FAQs for Step 36: Describe Your Market Area
Q: How do I define Market Area if I am including an online store?
Q: Is it better to confine the Market Area for example to a specific part of a city or is it better to include the broader scope ie the whole city or even the region?
Q: How do I define Market Area if I am including an online store?
Online success, unless you happen to enjoy the deep pockets of a Fortune 500 company, hinges on your ability to define a specific niche. While the Internet is huge and the number of users growing in all parts of the globe, each region or niche will have its nuances. This means you will need to adapt your marketing tactics and methods to each segment in order to effectively reach and attract customers. So, on the surface it might appear that Internet users across the globe need your products and services, but as you drill down, you will find differences.
One of the most immediate characteristics separating customers groups is language. Your target market will always be limited to the language your website or online store uses, at least until your sales go hog wild and you start expanding into different language markets. For shippable products, your distribution channels and delivery systems will be the limiting factor that controls where you can effectively compete, thereby controlling your market area.
While the Internet is big, for the small business people it offers vast opportunities to target small, narrowly defined niches. Conventional wisdom says to start small and get experience with one niche, and then take what you’ve learned and apply it to more niches. The principles of market area definition would apply equally to any niche you choose to target.
First, research the demographics of your online community, and divide it into market segments:
- Age, Gender, Education, Income, Marital Status, Ethnic and/or Religious Background, Family Life Cycle.
Next, segment the market using psychographics:
- Lifestyle, Social Class, Opinion, Activities and Interests, Attitudes and Beliefs.
If you are marketing to other businesses (B2B), you’ll segment your target businesses according to their number of employees, annual sales volume, location, and company stability.
Q: Is it better to confine the Market Area for example to a specific part of a city or is it better to include the broader scope ie the whole city or even the region?
In defining your Market Area, include all areas that will provide your planned business with any major or significant sources of income or revenue, and don’t sweat the small stuff. As well, you might define the geographic area as primary and secondary, with primary being the main part of your market area, and secondary including a broader definition. So, for example, if your primary area is the city you live in, the secondary market area might include a larger geographic area (region, province, state) that you expect to provide fewer customers and therefore less revenue than your primary market area. Most importantly, don’t sweat the small stuff. Your business plan is intended to reveal whether or not your business idea is viable and give you some assurance that you can sustain yourself and that you won’t lose your investment. If your main or primary market area achieves that, perhaps you don’t need to fuss with secondary market. If you only expect a trickle of revenue from areas beyond the city limits, don’t invest too much time planning it out as not much hangs on it anyway.
Have a question? Need Help?
Email us at faqs@riskbuster.com
We welcome all questions, comments and feedback and look forward to hearing from you!