Market segmentation – Less is more

Even with the technological advances and vast choice of media at our disposal, the possibility of effectively reaching “everyone” is nothing more than marketing utopia.
Small companies develop into large corporations because they realise that segmentation multiplies opportunities. They also realise that market segmentation is the most efficient and profitable means to better client service.

Unless you want to remain a small, run of the mill business you have to realise that you cannot be all things to all people all of the time. This is especially true in business. You simply do not have the time, energy and money to give every customer everything they want.

Through the process of market segmentation you will group clients together who have similar requirements or behaviour. Once you have set the criteria for your focus groups you can begin to tailor your products and services in a way that will appeal to your focus group, and therefore “attract” the clients you want.

The trick of segmentation is to have more than one market segment. In other words, you need more than one product or service with every product or service aimed at a specific segment of the market. The more segments you have, the more opportunities you will have.

As time goes by you will notice that new segments emerge. You will also notice that your existing segments are living organisms. They constantly change as a result of economic climate changes, advances in technology, political influence, fashion trends and a whole range of internal and external economic factors.

Start growing your business through successful market segmentation and claim a bigger piece of the pie.

Create a customer BUZZ!

5 Reasons why you should focus on product development

Creating a customer buzz is all about creating NEW products. Most companies take an existing product, change the shape, size and colour, make it more stylish, and then attempt to sell it to their clients as a new product.

Differentiation is a key-factor in various aspects of marketing. If you want to be different from your competitors you should focus on the development of products that will get your customers excited. Avoid the mistake of becoming a company that starts with one idea and finishes with the same idea everyone else has.

You have to master the art of creating and developing new products, and here are 5 reasons why you should:

1. It keeps your customers excited

Customers get excited when a steady stream of new products find its way to the market. Nothing gets customers in a better buying mood than the excitement of a whole new product range.

What can I do to get customers excited if I don't have the ability or resources to invent new products?

The main ingredient required is a little creativity. There are many businesses who spend a lot of time, money, and energy in finding new clients. It is in my opinion just as important to retain clients as it will be to find new clients. It is proven that it is more expensive (approxamately 5 times more expensive) to gain a new client than to retain a client.

Sometimes an improvement in the quality of client service will get clients just as excited as a new product or service. So, if you can't afford developing new products and services it might be a good idea to find areas in your business where you can improve and get your clients excited.

2. It gives your clients a reason to stick around

The slightest hint or promise of the newest, latest and greatest creates a customer buzz. Your clients will stick around in anticipation, waiting to see what you offer next.

Communicating with your clients on a regular basis is an important aspect of this exercise. Communicate with your clients in person, in letters, in faxes, in emails, through your website, with brief newsletters, etc.
As long as your communications are solicited you don't have to worry, you can’t over-communicate with your customers.

I always encourage my sales executives to make sure that they never contact a client unless they have something worth wile to share with the clients. The purpose of your contact should be to add value each time you interact with your client.

It is important to have your clients stick around, because real profits come from repeat business. You want a constant stream of sales, repeat business, clients who stick around.

3. They will buy from you as long as you have what they want

It is a well known fact that people's needs change over time. As long as you can succeed in providing products and services (new ones) that satisfy their needs they will stick around.
The main requirement for you would be to keep a pulse on what is going on around you, the latest local and international market trends, and advances in technology that could give you the leading edge.

Always keep in mind that the customer is the boss, and if the boss is not happy you are fired.
In fact, if the customer is not happy everyone in your company is fired. If your customer can't find what he wants he will spend his money elsewhere. Give the customer what he wants and you will have a long relationship and employment. The only people who will benefit from your unhappy clients are your competitors.

If you don't know how your customers are feeling about the quality of your products and services, ask them. Send a survey to your clients once in while and take action to rectify any serious problems.

4. It creates customer loyalty

There will always be clients who want to be the first to try, and those who want to be the first to follow. Your constant introduction of new products creates an expectation that has a compounding effect on customer behaviour. So, retain your customers' interest with a steady stream of new and innovative products and services.

An important factor that influences customer loyalty is whether or not your customers receive exactly what they paid for. Don't develop products and services simply to get your customers to enter your door. The disappointment of a client who didn't get what he expected and paid for will do great dammage to your business's reputation.

5. It sends a message to your competitors

By introducing new products you will be sending a clear message across to your competitors.
Yes, it won't be long before they take your products and service, change the shape and size, and sell it to their clients as a new product. It will also not be long before you are recognised as a market leader, and your competitors recognise you as a trend setter.
Your competitors will receive a clear message that you are here to stay and that you mean business.

Don't let success be the reason for failure

As your business develops and start to grow, you will soon realise that growth puts an enormous amount of pressure on your business.
It is important to have a plan to accommodate growth, as a business should always aim at gaining maximum benefit and revenue from its customers.
Preparation and planning is paramount to the long term survival of your business. Once the wave of success breaks on your shore things will happen very quickly, and there will not be sufficient time for planning.
If you are not prepared you might not be in business much longer.

"5 things you should do to prepare for success"

1. Always know what you are going to do next

Growth means more customers. More customers will require more goods / services, human resources, and cash flow.
You will probably need to expand your premises, or find a bigger space to conduct your business.
In order to expand you will need access to finance.

Know what you will do next by asking the following questions:

Who? (Example: We need more people. Who will be the best for this...?)
What? (Example: What skills will be required to accommodate this change...?)
Where? (Example: Where will we go if we need to move to a larger office...?)
When? (Example: When / How long will it take for us to be prepared and ready..?)
How? (Example: How will we finance the expansion...? How much people will we need?)

2. Know your customers better

As your clients become more, so does their needs, requirements, and expectations. Your clients will expect better and faster service at more competitive prices.
Do your research. Conduct a survey to determine how and if your clients' needs have changed.
Don't spend all your money on market research and data you can not trust.
Ask your clients what they need, they are usually more than willing to give you a piece of their mind.

3. Be prepared for a fast pace

The last you thing you want to tell your customers is that you are not able to meet their demands, or that you don't have enough competent people to do the work.
Do your planning ahead of time. Make use of schedules, charts, and enterprise resource planning systems suited for your business.
Always keep records of everything. Use your data and statistics to identify trends and market changes in advance, get suited up for the marathon, and be mentally prepared for the race.

4. Find the best people for the job

This is one very important rule that is applied by most successful businesses.
Identifying the best people to perform a specific task could be a tiresome process, but it is worth every penny. Reputation is more often than not determined by your ability to deliver the best quality product or service.
You will not be able to honestly say that you are the best at what you do if you do not make use of the best people available for the job.

5. Know how fast your business grows

If you are unable to tell whether you business is growing you are flying completely blind.
It is really not that difficult to calculate growth. There are various schools of thought regarding the calculation of growth, as there are so many areas you can measure.

For the purpose of this article I will suggest that you make use of your sales figure to calculate growth.

For example:
R = South African Rand (ZAR) currency.
Net sales 2006: R100 000
Net sales 2007: R180 000

Sales growth = (Net sales 2007 – Net sales 2006) ÷ Net sales 2006
Sales growth = (R180 000 – R100 000) ÷ R100 000
= 0,8 (Multiply by 100 to get percentage)
= 80%

There are many schools of thought regarding growth ratios. I believe that there is only one growth figure that really rings my bell, and that figure is called PROFIT.
I recommend that you find the growth ratio that speaks to your business's unique circumstances and requirements.

It is generally excepted that a business that shows a growth rate less than 10% per year is more predictable, and allow more time and space for “preparation”.
If your business grows by more than 10% (The double digit rule) per year you might find yourself in a difficult situation if you don't have the right support systems and business processes in place.

Interesting fact:

If your business is growing at a percentage rate, lower than the current inflation rate, your business is not growing at all.