Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-1 Profiling Your Target Customer Prepared by Ron Knowles Algonquin College chapter 4 4

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-2 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 to formulate your market strategy. chapter 4 4

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-3 Learning Opportunities  Understand that your key to survival in small business is the target customer.  Use your intuition to forecast what will happen in your industry.  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.  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. Gather critical market input from target customers through surveying field interviews.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-4 The Power of Profiling A Key Trend—Relationship Marketing The development of long-term, mutually beneficial and cost-effective relationships. Emphasizes a market pull strategy: –Profile your target customer. –Determine what your target customer (TC) wants. –Adapt or create a product or service to satisfy this want or need.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-5 Your Target Customer Target Customer (TC) A person, group, or firm, likely to buy your product or service. Three Kinds of Target Customers are: 1. Primary - 1. Primary - The primary customer is most likely to use your product or service and could be a heavy user. 2. Secondary - 2. Secondary - The secondary customer is not a heavy user and may not be apparent at first. Sometimes this TC leads to the third type of customer. 3. Invisible - 3. Invisible - The invisible customer appears after you open the doors.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-6 Two Types of Customer Profiles 1.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.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-7 Demographics and Psychographics  Age  Sex  Family Status  Age of Children  Education  Residence DEMOGRAPHICSPSYCHOGRAPHICS  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  Demographics involves key personal characteristics of a group of people. These characteristics include:  Psychographics is the process of segmenting the population by lifestyles and values. These may include:

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-8 Psychographic Profiling Chances are you will have to do your own psychographic research. VALS: –Use Action Step 24 (page 84) to help you get started –What is your VALS? (Assignment #1) PSYTE: –Geographic Segmentation & Clustering) –Use with Canada Post’s Unaddressed Admail

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 44-9 Media Sources Can Help Demographic and psychographic profiles are available from media sources:  Magazines  TV and radio stations  Online  See their Media Kits

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 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 p. 88 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.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 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.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter Joint Ventures and Strategic Alliances Ten 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

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter Field Interviewing and Surveying 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. 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. FIELD INTERVIEWING TARGET CUSTOMERS

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter Other Sources of Primary Research  Mentoring -  Mentoring - Locate a business owner who wants to help.  Experience -  Experience - Work in a similar business and get all the information you can.  Networking -  Networking - Go out and talk to local businesses and friends.  Brainstorming -  Brainstorming - Gather a group of friends, associates, or family and brainstorm your TC.  Competitors -  Competitors - In some cases, research on your competition may provide some good information about your potential TC.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 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.

Copyright © 2007 by Nelson, a division of Thomson Canada Limited.Chapter 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?