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Business plan part 5 – market analysis

A German Internet Marketer tells his secret – http://www.the-next-revolution.com/

We move on to the next point, the market analysis: in which market segment do I wish to be active? What is the nature of this market? The first thing to consider is your target group. Consider this question: who are you trying to reach? Many people respond, “Oh, everyone. Everyone has to eat. Everyone has to go to the hairdresser. My target group is everyone.” When you take this approach, you are near enough condemning yourself to failure. Though it might seem tricky, it’s crucial that you specify your target group. Where do they live? What do they do? How old are they? What kind of hobbies do they have? Am I targeting males or females? Define your target group very clearly. Some firms even sketch out their target group without familiarising themselves with their targets in real life – they have no customer contact. They pull together an image of how they see their typical customer, and proceed according to that.
This is because, nowadays, it is impossible to design a catch-all product or service. Everyone has their own individual identity. You must identify a particular target group and establish yourself within it. Later, you will have chance to expand; but you should begin with a relatively clear-cut target group. When you have recruited this group as fans of your product or brand, you can start to broaden your horizons a little. Consider where else your product could have relevance. Or perhaps you could expand your range of products within this particular target group. Whatever you decide to do later, it is crucial that you identify precisely who you target group is. Do not adopt this “for-all” approach – the mentality that all who pass by your store will automatically become your customers. This will not be the case. If you try to accommodate this, you will end up with an assortment of goods that – like your target group – is not clearly defined. Imagine someone entering your shop. “What is this place actually for?” they will ask themselves. “What’s this? Is this a toyshop or a shoe shop or a shop for fur coats? There’s nothing they don’t sell!” Without a clear-cut target group, you’ll end up offering a confusing, nonsensical array of products. You won’t win any proper customers, and the whole thing will be doomed to fail from the off. The target group is crucial!
Next to be addressed, of course, are your competitors: who is already established in the market? What are their strengths and weaknesses? It happens frequently that a budding entrepreneur will get their venture going and only realise afterwards that there’s an identical store two streets away. Now, this doesn’t necessarily have to be a disaster: you can drive your competitors out of the market. However, this will be considerably more difficult than simply establishing a business for which there is no competition.

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