- July 1, 2018
- Posted by: Editorial
- Category: Market research
Business strategy for your French business
To develop a business strategy is to make two choices, namely:
- To precisely target the potential clientele
- To choose a positioning.
- Target your potential customers
- Choosing a position
- The consequences of these choices
Target your potential customers
What does “targeting” mean?
Targeting simply refers to the action of identifying and selecting (thanks to qualitative and quantitative criteria) segments of customers (a homogeneous group of prospects presenting identical characteristics and behaviors) to which one wishes to propose one’s products or services.
For example, the toy manufacturer’s clients will primarily be children. It will therefore “target” a child population.
If a producer or distributor targets a specific segment almost exclusively, then we can speak of a “core target“. This is his priority clientele.
Targeting is at the heart of the strategy: a target error could eventually jeopardize the future of the company, if it isn’t dealt with fast enough. It is therefore recommended to act with caution, rigor, and professionalism when targeting.
Be careful! During this process, it is important to make the distinction between:
- The consumer (or the user): in the example above, the consumer is the child,
- The buyer: in the example above, the buyer is the adult,
- The prescriber: comparable to the doctor who will prescribe a medicine to his patient.
This then allows to act on these different targets.
How to target?
One targets by identifying precisely, both quantitatively (What is the number of potential customers?) And qualitatively (What do they want? How do they behave?) the different customer segments.
The first difficulty is therefore to properly segment one’s market. There are several means to segment a market, but they can be grouped in 3 distinct categories:
|Criteria of segmentation||Use|
|Method n°1||Age, gender, profession, location||For consumers|
|Method n°2||Activity, revenue, location size||For Businesses|
|Method n°3||Behavior: compulsive or reasoned purchase, seasonal purchase…||For clients and businesses|
As a reminder, segmenting a market is something that needs to be done in the market research phase.
How to make the best choice?
To be able to identify one or more segments, the project leader should try to answer the following questions:
- Is the volume of customers in the identified segment (s) large enough to support the business? What does it represent in terms of potential sales?
- Do these customers have a real need to satisfy? If so, what is it?
- Is the market mature enough? Is there a real potential for development? What could my sales revenue tomorrow be?
- Do I have the financial, human, technical and technological capabilities to meet their need (s)?
Choosing a position
After identifying and targeting one or more customer segments, the creator should define his position in the market.
Choosing a position is the second step when it comes to developing the strategy.
What exactly does choosing position entail?
When it comes to setting up a business, as long as the range of products or services is reduced, choosing a position is fairly straightforward. As such, the core target is usually reduced.
This becomes more complicated later, as the company grows, when the entrepreneur starts targeting several segments of customers, each with their specificities, needs, their expectations, their requirements, etc.
Basically, choosing a position means deciding on the image a company wants to give of itself to its customers and competitors.
The goal of any project leader is:
- to successfully launch the project,
- to succeed in entering the market,
- to be quickly identified by his / her target (s),
- and especially to ensure that we do not confuse the company with a direct or indirect competitor. In other words, to differentiate oneself..
What’s the use of choosing a position?
Every company carries messages and values that will differentiate it from others.
For example, what is the difference between Guerlain and Yves Rocher?
- “Guerlain” is positioned as a brand “upscale”,
- “Yves Rocher” is positioned as a “mid-range” brand.
Positioning has two uses:
- it allows the company to distinguish itself durably from its direct and indirect competitors,
- it allows the consumer to more easily identify the business.
There are three things to remember to choose a position correctly. Remember that in the case of bad positioning or lack of positioning, the market will do this job instead of the creator, and he will no longer be in control of the image of the company.
As such, these need to be taken into account:
- the positioning of the competitors,
- The expectations and needs of customers,
- The added value of the product compared to its competitors, which should represent a fundamental element of the act of purchase.
Finally, what exactly is a good positioning?
It needs to have these characteristics:
- It has to be easily understandable and perceptible by the consumer, the buyer and the prescriber,
- It has to be relevant to the positioning of competitors and the needs of the targeted segments,
- It has to be original and truly different.
The consequences of these choices
Targeting and choosing a position allows to do the following:
- It allows one to enter the market for a long time: a good positioning does not guarantee the success of a company or a product, but it does increase the chances of success, as well as optimizing the return on investment of the implemented actions,
- It allows one to act on these choices by acting on the mix-marketing: the entrepreneur will be able to offer a product or service tailored to the needs of its customers, at an acceptable price, to choose the most relevant distribution network to reach its target, as well as to communicate more efficiently.
- It allows one to set an accurate budget for investments and planned actions: any action on the market requires not only to set objectives, but also to evaluate, as precisely as possible, the investment needed to achieve it.
As such, not only will this allow to make precise financial projections when making your financial plan, realistic in relation to its financing capacity, but it will also allow to evaluate the expected return on investment.