Kumar R. Sarangee, Associate Professor of Marketing, discusses the importance of understanding the market before launching a product and the benefits of identifying your target market.
A common mistake committed by entrepreneurs is poor market selection for their products and services. This happens because entrepreneurs are often limited by time-related urgency and profitability expectations, due to which they are in a hurry to introduce their products and services to the first available market without conducting the necessary due diligence. Consequently, they do not do any form of analysis of that market or examine if there is a match between the needs of that market and the value provided by their offering. This might lead to further problems such as no repeat business from that customer and no additional customers due to a lack of word of mouth. So what should the entrepreneur do ideally? First, by using appropriate, pre-selected criteria such as geography, demographics etc., the entrepreneur should divide the total market into smaller, relatively homogeneous groups or segments where any subset may be selected as a market and can be reached by marketing strategy and tactics. What this enables is a better understanding of customer needs that thereby facilitates a better match with the value provided by their product/service. Then, after comparing these segments and evaluating their fit, the entrepreneur can select the target segment to whom to sell the product and direct the marketing efforts to. It is important here to decide how wide or narrow to market to, which is dependent on the resources at the entrepreneur’s disposal. Once the exact target market has been identified, it becomes much easier for the entrepreneur to position the benefits provided by the offering in the minds of the consumer, so that differentiation from competitors can be achieved. What is especially important here is to focus on a few, key benefits provided by the offering that are really relevant to the customer and is superior to competition that can really set you apart in the market.