force, labor turnover, union relations, quality control, supplier
retention, raw material sources
cash flow, retained earnings, current assets, current liabilities, long-term debt ratio,
inventory turnover, return on sales, credit line, debt/equity ratio, per share book value,
stock price, return on investment, net margins
employee turnover, administrative expenses, age of facilities
experience, depth and turnover of top, middle and supervisory managers, effectiveness of
communication systems, access to information, cohesiveness of top management ranks,
compensation plan; decision making speed, strategic planning ability
& Development: age of R&D facilities, age of production technology,
production patterns, basic innovation, engineering abilities, experience of R&D team,
R&D budget, R&D project timelines
Strengths and Weaknesses: Rate your company on your developed list of metrics in
comparison to your competitors. Look for clusters of strength that may give you a
Information: Analyze the intelligence youve collected, draw conclusions and
make recommendations based on it. Develop a plan for seeking out opportunities to demonstrate your
companys strengths. If weaknesses are critical drawbacks to your companys
success, develop a plan for overcoming them.