Profiling Your Target Customer

1. Profiling Your Target Customer 4 chapter Prepared by Ron Knowles Algonquin College Chapter 4

2. Business Plan Building Block Chapter 4 will: • Help you begin collecting information to understand, develop a profile of, and connect with your target customer. • Begin toformulateyour market strategy. 4 chapter Chapter 4

3. Learning Opportunities • Understand that your key to survival in small business is the target customer. • Recognize three kinds of customer groups. • Use primary and secondary research to profile your target customer. • Simplify the messages you communicate through your business. • Discover how popular magazines aim at the target customer. Chapter 4

4. Learning Opportunities • Match your target customer with what he or she reads, watches, and listens to. • Become more aware of and start being on the look-out for potential partnerships, alliances, and associations. • Recognize the market and the target customers who are about to surface. • Research your perspective target customers and refine your mission statement. • Visualize your business and target customer. Chapter 4

5. Customer Relationship Marketing A Key Trend—Customer Relationship Marketing • The development of long-term, mutually beneficial and cost-effective relationships with your customer. • Emphasizes a market pull strategy: • Determine what your target customer (TC) wants. • Profile your target customer. • Adapt or create a product or service to satisfy this want or need. • Emphasizes a one-to-one marketing strategy. Chapter 4

6. The Power of Profiling Three types of customers: 1. Primary - The primary or target customer is most likely to buy your product or service and could be a heavy user. • Secondary - The secondary customer has a possibility of buying your product or service but needs convincing. 3. Invisible - The invisible customer is the one you don’t anticipate but has a need for your product or service. This customer appears after you open the doors. Chapter 4

7. Two Types of Customer Profiles • Business to Consumer (B2C) or End-User Profile • If your TC is the consumer or end-user, your customer profile will likely require demographics or psychographics. 2. Business-to-Business (B2B) Profile • Many small businesses offer their services or products, often on a contract basis, to other businesses. • These supply chain companies need a customer profile that is based on business or company-type information. Chapter 4

8. Demographics and Psychographics DEMOGRAPHICS PSYCHOGRAPHICS • Psychographics is the process of segmenting the population by lifestyles and values. These may include: • Demographics involves key personal characteristics of a group of people. These characteristics include: • Where they eat • Where they shop • Sporting activities they engage in • Entertainment activities they engage in • How socially and physically active they are • Whether they travel for business or fun • Age • Sex • Family Status • Age of Children • Education • Residence Chapter 4

9. Psychographic Profiling Chances are you will have to do your own psychographic research. • Use Action Step 24 (page 84) to help you get started: • What is your VALS? Click on the SRI Consulting Business Intelligence site. • Profile your target customer using postal codes. Link on to Generation 5. • Do your own psychographic profiling. Invite a few friends to a psychographic party. Chapter 4

10. Media Sources Can Help • Demographic and psychographic profiles are available from media sources: • Magazines • TV and radio stations • Online Chapter 4

11. Media Sources Can Help • Analyze media sources aimed at different target markets. • What does your target customer read, listen to or watch? • Action Step 25 will help you get started. • Conduct primary and “new eyes” research. Interview magazine buyers. • Do some secondary research. Write to advertising departments. Ask for media kits and reader profiles. Chapter 4

12. Business to Business (B2B) Business-to-business or supply chain firms can be characterized as: • Businesses whose target customers are other companies. • Businesses who do not deal directly with the end-user or consumer. • Businesses whose major goal is to create partnerships, ventures, alliances, or associations with their target customers. A target customer profile would include: Company Profile—e.g. size of business, type of business End user Profile—e.g. end-user application, decision-maker Industry Profile—e.g. trends, competing firms and barriers to entry. Chapter 4

13. Joint Ventures and Strategic AlliancesTen Tips • Have a common purpose • Conduct research • Consider mutual benefits • Provide a structure • Consider potential advantages • Invest in human resources • Put it in writing • Stay in touch • Keep tabs • Exit stage left Chapter 4

14. B2B or B2C • B2B or B2C? Which one will it “B”? • Recall the experience of Adrienne Armstrong at Arbour Environmental. • You can benefit from both worlds. Chapter 4

15. Field Interviewing and Surveying FIELD INTERVIEWING TARGET CUSTOMERS SURVEYING Develop a questionnaire and identify a location at which to conduct the survey. Get permission from the owner of the location. As a bargaining tactic, tell the owner that the information you will discover may also be useful to him or her. Recall the experience of Elizabeth Wood. Test your TC profile, which you have developed from secondary research, against reality. Ask questions of your potential customers. Recall the experience of Julia Gonzales. Chapter 4

16. Other Sources of Primary Research • Mentoring - Locate a business owner who wants to help. • Experience - Work in a similar business and get all the information you can. • Networking - Go out and talk to local businesses and friends. • Brainstorming - Gather a group of friends, associates, or family and brainstorm your TC. • Competitors - In some cases, research on your competition may provide some good information about your potential TC. Chapter 4

17. Business Vision • Visualize your new business and the target customer. • A business vision is: • A mental picture of your business, product or service at some time in the future. • Provides guidance and direction. • A driving force–for your persistence and passion. Chapter 4

18. Plotting Your Future Checklist • Profile your target market in terms of primary, secondary, and invisible customers. • What do the results of your primary research questionnaire tell you about your target market? • What information have you developed about your target customer from your secondary research? • What characteristics are unique or clearly definable about your target customer? • What is the best way to reach your target market? Chapter 4

19. My Virtual ModelCase Study • My Virtual Model (MVM) is a successful company headed up by Louise Guay and Jean-Francois St-Arnaud. • By answering the case study questions, you’ll learn from their experience: • How did MVM take advantage of relationship marketing, the market pull approach and one-to-one marketing? • Give an example of each of the three types of MVM customers. • Profile MVM’s and Lands’ End target customers. • What was MVMs business vision and how did Louise Guay use primary research to help start the business? • How did MVM benefit from market trends and partnerships? Chapter 4