By Marguerite Inscoe
Written exclusively for StartWheel.org
Every start-up operates on a restricted budget with scarce resources. Because of this, marketing should not randomly target prospects—even if your product or service could serve a broad number of people, markets, or customer segments.
Rather, you want to focus on attracting those who are a perfect fit for your company right now. A more targeted approach in your marketing can boost a start-up toward profitability as it launches into the marketplace.
No doubt your business idea was birthed to solve an existing problem or need that other businesses (i.e., competitors or substitutes) aren’t addressing. Broader applications and markets soon became apparent, making the possibilities more exciting if not seemingly endless.
Congratulations, you are floating on the sea of opportunity!
So do you stick with the original plan (or problem), or is it more prudent to look at all the options and pick from the best?
Plan Your Markets As Early as Possible
You can never study potential markets too early in your business planning process. Where you start and where you envision ending up are often two very different places.
For example, sub to prime in federal contracting; a validated product to licensing deal; a single location retail store to franchising; or local to national, and then international markets. Or, perhaps you’re looking for acquisition as soon as possible.
In any case, formulating a bigger game plan from the start enables you to design all aspects of your business and deliverables, including marketing, for continued development down the road.
Of course, there are no guarantees. It’s possible the whole concept may never make it out of beta, but that doesn’t mean the time spent researching your market or proposed solution was wasted—as long as it contributed to your ongoing entrepreneurial education.
Who attempts only one start-up anyway?
Looking at the Big Picture
When planning a business for high-growth, consider the multiple “sectors” or “customer segments” it could serve, and prioritize their development. Accomplishing the plan might take a few years—and you’ll be very busy during that time—but it provides unparalleled security since you aren’t counting on only one avenue for growth. In other words, don’t put all your eggs in one basket.
Many businesses dry up when their five-year federal contract doesn’t renew, or when they can’t sustain B2B sales before their runway ends. When delivering to one sector, it’s extremely difficult to launch into a new sector unless the foundation is laid early on.
Multiple streams of revenue aren’t the only advantage when serving different sectors; intangible benefits might exist, too, which can be unique to your business. For example, the non-profit sector might bring in grant money, increase the goodwill of your brand, and provide a friendlier landscape for iterative product improvements.
In fact, if you can get a handle on this visionary approach to business, you can consolidate much of the work within your current pool of talent. Developers can write code for local government agencies AND the Department of Defense. A skilled customer service or sales person can juggle between B2B and B2C, at least for a while—until revenues allow for greater specialization within your workforce.
A product’s specifications and delivery channels may vary among markets and customer segments, but the marketing strategies are starkly different. Local marketing, government contracting, and national B2B marketing are nothing alike, but your plan may be to accomplish all of them at some point.
As a start-up, it’s perfectly fine to earn revenue from any source, as long as it doesn’t distract you from the bigger picture.
Bringing Your Markets Into Focus
Once your broader market or sector priorities are defined, further segmentation is necessary for marketing purposes.
Let’s use the promotion of hot sauce as an example of segmentation, since much of the national population consumes it. Despite the popularity of hot sauce, only a specific group of people (i.e., set of demographics, customer segment) are inclined to purchase it regularly.
If you’re strategic, you’ll advertise the hot sauce to one or two market segments. Maybe one delivers to a tightly defined male audience while the other is an ethnic group of female home cooks. The messaging has to differ, or the campaigns won’t resonate—you’re more likely to end up with a “one-size-fits-none” campaign.
Marketing can influence how sets of demographics respond, but there’s a point when you are pushing uphill. Keep in mind the factors of competition, substitute products, and market saturation. These also impact the response rate to specific marketing campaigns or promotions.
Choosing Your Segments
Demographics (i.e., description of your desired customer) are not the starting point for segmenting the market for marketing purposes. In fact, it’s where you want to end up once you’ve worked out which criteria makes the most sense for your business.
Ask yourself the following about your broader market (not an exhaustive list):
- Who is currently underserved by direct competition and why?
- Who is willing to spend the most money (at once or over time) on my product/service?
- Whom do we like to serve the most and what gets us excited every morning on our way to work?
- Who “gets” what we do the most (enjoys, appreciates, relates) and who is likely to refer or recommend us to others?
- Who can access my product/service the easiest and most cost-effectively?
Then do some research to validate your choices:
- Size the Market: What are the sizes of these market segments in my select geographic region?
- Competitive Analysis: How saturated is the market segment regarding the product or service (good to get a solid metric on this if it’s fairly saturated)?
- Profitability: Which segments might be the most profitable per unit sold (based on the cost to put it in their hands) and overall (profit per unit times total # of potential customers)?
Now you can better conclude:
- Which segments might contribute to faster sales and profit growth
- Reasonable [SMART] goals for marketing and the level of investment required
With your ideal market/customer segments identified, you can now begin plans for actively marketing to them. The next step is turning those demographic descriptions into buyer personas. To do this you need to learn more about their buying behaviors, but that’s topic for another blog post.
Segmented marketing increases the attractiveness of your business to your ideal customers. It helps you better manage opportunity costs and hard costs—both of which any business, start-ups or the well-established, need to understand.
By Marguerite Inscoe
Do you have questions about growing a B2B brand? Please contact me.
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