Conducting Target Market & Competitor Analysis

In the previous post, I touched on conducting target market and competitor analysis. In this post, we’ll get knee deep into them.

Target Market Analysis
Critical to your success in marketing any product or service is focusing your marketing efforts on a specific target market or niche. Marketing becomes a lot easier and a niche offers the opportunity to become the big fish in a small pond. But, planning your marketing strategy without knowing to whom you’re talking to is akin to throwing a party without knowing anything about the people you’re inviting.

Describe the size of your target market
A target market, or niche, is a group, or groups, of people with something in common. It could be an industry, job title, gender, age, income level and a myriad of other things.

When it comes to describing your market, be as specific as you can. Include statistics about the size of your audience. Include information on whether the size of your target marketing is growing, shrinking, or staying the same. If the size of your target market is changing, explain why. What are the common problems or challenges they face that you can solve?

Where do you find all this juicy data? For business prospects, industry associations are a good place to start. Most have sites that provide a wealth of information. A trip to the reference section of the largest library near you is also a good source. Don’t forget to scour trade publications and newsletters. Sites such as LinkedIn, Jigsaw and Spoke can also provide some useful bits. For corporations, a few years worth of annual reports can come in handy. You can get them at AnnualReports.com.

For consumer markets, consider perusing a few online forums, discussion groups and blogs related to the audience. As with business prospects, relevant magazines and their media kits can also be useful.

For both groups, be sure to follow key players on Twitter, Facebook and other social media outlets.

Another option is going low tech and picking up the phone. Talk to the movers and shakers and ask some open-ended questions. Those are the kind that require more than a simple “yes,” or “no,” answer. In a similar vein, surveys can help you take the pulse of a target group. Snail mail surveys and online versions are both options. But, the former can get costly. Survey sites such as SurveyMonkey.com and Zoomerang.com might just be the ticket. Both provide free versions and free is good.

Describing your target market
Once you’ve collected some information, begin to describe your target market by characteristics they share such as job title, age, income level, sex, race, number of children, marital status, zip code, etc. These characteristics are also known as demographics. If you’re targeting businesses, they can be described by SIC code (Standard Industrial Classification), number of employees, sale volume, zip code and such.

Beyond demographics are habits or hobbies they exhibit. For example, your target audience might be Marketing Managers at mid-sized companies. After doing some homework, you find that these folks are overworked, having to do more in less time with fewer resources. Your job is to find a way to stretch their resources and make their jobs easier.

Describe wants and needs they have and how your product or service fulfills them. As with the previous example, the Marketing Managers need to find ways to stretch their budgets and get more done in less time.

Describe your market’s buying habits. For example, how do they spend their budgets or disposable income? When do they buy? How much? How often? Maybe our Marketing Managers are spending the bulk of their dough on print advertising. If your business is related to communications, advertising, or other creative enterprises, the Red Books are a great resource. Also known by their formal name, The Index Guide to Advertisers and is companion tome, The Index Guide to Advertising Agencies, they list a breakdown of media spending for each company. That’s pretty handy information.

You may have more than one target market. But, it can get to be a juggling act trying to keep track of three or more. So, try to focus on one or two.

Finally, create a profile of your best client or customer. These are the folks you want to clone. I prefer to use a person rather than a company for this. People buy from people and usually people they like. Here’s an example profile:

Joe Schmo is the key contact at Mondo Big Corp. As Director of Marketing, Mr. Schmo is responsible for developing and implementing Mondo Big’s marketing strategy, campaigns and branding efforts. He manages a staff of six, many of whom are alternate contacts.

Schmo is well-organized and funded. Project briefs and RFPs are succinct. Projects are normally scheduled with plenty of lead time, with a reasonable budget and payment is always received within 30 days.

Joe’s primary concerns from a designer are objective feedback and quality work executed in a timely manner at a reasonable fee. He understands what can be done at various budget levels and is not adverse to paying more when a project warrants it or has multiple revisions.

Joe has often commented that he appreciates the information I provide in the form of useful web links, articles and such.

Competitive Analysis
The Competitive Analysis is where you’ll do some digging into those pesky competitors. To be thorough, it can and should take some time to complete. Since new competitors are always cropping up and existing ones change, this should be an ongoing activity.

During your research, you’ll begin to discover your company’s competitive advantage – the reason customers do business with you instead of the other guy. Or vice versa. Once you know that, you’ll be able to effectively communicate what you bring to the table that the others either don’t or can’t. Conversely, you’ll also begin to learn where you could use some help to be more effective.

Looking into your competitors products and service offerings can also prompt ideas for innovative improvements to your product/service offerings or spark ideas for new ones.

You might find that there are some marketing segments whose needs are not being met. If you’re a photographer, for example, maybe you find there’s a lack of tomato photographers in your marketing area. Bingo! A new niche for you.

If you find that your market is saturated with capable competitors, you can avoid the costly mistake of entering a market or starting a business without adequate demand. You can then redirect your efforts toward something that will pay off instead, like tomato photography. Or, for example, your research may tell you that there’s an ample number of print designers in your marketing area already but few packaging designers.

What to address in your competitor analysis
Names and types of competitors – This may seem deceptively easy at first. The thing to remember is that there may be other groups vying for your prospect’s purse strings. For instance, if you’re an accountant, you’re not just competing against other accountants. There’s also all those indie bookkeepers out there along with storefront tax prep franchises, accounting software and such. If you’re a graphic and Web designer, you compete with other designers and firms, but often also with ad agencies, your neighbor’s cousin’s kid who does some html and the dangerous administrative assistant with a copy of Photoshop.

Summary of each competitor’s products/services - This summary should also include their location, quality, advertising, staff, distribution methods, promotional strategies, customer service, etc.

Competitors’ strengths and weaknesses - It’s important to see your competitors’ strengths and weaknesses from your customer’s viewpoint, not yours. List their strengths and weaknesses. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.

Competitors’ strategies and objectives - This information might be easily obtained by getting a copy of their annual report, if they produce one. Probably, however, you will need to do some detective work or conduct an analysis of many information sources to understand competitors’ strategies and objectives.

Strength of the market - Is the market for your product growing so there are plenty of customers for all market players? Or, is the market so tight you are selling primarily to your competitors’ customers? If so, you need to have a strong competitive advantage.

More ideas for gathering competitive information
The Web – The Web is a wonderful thing. It’s cut down research time by providing a single source for most of your researching needs. In days gone by, I’d spend a day or three at the library, sweet talking the Research Librarian. Now I just fire up my favorite browser and I’m off. Plus, I do it on my schedule, not the library’s.

Personal visits – If possible, visit your competitors’ locations. Observe how employees interact with customers. What do their premises look like? How are their products displayed? How are they priced?

Talk to customers – You and/or your sales staff are in regular contact with customers and prospects. So is your competition. People like to talk. Use that to your advantage. Learn what your customers and prospects are saying about your competitors – and about you.

Talk to your suppliers and vendors – For the same reasons you talk to your clients or customers. These folks are usually in the know and can supply information you wouldn’t be able to obtain elsewhere.

Competitors’ marketing materials – Get on your competitors mailing lists if possible. Analyze their brochures, ads and such to gain information about their target audience, market position, product features and benefits, prices, etc.

Seminars, workshops or presentations - Attend seminars or presentations made by representatives of your competitors.

Trade shows - Visit your competitor’s show space and check out their display and materials. Head over to a few hospitality suites for some informal conversation and detective work.

Check various print sources: These may include local, regional and national business publications; Local newspapers and business journals; Industry research and surveys; Annual reports; Yellow Pages and such. Look for articles by or about them, news releases, ads, etc.

Other sources: Set up Google Alerts for each of your competitors. Alerts are a very handy way to keep track of not only your competition’s online buzz, but also your clients, prospects … and you. Don’t forget to follow them on various social media.

Create a file for each competitor
Finally, as you run across things like their marketing literature, tips from sales people or customers about them or articles that mention them, place it in their file. Then, when you’re ready to conduct or update your competitor analysis, you will already have some relevant resources.

Having a solid, fact-backed understanding of your target market and competition will put you in a position to make strategic decisions about your marketing plans and efforts. It will also eliminate or at least minimize any guessing. Plus, you’ll be much better at beating your competitors who haven’t done their homework.

To make your live a bit easier, download a copy of my Competitive Analysis Form in handy pdf format.

Next up … What the SWOT is that? Conducting a SWOT Analysis and crafting your marketing objectives.