Knowing your customer sounds like a person who buys and uses your product. Right?
Can you name any 5 refined marketing strategies to understand your customer?
Here in this article, let’s understand your customer.
It boils down to the methods and marketing strategies you plan to implement for the success of your business.
The major objectives are:
- Acquire the market by segmentation with primary market research and build marketing strategies.
- Generate an end-user to understand your customer and measure the total available market and form your buyer persona.
Every marketing strategy is different based on the model, plan, and action to implement.
The truth is the market size is enormous. To understand your customer, it begins with what problem has to be solved.
The best marketing strategy to help understand your customer is with the product and it must ensure that opportunities are created, and satisfy the wants and needs.
It is tough to drive a high number of sales without proper knowledge of targeting the specific market.
Your marketing strategies must focus on relevance to understand your customer.
To understand the application of this strategy, let’s understand the 5 refined marketing strategies to understand your customer
MARKET SEGMENTATION- The marketing strategy based on the categorization of markets.
Imagine the total population we have today. It is a lot.
Not everybody is going to buy or know what you offer, correct?
With that population word, think how many people are doing business, selling products, and how many of them are consumers?
That seems pretty unpromising.
Except you want to do a survey, go hand in hand, and talk to every household member and identify if they give any dime for your product.
It is a time-taking yet futile approach to targeting your customer.
This is where segmentation of the market comes to play.
It is a practical procedure based on the categorization of the broader market, into
- Demographic segmentation: division of the market into gender, age, income, etc.
- Psychographic segmentation: division of the market based upon the values, traits, and beliefs.
- Behavioral segmentation: segmentation of people into the behavior, action, and purchase similarities.
- Geographic segmentation: division of a market into locations, like cities, regions, and countries.
The Process to divide a mass market into groups with similar needs and wants is market segmentation.
Let’s see how you can implement this strategy to get your end user.
|Real Estate: residential||, Commercial, Industrial, lease condominiums||, houses and lots, vacant lot, Commercial spaces, warehouses.||Company Owner, investors, developers, managers, business persons, ex-pats, corporate workers, SME.|
|Human Resources & employment||High skilled, medium-skilled, and low-skilled workers||Wage workers, salary workers, allowance workers, degree oriented workers, helpers for wages||Graduates, 5-year experience individuals, bilingual, etc.|
|Gambling||Casinos, video gaming, lotteries, sports betting,||Hospitality sectors, resorts, hotels, tourism||Investors, athletes, horse racers, online gamers, high-income adults, etc.|
In the three industries above, we find the market based on what products or services are available.
Upon segmentation of the market, we get different sectors who can benefit the products, approaching the end-users who can be a customer.
There is a different measure of how you can come up with segmentation.
As we know, not all the business has the same paradigm. The simplest way is to brainstorm ideas.
- You should store your ideas and thoughts on a whiteboard.
- Jot it down on your spreadsheet to identify the industry your business falls in and who needs your product.
- Invent as far as you can and attack the ideas to find the end-user.
Market Segmentation is done by Primary Market Research which is any type of research that you concentrate on.
- Your primary goal is to look for the homogeneous target customers and for the one who pays (the end-user).
- Why does the end-user need your product? What is the benefit(s) he/she has after using your product?
- Find out who is the lead customer. What characters your end-user must have?
- Check the market size, the area where you find your end-user.
- Understand the competition and Partners. Know who has the same product and can be your support to promote your products.
- What capabilities of assets define your product commercialization?
BEACHHEAD MARKET: Understand your customer with this marketing strategy to attack the smaller markets.
We understand the tactics of primary market research toward the segmentation of the market.
It is essential to discern that it doesn’t mean you have learned your customers well.
Why is this a crucial approach to read your customer?
Select and choose the best industry that can buy and use your product.
This serves as a platform for attacking the follow-on markets.
Attacking your biggest market first isn’t usually the wisest plan. Isn’t it?
Let’s see the steps to know the Beachhead Market.
- Check if your customer has the money to pay for your product?
- Apply the information you have from your primary market research.
- Is the customer accessible, can you easily get the product to your customer?
- You should always check if you can deliver your product, and you must always deliver to the customer
- Does the target customer have a sound reason to buy your product?
- Understand why your customer is buying your product.
- Is there entrenched competition that could block you from getting this business?
- Is this a strategic market that will give you the capability, credibility to win other markets?
- Is the market consistent with the values, passions, and goals of the founding team? Is this something that you’re going to feel comfortable doing for the next five years?
- Are there any personal financial goals that need to be realized in a three-year time horizon?
Target an absolute market until you find opportunities like:
- The customer buys a similar product.
- He/she has the same sales cycle.
- There must be a word of mouth between the customers.
END-USER: The marketing strategy focused on building a user persona.
What is an end-user? Why is it important? How to get the end-user?
Do you think you can answer that?
It is a narrowly defined subset of product users with similar characteristics, similar needs, and word of mouth.
This will ease the definition of your end-user. Let’s assess the methods to study end-user.
|Gender, age, income, and location||Motivations, fear, who’s their heroes, what is their religion, what makes them special||Where do they go on vacation, where do they go for dinner, what is their favorite newspaper, TV shows, sports, where do they hang out?|
The exercise of the end-user comes with a self-examination of why you like that product?
How many other people like that product? Do all those people fit in your homogeneous group?
You should always create the subset or the sub-group of people that want your product to get specificity.
Build a company based on what your customer needs NOT on your interest.
A great product produces word of mouth.
TOTAL ADDRESSABLE MARKET: Understand your customer by accessing the total market on revenue opportunity.
You already know that end-users mean a group of people in a broad category.
This provides us a source of the entrance where to get the Customer which is our goal.
Yet, Primary market research will serve us to find and analyze the total addressable market.
Is this going to be hard? Yes. Will it be worth it? Absolutely.
TAM is the Total Available Market in a Serviceable Available Market (SAM) to get the Serviceable Obtainable Market (SOM).
SAM is the portion of the market that you can gain in your geographical location.
SOM is the portion of SOM within a topographical reach.
It is the amount of annual revenue expressed in dollars per year. The units are very important.
Let me show you a calculation of TAM from your end-user profile.
To do this, find the numbers in a population that will fit to like your service or buy your product.
Say, You have 500 people that like your product. This 500 is your end-user profile.
Try to know the other variable like revenue on average, each end-user generates.
The number of people times the revenue of an average person will give you the Total Addressable Market.
If the TAM value is too high, it raises a red flag.
It should be in assumption value, and this will be on your understanding of how much cash flow you need.
Note that you must:
- Always understand factors like growth, gross margin, and revenue in knowing the TAM.
- Does this market have strategic value? Will it lead you to other markets as well?
TAM = End User X Average revenue per end-user per year.
Let’s assume your End user is 10,000, and the average revenue you charge per year is $50,000, which gives $500M.
To Find TAM,
- First, identify the number of end-users in your beachhead market through a bottom-up analysis.
- Second, calculate the average amount of revenue you would generate per year
- Third, multiply the two numbers to get the total accessible market.
PERSONA: The marketing strategy of creating and profiling your End-User.
Who is your role model? Or maybe your childhood superhero, Is it Batman? Mine is.
Err. Why do we need him? What can you tell about this DC Comics Character?
We can easily recall the appearance, looks, and traits. It is easy to draw. Right?
Imagine your customer and note all the characteristics and appearance to build an avatar for your reference.
You can name your persona, think of all the qualities, behaviors, interests- your avatar has, in parallel to your ideal customer personality.
You can create your persona as below:
- Persona is an end-user who best exemplifies the end-user profile. A persona can be a proper person who you interviewed and one who you know.
- Include a visual picture, draw a diagram of the individual. The more visual, the better.
- These are important to understand demographic, behavioral, motivational knowledge, and the business environment.
- Include demographic, behavioral, and motivational knowledge.
- Know their purchasing criteria, Brand, price, quality, service, or general acceptance.
- Create a persona and see how your persona must be or is.
- Gather the knowledge from your end-user profile and relate this to a persona.
- Prepare a fact sheet about the persona based on the information you have.
Remember, no persona will represent all the characteristics of the target customer end-user profile.
You can always upgrade your persona. If both or multi-sided persona, create both of them.
One is critical, and the other is to be kept to get the best of the second one.
Keep in mind to describe the demographic, behavioral, and motivational attributes of the persona.
It is the one person who best represents your end-user profile.
Persona is your north star. A constant reminder to know the customer.
Your search for a persona is an iterative process.
We require a lot of perseverance to build a successful business.
From the market segmentation to beachhead marketing, try to establish the end-user to get the persona.
This facilitates business consumes companies, industries target the right customers,
and supplements the highly needed values and excellence.
The heart of a successful business is its customers.