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Ten Action Steps of Bankable Business Plans- Step 4 9/17/2008 11:56:24 AM
Action Step # 4: Analyze Your Potential Markets: Who will want your product or service? Action Step # 4: Analyze Your Potential Markets: Who will want your product or service?
To determine your targeted market, write down the demographics of the people who will use your product or service. How old are they? What do they do for a living? Will mostly women use your service? Is your product or service attractive to a particular ethnic or economic group of people? Will only wealthy people be able to afford it? Does your ideal customer live in a certain type of neighborhood, such as a suburb with grass lawns, in order to use your lawn mower? Answering these questions about the demographics of your prime market will help you establish the clear characteristics of the people you need to reach.
If you’re selling soap, you may believe that every dirty body needs your product, but you can’t start with the entire world as your initial market. Even if you’ve developed such a ubiquitous item as soap, you need to identify a smaller, more targeted customer group first, such as children under eight for the bubble gum scented bubble bath. If your soap only works with pumped well water without fluoride, you must acknowledge that your intended market has geographical limits as well.
Establishing the size of your potential market is important, too. This will be easier once you’ve completed the demographic analysis. Then you’ll be able to research the numbers: How many car mechanics, house painters or bathroom contractors are there in any given community? How many children in the United States are currently under the age of eight? How much soap will they use in a month or a year? How many other soap manufacturers already have a share of the market? How big are your potential competitors? And where do you find the answers to all of these questions?
Identifying your market is one of the great satisfactions of starting your own business. You’re thinking about the actual people who will use your product or service and how pleased they will be buying it as you are selling it.
Edward G. Rogoff
Academic Director
Lawrence N. Field Center for Entrepreneurship
Baruch College
Bankable Business Plans
