#37 Assessing Your Market Potential
Market Analysis: What is My Target Market?
A target market is a well-defined group of customers. Markets can be found within any broad category, such as consumers, businesses, industries, or institutions. Consumer groups, for instance, can be characterized by demographics, geography, lifestyle, values, leisure, or occupation. Business customers can be defined in terms of markets, products, management styles, distributions channels or size. Customer groups can be reached through a variety of marketing models for fresh or minimally-processed farm products, including Community Supported Agriculture (CSA’s), farmer’s markets, co-ops, retail at a storefront, direct consumer-buyer retail, or wholesale. Value-added product marketing includes the end consumers of your product/services and the businesses that may distribute and sell your product to the end user
Begin market planning by clearly identifying the market you want to target. Note that this may or may not be the market you are working with now. The idea here is to think creatively about how you plan your product mix to attract the customers that will give your business the cash flow, profit and growth it needs.
Start with a big piece of paper. Across the top write a brief description of your product as currently conceived. Next write your answers to the following four key questions:
- Who will buy my product?
- Why will they buy my product?
- What will they pay for my product?
- Where will they find this product?
When you are finished, step back and consider what you have learned. Write:
- A brief, focused description of your target market,
- An assessment of which aspects of your business need to change in order to attract this market, and
- A list of what is involved with making needed changes.
Product Development: What Am I Going to Market?
Once you have a clearer idea of who your market is and what they want, you must identify how your product meets their needs. Remember that products are continually fine-tuned as you better understand the needs of your customers and the mechanics of your business. The challenge is to think about your product from the perspective of your target market, both end consumer and channel customer. To help you do so, answer the following set of research questions:
- What is my product?
- What is the best method to package and present my product?
- What need or niche does my product fill?
When you have finished answering these questions, summarize your answers into:
- A creative, market-informed description of your product, and
- A concept of how you will make your product meet the needs of your end consumers and channel customers while being competitively priced and profitable.
Market Positioning: How Does My Product Satisfy the Needs of My Market Better than My Competition?
Market positioning is the way you communicate precisely the place your product holds in the marketplace. How you position your product in the mind of your customers determines how the product is perceived. Positioning is a strategic component of marketing. It ties together information about your product, your market, your competition and your industry. It is the answer to the very basic question: What business am I in? The “what’s for dinner” business? The “family vacation” business? Or you can distinguish yourself on the basis of the needs you fill, the services you provide, the distribution channel you use, or the pricing strategy you employ. Think about your product from the perspective of your customer and that of your competition. Note that buying usually comes down to a decision of choice: your task is to figure out how to make the customer choose your product over that of the competition.
Once you’ve thought about your product in this way, summarize your findings into a position statement of 50 words or less that answers two questions:
- What business am I in?
- Why will my customers want my product rather than that of my competition?
Market Connection: How Will the Market Know I Have What They Need?
Making connections with your target market lets the customer know you have the product they need. Unless you are a direct-to-consumer marketer and seller, these connections are made with the assistance of intermediaries, or “channel businesses,” that warehouse, transport or sell your product to end-consumers. Independent warehouses and transportation companies provide distribution services for a fee. Wholesalers resell product to retailers, while brokers present the product in the marketplace for a commission. Retailers sell your product to the end-consumer.
Channel businesses are a key component of your marketing strategy. How a channel business warehouses and distributes products, how it targets consumers and how it features and merchandises goods all define its particular set of needs and resulting in buying criteria. To be an effective marketer, producers need to identify and understand the differences among channel markets and market their products accordingly. No single marketing program works for all markets.
Ask yourself the following questions:
- What distribution channels are best suited to my product, my customers and my business?
- What are channel cost/benefits?
- What will it take to sustain market/channel connections?
Once you’ve asked yourself these questions, prepare a strategic response that answers the following:
- What will it cost to reach each potential market segment?
- Where can my business reach the best market at the least cost?
- Which market and channel options should I develop now?
This fact sheet was developed as part of Market Planning for Value Added Products by UNH Cooperative Extension in cooperation with NY Coalition for Sustaining Agriculture, and edited for clarity by the editors of this Guide, January 2016.
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