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Don't Jump the Gun... If You're Looking to Come Out a Winner!

Don't Jump The Gun - If You're Looking  to Come Out a Winner!

by Gail Buckley

Tempting as it is to rush online when you're all fired up about a hot new business idea, it really is best to hold your horses. The WWW isn't going anywhere, and taking a few extra days to do some research and think things over will only stand you in better stead when you do jump into the fray.

Fact is, if you aim to have a solid shot at success, it's not enough to know the answers to the what, where, when and how questions about your proposed venture. You also need to know why people would be interested in what you have to offer in the first place. All successful business owners must know their markets, competitors, customer wants and needs, and "what it takes to be competitive."

If you already know all this, then by all means, get hopping. If not, you need to do some homework to determine whether your hot new idea is in fact your ticket to the good life.

You have three assignments to perform:

1. A Customer Analysis - The best products and services are those that people want. So, before you pump your life savings into a scheme, you'd best be sure the people want it. 

2. A Competitive Analysis - Like it or not, when you put your business on the Web to offer products or services globally, you are bound to face some pretty stiff competition. To succeed you need to identify your primary competitors, find out their strengths and weaknesses and trump them.

3. A Market Analysis - Is there a large enough market for your product or service? If so, how much income can you expect to derive from it?  

Let's take a minute to examine each of these in turn.

Assignment #1: Customer Analysis

Do you know precisely who your potential customers are? A surefire formula for success is to thoroughly understand who your customers or clients are (or will be) and what they are looking for. You may think you already know - but don't rely on assumptions.

If you're planning a new online start-up it's especially important to try to put yourself in the shoes of your potential customers. 

- What do they buy? 

- What do they want and cannot buy?  - What do they buy and don't like?  - Where do they buy, when and how?  - Why do they buy? 

- What are they buying more of?  - What else might they need but cannot get?

You need to be specific - to aim your marketing at a carefully defined group of people. If you're looking at everyone as potential customers, you're bound to miss out on your best customers.

So, your first assignment is to prepare a customer profile. Some demographic parameters you might want to consider are:

- Geographic location: Where do most of your customers come from? - Economic background: What is their average household income or purchasing power?

- Education: What is their typical educational background? - Lifestyle: What are their hobbies, interests, recreational/entertainment activities and typical family make-up? - Age: What is the predominant age group of your customers? - Values & attitudes: What are the predominant values that your customers share? What is their attitude toward your kind of product or service?

- Knowledge & Awareness: How well-informed are they about your product or service? 

- Buying patterns: How do customers of different ages and demographic groups typically shop on the Web? - Media preferences: How do your customers get information? What do they read? What magazines do they subscribe to? What are their favorite Websites?

If you already have a business online and you're looking to start another, you are way ahead of the game when it comes to getting customer feedback. All you need to do is ask your site visitors. Use your newsletter (if you have one), send out an email survey or post one on your site. 

On the other hand, if you're new to the internet you'll have to dig in your heels and do a bit of research. A good place to begin would be with online news or discussion groups in your area of interest. Try these sites to locate some. 

http://www.deja.com

http://talkcity.com

http://theglobe.com

http://forumone.com

Other great places to learn what products consumers are buying and why are consumer review websites, such as:

http://www.consumerreview.com http://www.consumersearch.com http://epinions.com

(If you go this route you'll also get a leg up on your next assignment by finding out what consumers like or dislike about your competitors' products!)

If you feel more comfortable with second-hand research, you can try media sources - online ecommerce statistic sites or off-line trade/entrepreneurial journals or magazines (most of which also have online versions.)

http://www.entrepreneurmag.com http://www.ecommercetimes.com http://www.iconocast.com

http://www.clickz.com

http://www.forrester.com

http://www.wilsonweb.com

Granted, you may have to spend a bit of time at this but, if you're as fired up about your idea as you should be, learning more about it can't be construed as hardship duty. (If so, perhaps you should re-think your options.) 

And the information you gather will help you in two very important ways. Not only will you discover whether the product or service you plan to offer is a true fit for your potential customers' wants/needs - and be able to modify it accordingly, but you'll also have a heads up on how best to reach your target buyers when you're ready to begin promoting. Let's move on to ... Assignment #2: Competitive Analysis

Competition is a way of life, especially so when it comes to conducting business online. The very thing that makes the Internet so attractive as a small business marketing medium - it's global reach - also insures that your your competitive field, regardless of how narrowly you target your niche, is going to be a pretty broad one. 

Your goal in preparing to launch any new product or business venture is to get to know your chief competitors, to analyze their individual marketing strategies so you can better position your company for success.

Off-line this might pose somewhat of a problem. Online...it's a breeze. Zero-ing in on your competition is as easy as typing a few business-related keywords into your favorite search engine and hitting the search button. Your competitors are occupying the top 10-20 listings of the page that turns up. 

Or you could use Yahoo! Directory, researching categories closest to your area of interest. Two other tools that might aid in your sleuthing efforts by pointing out which sites actually get the most traffic are:

http://www.mediametrix.com  http://www.alexa.com (a free web browser add-on)

After you've looked over the field, identify the major players. Who are - or would be - your 5 or 10 nearest direct competitors? Have a pen or pencil handy because you'll want to study the leaders and take some notes with an eye for:

- The look, feel and overall functionality of the sites themselves

- Statement of vision or purpose, noteworthy strategies or objectives

- Products or services offered, especially those that differ from your own 

- Customer service - guarantees, policies and procedures - Capability and personalization of the shopping cart/sales system

- Advertising campaigns and offers - Strengths and weaknesses - both from the consumer and sales point of view

- Areas where a particular competitor holds a market advantage - Vulnerabilities or gaps in what is being offered

Your goal here is to "borrow" the good and learn from the bad. What can you learn from their operations? from their advertising? How can you differentiate your product or service from yours? And most importantly, what makes you think you can compete successfully with them?

You may decide, after surveying the competition, that the field is simply too crowded and you don't have anything to offer that your competitors haven't already thought of. In this case, you'd be better off finding another niche in which you can compete successfully.

On the other hand, if you find the competition not unduly formidable, simply use your ingenuity to come up with strategies necessary to counter or one-up what they're doing or offering - and move on to...

Assignment # 3: Market Analysis 

How do you determine if there are enough people in your market who are willing to purchase what you have to offer at the price you need to charge to make a profit? The answer, of course, is to conduct a market analysis.

Don't worry - it's not as scary as it sounds. In fact, you've already done most of the work with your first two assignments. 

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Topics addressed in an official market analysis include the existence and type of competitors, the characteristics of your target customers, market size, distribution costs, trends in your industry and in the market in general. For preliminary purposes, however, it's sufficient to merely determine whether there is indeed a viable market for your proposed product or service.

To succeed in an online venture, you must first be able to comprehend and appreciate the Internet's hugeness as a market - and then be able to scale down that hugeness to a size you can both accommodate and dominate.

The classic path to success is to "find a need and fill it." When it comes to Internet marketing, however, the phrase might be modified to "define a niche need and fill it."  You have 4 basic niche options:

1. Unfulfilled Niches:

2. Poorly Filled Niches

3. Partly Filled Niches

4. Creating New Niches

If you are having trouble defining or narrowing down your proposed market, you might try thinking in along these lines:

- Who you serve (e.g. a software consultant who works only with Mac owners)

- What you provide (e.g. an accounting firm that specializes in small business operations) - Where you work (e.g. a public relations firm that specializes in foreign media coverage) - When you are called upon (e.g. a computer specialist who is available after-hours)

Bear in mind, it's much easier to market yourself as an "expert" serving a particular niche. This helps you stand out from the crowd and also allows you to charge a higher fee because the information you provide is "specialized."

Beyond this, identifying the right niche market is the best way to keep cost per sale to a minimum. When you have the ability to target only your most promising prospects, you spend far less money making sales. 

This being said - you still have to pick the right market segment, and this, alas, is easier said than done. Some questions you should ask and answer in analyzing your proposed market are:

- How large is the total market? - How does the existing total market segment (by price, product, location, quality, distribution channel etc.)? - How large is the portion of the market that is interested in your specific products or services? - What segment or niche of that market will you be targeting? (You can target more than one segment or niche.) - How large is this segment or niche (in volume terms)? - Is it large enough to sustain your business and that of your competition?

- What is the growth trend for this niche for the next five years?

- What market share of this niche already buys competitive products?

- What market share of this niche is accessible to your proposed distribution methods? - How much of this niche can your proposed business actually serve?

- How much of this niche can you affordably reach with advertising and promotion? 

Other important factors to consider are: 

- strength of competitors to attract your niche buyers away from your products 

- similarity of competitive products in the buyers' minds  - rate of new product introductions by competitors  - ease of entry/protectability in the market for your niche 

Basically what you're looking to determine, particularly if you're thinking about a new venture, is whether the customer base is large enough to support your business or new product idea - to generate your planned sales volume. 

It's not enough that people like your business concept. There must be enough target buyers on a frequent-enough basis to sustain sales, spending and profits from year to year. For example, selling a product or service that people may need only once in a lifetime (e.g. an indestructible toothbrush) may not be a sustainable business, unless a large number of people need it at any given time or everyone needs it eventually (e.g. funeral services).

As you are conducting your market analysis bear in mind its purpose - to lay the groundwork for your marketing strategy, which will, in turn, form the basis of your plan for successfully competing in your selected market.

All this may sound a bit complicated - and if you're just looking to "test the waters" of internet marketing by joining an affiliate program or two - it may not be necessary. (Most of the affiliate products/services we recommend on our site are already proven winners.) But if you're thinking of launching a new venture of your own - or expanding an existing one, any research and preparation you do now will pay off big time when your business actually gets underway. 

The more you know about your potential customers and competitors, the more successfully you'll be able to compete. And the more successfully you're able to compete, the better off your business will be. So, if you're looking to come out a winner - don't jump the gun!

===============================================  (c) 2002 by Gail Buckley

Gail Buckley, author of "Plan To Succeed Online," a brand new, all encompassing online business planning course, offers a FREE,  internet marketing opportunity & resource coordination service at http://www.websuccessmaker.com. Visit this unique entrepreneurial "HUB* site to get up to speed with all the cutting-edge tools,  information & resources you'll need to succeed online.