Get to Know Your Customers and Keep an Eye on PESTS!

Part IV of our business plan looks at customer analysis and market targeting.  Knowing your customer is one of the most important functions of marketing. Only through a complete understanding the customer can you begin to offer services to meet their needs or conversely – know if your product is “buyable” to your target population. A customer analysis, is essentially a study centered on the “buyer” and an integral part of any business plan.

Perhaps the first question to ask is “what is the total market size for the product?” Where, and the details of “who” - are the next critical questions.  Where is the market location, and what are the preferences and socioeconomic status of the target customer are critical to know.  If the sale of your product is already underway – an analysis of who has purchased the product and where/how will help to focus in on your target population.  Have you received any feedback on how the product might be improved? It is necessary for you to correctly understand your customers in order to create and develop a profile for targeting purposes. This is important if you are seeking investors since they usually ask for a complete profile of your niche target customers.

Businesses usually target many consumer categories or segments, and each consumer segment should be well developed.  You will need to know who the decision makers are – are they your direct target? or will they confer with others before making a purchase.   The decision processes - before, during and after purchase -should be included in the customer analysis.

The Target

The best companies manage to meet customer needs over a long period of time.  Revenues and profits result from one thing – finding customers who are willing to pay for products or services that they need or meet their needs.  Understanding the target customer is therefore, critical. Knowing and meeting your customer needs will help grow a long-term relationship that can endure and create a long standing loyalty.

Don’t Forget the Pests!

Businesses sometimes forget to look at the big picture (macroenvironmental factors.)

• Political Factors - Include government regulations and legal issue. For example: Tax policies; employment laws; trade restrictions or tariffs.
• Economic Factors – These impact the buying power of your customers. For example: interest/exchange/inflation rates.
• Social Factors – These factors impact the size of current and potential markets. For example: health awareness, population growth, career emphasis, safety emphasis.
• Technological Factors – These factors can reduce or remove barriers to access or increase productivity.  Some examples are: rate of technological change; research and development climate; automation.

All the above factors need to be presented in your business plan to some degree in order to show that the company is knowledgeable of its markets and is viable for possible investors.