Marketers usually define their customers by their physical characteristics such as age, gender, occupation, income, etc. These are important because they represent the natural categories of customers. Some of the more common customer characteristics include:
- Gender - Men and women exhibit different habits when it comes to purchasing.
- Age - Second only to gender as most important characteristic to measure.
- Income - A good indicator because it often shows whether the customer can buy.
- Occupation - Relates closely with age, income, and education.
- Location - Can be designated in any of several different ways.
- Family status - Couples differ significantly from singles.
- Children - Households with children can exhibit very different buying habits.
- Education - An indicator of advertising comprehension, reasoning power, etc.
- Ethnic origin - People from different cultures have different values and needs.
As you begin to study your market, keep these characteristics in mind. They will guide you in learning to attract your specific customers.
80/20 Principle
When you are analyzing your market, the 80/20 Principle is a good one to keep in mind. It states that 20% of your customers will consume 80% of your business's products or services. Conversely, 80% of your customers will use only 20% of your products or services. So why is this important to a small business owner? Because it is key for you to focus your advertising and marketing dollars on the group of customers who will be consuming 80% of your product. Let's look at the beer industry in America as an example.
First of all, think of a beer ad you've seen on television. Now, can you describe the person this ad is aimed at? What is this person's age, gender and interests? The beer industry advertises to basically one group of individuals, right? And the reason is, that group consumes 80% of the beer in America! The beer companies are getting "the most bang for their buck" by targeting this group of people - 20% of its customer base. The other 80% of beer drinkers will likely continue to drink beer whether or not beer ads appeal to them. These are the people who will drink watching a game, with dinner, or maybe at a special event. Their drinking habits are more of a sure thing, albeit in smaller quantities.
When thinking of this example, it is your job as a small business owner to identify your "20%" and market toward them. This group can be identified utilizing your national trade association and by obtaining market analysis reports. The next section will get you started on your search.
Links
The links below will help you in obtaining market research information. They include trade association information, census statistics and additional market analysis information. Use these resources to guide you through the next area, which focuses on determining actual numbers of potential customers and how to begin to analyze the data you collect.