Finding your Target Market - A Key to Profitability Using a SWOT Analysis
Businesses are driven by markets, which are determined by customer needs, wants, or aspirations. A target market is the group of people who have an interest in the products or services of a company. Markets are determined by factors that are interrelated and include sex, age, professional needs, marital status, geographical location, education level, income, technological expertise etc.
Businesses should understand how their products or services benefit their potential customers. Conducting marketing research through focus groups and customer surveys with your target market is an excellent way to gain a better understanding of the drivers and motivations behind the buying behavior of your target market prospects. Marketing research commonly performed online, but can also be outsourced to market research companies to conduct a comprehensive study.
Do you have a formal Marketing Plan that is updated frequently?
The Value of Market Research
A deep understanding of your target market will assist you in developing focused advertising tailored to the specific audiences (likely to purchase) that have an interest in the products and services being offered in the marketplace. By understanding their target market, businesses are able to connect with their audience even before communicating with them in a more personalized manner. With a keen understanding of a target market, companies can determine the likelihood customers will buy their products or services at various price points (called price elasticity).
Secondary marketing research data can be obtained from the media, libraries, journals or even observation. The more data a company has about the market, they can begin to identify specific profitable market segments. Many companies ignoring this very important part of marketing which essentially amounts to doing business ‘blind folded’ resulting in missed opportunities.
A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis helps to identify the advantages (S - O) and disadvantages (W - T) internal to your organization and the external environment. Developing a full awareness of your competitive situation can help with strategic planning, problem solving, and decision-making.
A SWOT analysis is used to:
- Identify and uncover problems in the business
- Explore alternatives for new initiatives to grow the business
- Identifying opportunities for success in context of threats and the competition
- Establish business priorities
- Adjust and refine business plans when goals are not being achieved
A SWOT analysis also offers a simple way of communicating major initiatives or programs to the organization. In addition, SWOT based reports are an excellent way to organize information gathered from studies, surveys, business metrics, and marketing research.
Similar to the approach to characterize the internal environment, cast a wide net to assess the external environment. No organization, group, program, or geographical region is immune to outside forces.
External forces to consider include:
- Future Trends/ and Technologies
- Economic (Domestic and International)
- Access to Capital
- Legislation and Regulations
- Local, National or International Political Events
It should be noted that a SWOT analysis should be dynamic due to responses and reaction to your plan by your competition.
Internal factors include:
- Human Resources/Employees
- Physical Assets
- Business Processes
This list is not all inclusive so be very creative and critical in identifying your strengths and weaknesses. If you are having difficulty identifying them, start by listing your characteristics or how your customers describe your strengths. Another good are to find data about your organization are from customer surveys, complaints, and information from your call center.
It is also important to study your competitors and their offerings. Customer buying behavior may be influenced by features that differentiate your products from the competition and they often use differences in products/services as a means of comparison. Companies should have taglines and marketing promotions build awareness and familiarity (branding) in the mind of the customer.
Most businesses owners often assume, incorrectly, that they have a better product and the competition is . Business failure starts by losing customers either as a result of wrong pricing or wrong marketing strategy or wrong products in a market. By identifying and understanding a particular group, businesses are able to build and retain a healthy loyal customer base, generally shown by the success of the business.
SWOT Analysis in Action
In summary, people buy products and services for the satisfaction of basic needs, to solve problems, or for emotional reasons. Businesses should segment the larger market and specialize in sub-segments that are profitable and where their unique qualities enable them to identify and retain loyal customers. A SWOT analysis helps to identify the advantages and disadvantages internal to your organization and the external environment.
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