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“Sizing the Market” April 21, 2011

Posted by Jack Macholl in Market Research, Marketing, Marketing Planning, Sales.
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BONUS– here is a link to a podcast interview with Jason Kuhl Library Operations Director of the Arlington Heights Library

         CSM 472010 FINAL 

 that I recorded in 2010. You’ll hear an expert librarian walk you through some of the essential research sources available at many municipal libraries across America.

As I speak with small business owners daily, the common thread appears to be erratic levels of new projects or orders at their companies. Many are pondering the best way to “get new prospects.”  Given the fact that many are taking on the same business challenge, I thought a short review of basic market research will help business owners in their quest to identify more prospects by “sizing the market.”

Here are some of the fundamentals:

  1. Define your target market– what type of customer are you seeking? Be exacting or risk wasting time and resources.
  2. What does your target customer need? The term “pain points” or “problems” are often used in this discussion people buy benefits, how do you help them by solving a problem?
  3. What information do we  need?– again be exacting is it age, income, home value, education level, a company’s sales size, etc.
  4. Where do I go to find all this information– I have no budget for research… Start with the library, the U.S. Census (for basic demographics or county level business pattern data),  Dunn & Bradstreet’s Million Dollar Database, Reference USA. A good business librarian can help you narrow the proper source from an almost endless array of data sources.
  5. Data Collection– sources identified, then it’s on to extracting the required facts. Then determine is this enough? Will you need more? Much of today’s data can be easily downloaded and dropped-in to a spreadsheet program like Excel.
  6. Analysis– What do the numbers tell you?  Is your target too broad/narrow? Do the geographic boundaries you’ve set need adjusting?
  7. Market estimate– what are the total number of households or businesses your marketing will reach? Perhaps adjusting your expectations about market potential and your ability to reasonably reach them needs refining.
  8. Set expectations– realistically how much of the target market can you expect to capture and more importantly deliver proper customer service levels once you have them.
  9. Competitive analysis– who are your immediate  (often local) competitors? Realistically, how much market share can you take from their operation?
  10. Reaching the target– prospecting requires careful thought and resources to make the needle move. Once the market has been “sized” and everyone’s expectations are on the same wavelength, you can build a “bottom-up” budget based on objectives.

The research does not stop there. Knowing what your prospects read, watch, listen to, blogs they read, trade groups they belong to, will allow you to make tactical marketing plan decisions that deliver a strong return on the marketing dollar invested.

I know the process seems daunting and often people throw their hands up returning to “gut instinct” or inconsistent approach to prospecting. The time and money invested in a thorough market sizing exercise will surely help you develop an effective marketing plan that pays dividends.

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Comments»

1. Jim Platt - April 22, 2011

Great information podcast. I think any small business would benefit from utilizing the services of the Arlington Hts Library in conjunction with Jack’s expertise to formulate an effective, cost-efficient marketing plan.

Jack Macholl - April 22, 2011

A compliment from a great client is always appreciated. Glad you enjoyed the podcast, feel free to pass it along. Best, Jack

2. Michael Harris - April 21, 2011

A lot of good insights can come from a well thoughtout approach to market research. For small entrepreneurs that are close to their markets and customers, it may also be helpful to combine quantitative approaches with those that are more qualitative or observational. You may find that your customers are using your products or services in unintended ways, revealing a potentially lucrative new market for your product.

Jack Macholl - April 21, 2011

Great point Michael. People are often ingenious and create new uses which can become big money makers.


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