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International Business Management and Entrepreneurship Lecture Notes [2]

International Business Management and Entrepreneurship Lecture Notes [2]

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Published by: Arun Kumar on May 13, 2011
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Finding a niche can be a more daunting task than you might think. When trying
to identify your niche market, go through the following 7 steps:

1. Make a wish list – Who do you want to do business with? Identify

• Geographic area you want to serve,

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CHAPTER 9. DEFINING YOUR MARKET

• The types of businesses and consumers you want to target in terms of
age, earnings, and other important demographics.

It is much better to target “pregnant women between 25 and 35 in households
that earn more than 50,000 per year.”

2. Focus – Be specific. “Selling maternity clothes to executive women” is much
better than “selling clothes.” To focus your search for a niche,

• Make a list of things you do
• List your achievements
• Identify the most important lessons you’ve learned in life
• Look for patterns that arise from your style
3. Describe the customer’s worldview – Talk to prospective customers and iden-
tify their main concerns.

• The rule “do unto others as you would have them do unto you” is often
called the Golden Rule. Lynda C. Falkenstein, author of Nichecraft: Using Your Specialness to Focus Your Business, Corner Your Market & Make Customers Seek You Out,
coined what she calls the Platinum Rule: “Do unto others as they would
do unto themselves.” [4, p. 75]

4. Synthesize – Coalesce your ideas. A good niche has five qualities

(a) It takes you where you want to go. It should confirm to your long-term

vision.

(b) Somebody else wants it. By someone else, I mean customers.

(c) It’s carefully planned.

(d) It’s one-of-a-kind. That is, there is not already alot of competition.

(e) It evolves. That is, it allows you to branch off into other niches as the
business grows.

5. Evaluation – Evaluate your niche against the criteria in step 4. If it does not
sufficiently meet the criteria, discard the idea and move on to the next one.

6. Test – Offer samples, give a seminar, etc..

• Don’t spend alot of money. After all, the longer you wait to go into
business in earnest, the longer it will be until you make your first profit.
But do test your product before you go ahead full speed.

• If your initial test does not go well, you need to stop and seriously
reevaluate your plan.

• A friend in Chicago, Donna, decided to start a business selling unique
winter clothes for dogs. She started by making a few samples and giving
them to friends with dogs. Then she approached a few local pet stores
and arranged for them to offer her products for sale at a low price, then
asked them about customer reactions.

9.1. FINDING YOUR NICHE

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7. Go for it! – Implement your idea. If you did your homework, you should be
able to enter your niche market with confidence.

Side Note 9.1.1 (Smaller is Bigger) When starting a business, many entrepreneurs
make the mistake of being “all over the map.” That is, they try to satisfy all possi-
ble customers and end up trying to do too many things well. It is better to do just
one thing well than to do many things poorly.

Side Note 9.1.2 (Caveat: Marketing to Demographic Groups) When market-
ing to demographic groups, you should practice extra caution to avoid stereotypes
or other insensitive approaches.

Many Western companies make the mistake of lumping together Japanese, Korean,
Chinese, and other Asian customers together. Likewise, many Eastern companies
make the mistake of lumping together American and European customers. This can
be offensive and serve to alienate rather than appeal to your customer.

Marketing to demographic groups has become much more refined in the last few
decades. New marketing techniques include generational, life stage, and cohort
marketing. (See definitions 9.1.1, 9.1.2, and 9.1.3.) Using these new marketing
techniques can allow you to narrow your market, and the narrower your focus on
your target, the more likely you are to score a hit.

Definition 9.1.1 (Generational Marketing) Marketing to consumers based on age
as well as social, economic, demographic, and psychological factors.

This marketing technique has been widely used since the early 1980s in the U.S..

Definition 9.1.2 (Life Stage Marketing) Marketing to consumers based on what
they are doing at a given period in life, such as having children, buying a home, or
retiring.

As older people are more active than before, many are choosing to start families
later in life or even have children ten years or more apart. Someone who is starting
a family at age 20 has much in common with someone starting a family at age 35
even though their ages may be quite different.

Definition 9.1.3 (Cohort Marketing) Marketing to people based on the groups
or “cohorts” they were part of during their formative years; for example, the World
War II cohort, the Depression-era cohort, etc..

For example, in the U.S., young adults in the Depression, when many people were
suffering from extreme poverty, are similar in age to those who came of age in World
War II, when the country was immersed in a war effort, but their behavior differs
significantly due to the different influences in their youth.

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CHAPTER 9. DEFINING YOUR MARKET

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