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How do you define a market?
Question:
I would like to know how do you go about defining a niche market. How do you define who would make up that market? How do you reduce that definition to keywords or search words? Thanks in advance. Jeff
Response:
>I would like to know how do you go about defining a niche market.
A book that addresses this issue, quite well in my opinion, is _Nichecraft_, by Dr. Lynda Falkenstein Matthew
Response:
>I would like to know how do you go about defining a niche market.
I define a market segment/niche three ways: – Total market – speaks for itself – Available market – Total market less the parts not available to you. E.g. if your business sells branded products, you must deduct the size of the unbranded segment, to determine the available market. – Served market – Available market less all parts which you don’t serve – geographic areas, product groups, channels of distribution, price/quality bands etc. etc. I often encounter entrepreneurs seeking "just 1%" market shares. They relate this share to the total market. When their projected sales (based on 1% share) are related to their real, real served market, market share can jump to 10-20% to make them one of the biggest players in the sigment/niche. >How do you define who would make up that market?
Existing and prospective suppliers. >How do you reduce that definition to keywords or search words?
Very explicit product/competitor terms. >Thanks in advance. >Jeff
– Brian Flanagan Invest-Tech Limited, Ireland PlanWare: <http://www.planware.ie/resource/planware/> Extensive advice about business planning, management & enterprise plus shareware, on-line financial planner & much more.
Response:
>I would like to know how do you go about defining a niche market.
While "niche market" is a popular term, I have never really figured out what it means. I believe people use the expression to refer to a target audience or segment of a market they believe will offer the highest probability of success. Setting that issue aside for the moment, the process of defining a market is reasonably straightforward. A market is a volume of people either as individuals acting on their own behalf or as buyer/specifyers for an entity who may be defined as having: 1a) a common unsatisfied need, 1b) a greater than nominal level of means to satisfy that need (1a and 1b combined from demand) AND; 2) a level of access to some channel of distribution to acquire a good or service to satisfy that need AND; 3) recognition or awareness that a good or service exists whereby that need may be satisfied. The three market formative criteria (Demand, Access and Recognition) are exclusive. To be defined as being in a market, the individual must satisfy all three. Additionally you must realize that a market is not defined by a given product or service, but by a need. This means that skateboards theoretically compete for share in the same market (transportation) as automobiles, but may appeal to different levels or segments of that market. Your first step, therefore, is to quantify those individuals who satisfy all market criteria based on the common need (or needs) your product or service would satisfy. This is typically done with a census based total universe survey. Since most markets have already been surveyed, you can usually compile a reasonably good definition of a given market from government, industry, or private research publishers. Markets change very slowly (the speed of glaciers), so empirical data, baseline studies and other lagging indicator methodologies are quite good. This becomes your control data or model. >How do you define who would make up that market?
A good survey research report will give you market composition. Once you have done this, the next step is to define YOUR position or profile. This is a three part analysis: 1) Compared to the market as a whole, what percentage indicate that your category of offering (price/features) appeals to them? 2) As a percentage of the market as a whole, who has access to your channels of distribution? 3) Finally, what percentage of those within the market are aware of your offering? Take the three percentages and multiply %D x %A x %R and you will have your variable of market share equilibrium. Then take that number and multiply it by the total size of the market. Compare and contrast the composition of the market with your profile. It takes a bit of effort, but it is worth it once you finish the number crunching and analsys, etc. Basically, this is how one defines a market. >How do you reduce that definition to keywords or search words?
I don’t believe you can. Good luck. Whipple, Sargent & Associates Strategic Services 10 Industrial Park Road, Hingham, MA 02043
Response:
>I would like to know how do you go about defining a niche market. >How do you define who would make up that market? >How do you reduce that definition to keywords or search words?
One of the most powerful things you can do is to come up with a target market. It’s not a niche, not exactly anyway. But you might end up thinking that. Now, I don’t know what you do, however a typical target market is what you get when you take a clearly defined set of prospects and market to them, focus your energies on them. That’s what we mean by a target market. Here’s the criteria my wife uses to define a target market… 1) They have a common set of problems. You want to find people who SHARE this common set of problems. I’ve had people ask me about a target market where only 20% of the market shares a common problem. That’s not the way to go. 2) A common set of interests that band all of the people together. Whether those people are interested in something that is personal or business or social, whatever, they have this common set of interests. 3) They have a regular means of communications for talking to one another. A lot of times people tell me they are going to go after a target market and this target group has no way of communicating with each other. Without that common means of communications, how are you going to find and communicate with them? Moreover, how are they going to refer you on to others? This third criteria is important for leveraging your marketing dollars. If there is communication among the target market, it means you get a whole lot more referals and there is a lot more word of mouth. This leverages the dollars your spending as well as your time, energy and effort. 4) Not only do these people share a common set of problems, they share a common set of problems that YOU can solve. Again, you want to be able to solve these people’s problems with your advice, products or expertise. The other day, someone emailed me with and told me that they were a marketing consultant and that they were going to go after the people who had already been through the Jenny Craid diet program. While it fits the rest of the target market criteria, I asked "What problem are you going to solve for these people as a marketing consultant? These people are obviously concerned about weightloss, staying fit and staying healthy." She said, "Well, I don’t know." It just won’t work that way. You have to be able to solve a problem the target group knows it has. The Jenny Craig market might be a good one for someone who sold health products, but not for someone who is a marketing consultant. 5) As an independent consultant, I like to work in target markets that are small in size. I like no more than 5000 persons or entities in the target market. Let’s say you are working a very large target market, and you are coming in as a consultant looking for $15,000, $20,000 and $30,000 consulting contracts that last up to three months. You won’t be able to keep up and remain a one man shop. A lot of consultants like to stay solitary and this just wouldn’t be possible. Now, if you want to build a BIG practice and build it fast, you hit a few of these large target markets and your business will grow faster than you might believe. If that happens, we’ll have to have a discussion about how you hire the right people and manage them. Otherwise with these methods, and keeping your target market in the 2,000 to 5,000 member range, you can have a practice easily doing $200,000 to $300,000. There is a 6th bonus criteria… 6) You want people that share the same interests you do. It isn’t a must, but it is a lot more fun to serve people who have the same interests you do. Dan Dabrieo * Success Partnership Network * http://www.dabrieo.com Computer Consultants: You don’t want to waste another year working too hard for too little compensation. Take time off and enjoy your life. Learn ways to get more out of your career..See our URL.