Your customers are the most important focus for your business. Without customers you would not be able to generate revenue for your business. Many business owners believe that everyone is a potential customer. Based on your reading so far, you are now seeing that this is simply not true. Not every person will desire what you are selling or appreciate the value of your products or services. This section will help you organize potential customers into market segments using ideal client profiles. You will also learn about the importance of researching who your customers and competitors are.
Describing your Market Segment
Before you start segmenting your market, it is valuable to think about how you would describe a market segment. What helps you describe differences between one market and another? The language we use for segmenting markets is called demographics and psychographics.
If you think about it, you use demographics all the time. Every time you speak about someone’s age, occupation, address, income, or education degree you are speaking the language of demographics. If your customer is a business, their demographics are somewhat different. Examples of demographics that relate to businesses include which industry they are in, the size of the company, and their corporate structure.
Psychographics in marketing is about understanding your customer’s emotions and values. If you try to understand what resonates with your client, you can market more accurately. Every market segment has an ideal client. Think back to Section Three in this guide. In this instance the market segment was called a “diaspora”. Within this segment, there were four ideal client profiles: Assimilators, Marginals, Ethnic Affirmers, and Biculturals.
You can create a full profile of your ideal client according to their shared demographic, psychometric, and behavioural traits. When you discover where your ideal client lives and understand what they like, you can create more effective marketing strategies. Behavioural traits show how people behave. These behaviours are usually based on people’s values.
You can learn even more about your customers by conducting additional primary and secondary market research. There are many databases that organizations, including SK Startup Institute, have at their disposal to help you.
- Demographic and Expenditure reports through Sitewise database provide a better understanding of who your market is and what they are spending their money on. For more information on how to access reports through Sitewise visit our market research page.
- Statista is an open database where you can browse insights and facts across 170 industries and 150+ countries. For more information on how to access reports through Statista visit our market research page.
- PRIZM classifies Canada’s neighbourhoods into 67 unique market segments based on postal codes. Click the link and enter your home postal code to see how your neighbourhood is viewed as a market segment.
- Statistics Canada provides free data and reports to ensure Canadians have the key information on Canada’s economy, society and environment.
The Importance of Primary Research
Primary Market Research is research you do yourself. It involves going to your customers, potential customers, and competitors directly to gather information. An example would be a customer survey or focus group.
One of the best ways to understand your customers is to ask them lots of questions! What is it they like about your products and services? Why do they like your products and services? Customers appreciate being asked their opinions. You can learn so much from their answers. This kind of direct questioning is called “Primary Market Research”. Gather as much information from your customers as possible and they will tell you what is working for them. Your customers will also tell you what is not working.
You can ask questions directly at the checkout counter, create a telephone or online survey. Try to reward your customers for taking time to connect with you. And don’t forget to ask for your customer’s postal code now that you know the value of this information. Your customers have the right to say “no” but many of them will say “yes”!
There are many free and cost-effective ways to create an online survey. Visit SurveyMonkey to learn how you can create a survey to send via email.
Researching your Competition
Have you ever heard someone say, “We don’t have any competitors”? What they really mean is that they have no direct competition. A direct competitor may be another business selling the same or similar products and services as you are.
For example, you may have a retail storefront that specializes in selling custom fabric and clothing to customers in your community. You may be the only business in your area specializing in these specific items. It is true then that you may not have direct competition. However, an indirect competitor could be a large retail fabric store, such as Fabricland, which sells similar fabrics to your market segment. Another indirect competitor could be an online retailer that imports fabrics and clothing which ship directly to the same type of customers you serve.
If you are unsure about whether you have competition, answer the following questions:
- What problem is my business solving for a potential customer?
- How would a potential customer already be solving this problem without my business?
- Is there an existing business that might already be solving this problem in a different way for my potential customers?
If you are researching a new business idea and cannot find any competitors, there may be a good reason. Lack of competition could indicate that the market is not big enough to support a sustainable business. Perhaps there is a lack of potential customers for your business. Therefore, it is important to conduct market research.
How Secondary Research Can Help
Secondary Market Research is a kind of research where you are gathering information from sources such as databases or other specialty companies who collect the data for you.
Secondary research can reveal a lot of information about your industry and competition. This type of research can uncover hidden competitors, industry statistics and so much more. You can gather good information about your industry by identifying your industry’s NAICS code.
NAICS stands for: North American Industry Classification System
- A code used to find data that is publicly available or on databases.
- Helps to find information specific to your industry.
You can learn more about conducting market research with NAICS codes and industry classifications by visiting the Government of Canada website.
- 487110 Scenic and Sightseeing Transportation, Land
- 561510 Travel Agencies
- 721191 Bed and Breakfast