Target market, or to whom to sell our goods?
The target market to which we target our company's offer is one of the most important issues when determining the company's business strategy. A well-selected target market of the company's customers allows you to spend the budget allocated to marketing and sales activities more effectively.
Target market - is it so obvious?
It would seem obvious that we sell our product to those companies or retail consumers who are potentially interested in it and have a need to own it. However - as reality shows - although everyone is aware of it and knows what a theory should look like, the practice, unfortunately, is often completely different. Based on a specific situation, let's see what mistakes can be made in choosing the right target market and how it translates into wasting money and the company's time. Below is a real-life situation, it was just about a slightly different assortment.
Target market - you don't need to define it?
“... and we offer a wide range of PVC pipes ... Aren't you interested? Goodbye".
Piotr sighed with resignation and ended the phone call. It was his fortieth call to a potential customer that day. So far, none of the people he spoke to showed interest in the company's offer, or even wanted to hear about PVC pipes or other plumbing fixtures, let alone meet them face-to-face.
Piotr doesn't know what to do. "Does it make sense to continue calling? I will go to the boss, maybe we can manage these difficulties somehow and come up with something that will allow us to gain customers?"
After presenting the case to the vice-president for sales, Piotr received a short but blunt briefing: "Call more, that's what you're a salesman for!"
The next day, Piotr made a phone call to eighty companies. Unfortunately, still without any response.
Is there something wrong with Piotr then? Not suitable as a salesman, not diligent at work?
Surely at this point you already know that these are tricky questions, because the apparently easiest answer (Piotr is not suitable for this job) does not have to be true. Let's see what it can look like based on potential event scenarios.
Scenario 1 - location
Piotr calls the numbers given to him by the manager from the purchased database. It turns out that these are calls to companies from all over Poland, while the specificity of the industry and customer habits are such that potential buyers prefer to buy this type of assortment more locally, from points in the immediate vicinity. If the seller does not narrow down the database of potential customers to contacts from his area, he can make calls without any effect for many days.
Scenario 2 - industry
The trader makes phone calls to all enterprises in the database of companies received from the sales manager. Simple statistics indicate that it may take several days for a company that needs such an assortment. Solution? Narrow the target group of companies by industry, i.e. to companies that sell or install water fittings.
Scenario 3 - the amount of revenues
In this case, the database of companies purchased by the sales manager does not contain data on the revenues of enterprises that are in the database. There are both sole proprietorships, micro-companies, small and medium-sized companies and the largest companies in the industry. Out of all, 60% are companies that are either too small or too large, i.e. companies that will not buy the goods offered by Piotr.
Scenario 4 - the right person
Piotr reached a company from the same province, with the right income, neither too small nor too big, but the secretary answered the phone. The secretary did not know if her company needed PVC pipes or not. She didn't want to talk to the seller, so wanting to end it quickly, she shortly replied, "No, we don't need it." The trader should try to contact the right person in the company - the procurement or purchasing manager or the technical manager.
Target market - how to choose the right one?
Many other scenarios of events can be presented, but the most important thing is the most important thing - a properly selected target market. Before the sales director provides his salespeople with guidelines regarding commercial activities, he, the marketing director or the president of the company should select the target market to which the forces of individual departments will be directed - marketing and sales campaigns. The most important thing is to know who the company's customer is, which is the basis of the company's business strategy.
Therefore, before engaging the funds and resources of the company, it is worth answering the key questions about the target market to which we want to reach with our company's offer:
What is the geographic location of our potential client? Is it close to our headquarters or rather far?
Who is the person authorized to make purchasing decisions in a given company, i.e. with whom should we talk?
What is the organizational and legal form of the company (sole proprietorship, partnership, etc.) and its form of ownership (state-private)?
How long has the company been in existence?
What is the status of the company - are we dealing with a new, developing, mature company, or rather in the declining period of its development?
What level of revenues should the company we are looking for have?
How many people does the company employ?
Whose needs will the products or services we offer meet?
If we get to know the answers to the above-mentioned questions, we define the market to which we will direct our offer. This allows us to plan the company's marketing strategy with much greater precision, including the methods of communication with our target group. Thus, we reduce the costs of reaching a particular customer and increase the probability of making a purchase by him.
In connection with the question about Piotr's qualifications asked at the beginning of our considerations, we can clearly see that he is not a weak element of the company. The more so because he communicated his doubts to his supervisor, wanting to solve the problem of the lack of response from clients.
In this case, the basic work related to strategic planning of the company has not been done and no business strategy has been created - even in the mind of its owner - within which the target market for the goods or services sold is defined. The matter seems trivial, but there is quite a large percentage of companies that want to sell their goods to everyone, instead of precisely defining the target market of the offered product.