Marketing is a complex category of business which is why I’d like to begin this article with a true definition of marketing. Dr. Philip Kotler the marketing guru defines it as:
“The science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.”
The ultimate aim of marketing is to understand and know your customers so well that your products and services will fit them perfectly.
The Role of Market Research
Achieving the ultimate aim of marketing however is a difficult one. It requires tremendous amounts of research into four key areas to begin with:
- Your business
- Your customers
- Your competitors
- Your chosen market
The research conducted will then form the basis of a firm’s ‘Marketing Strategy’.
All business strategies aim to show how different you are as a business from your competitors and what your competitive advantage is. Your marketing strategy should aim to create, communicate, and deliver value to a target market at a profit.
Areas to Research
To survive in this highly competitive market, companies need to know exactly what their business is about.
This seems easy yet there are many owners and managers who wouldn’t be able to answer why the customers should buy from them and not their competitors. The purpose of your research into your business should be to determine what your Unique Selling Point (USP) is.
There are so many choices available to your customers that when they’re spending money to buy something, they want to know that it is the absolute best that their money can buy them. So, as a business you need to clarify and tell them exactly why they should buy from you. Here are some key questions:
- What is your specialisation?
- What is your competitive advantage?
- What is your business’s area of expertise?
- What is your USP?
- What is your business the best at?
Many businesses fall in the trap of answering those questions with ‘quality service’ which is only an acceptable answer if your competitors offer zero quality and zero service.
Having a clear competitive advantage and basing your business on it would not only differentiate your business but clarify your purpose as a business and help you with your segmentation.
Segmentation is a key part of any successful marketing strategy. It involves identifying those who will appreciate your area of expertise the most. Technically you could target everyone in your chosen market, but you wouldn’t get a good return. By segmenting your data you will find your best customers – they will be the people it is easiest to sell to.
When researching your customers, you will need to gather two forms of data:
- Psychographics/Behavioural Segmentation
Demographics are the characteristics which can be observed from the outside, they are statistical:
- Family Status
Psychographics are the things that motivate them, the information you gather in this area is crucial and very important for the future of your business. The general points to take into consideration are:
- Lifestyle, Interests, Activities
- Values, Opinions, Beliefs, Personality
- Goals, Ambitions
- Wants, Needs, Motivations
- Hopes, Dreams, Aspirations
- Fears, doubts, Worries
- Problems to be Solved?
There is always ‘one’ thing that will motivate your customers to buy from you, you must find that to succeed.
There is also ‘one’ major fear that holds your potential customers from buying from you, you must also find that doubt and eliminate it.
Both of these go hand in hand so you must ensure that you are aware of both of them.
Once again, segmentation is crucial for your business. A product simply cannot satisfy everyone so by segmenting you will be ensuring that your time, money, and efforts are spent on those who are potential customers.
Did you know that your prices are set by your competitors?
Your market share, profit, growth and the future of your business is also determined by your competitors; hence why they are crucial to your marketing strategy. You cannot form a strategy without thinking about your competition which is why it is very important for you to know:
- Who your competitors are
- What they do
- Why customers buy from them
- How you can get the customers to buy from you
- What your competitions reaction will be if their customers buy from you
Your Chosen Market
If you want to ensure that you are in sync with your market, you have to do market research. You need to know the current and the future climate of your market. If you are unaware of the opportunities and threats that lie ahead, you will put your business in great danger.
Every company that ignores a major market change has faced or is facing economical difficulty.
Currently HMV is financially stretched; would they be in the same situation if it wasn’t for the popularity of downloading and internet? Amazon, Youtube, NetFlix, LoveFilm and many other companies have changed entertainment in a way that favours the customer. Companies like HMV couldn’t keep up as they didn’t move with the changes in their market.
In this post we explored the key areas of market research that every business should have clear understanding of. In my next post I will look at research objectives and methods that you can use in your marketing research.