Identifying the right target market can often be the difference between success and failure for new products. The right market will be more willing to accept, and ready to pay more for, the right product, and the wrong market will be slower to accept your product and will require more marketing efforts, cutting down on your profits. So choose your target market carefully. There are many factors that determine the right target market, and this article will cover two important factors: market size and pricing.
When you determine your market you need to answer these questions:
1. Who are your customers? (income level, gender, hobbies, etc.)
2. Where do they live? (city, state, region, or country)
3. How will they find you? (they belong to an online community, read a certain newspaper, go to certain stores, etc.)
4. Markets that are the right size for inventors
While many inventors want to enter a big market with lots of customers, this is most often a mistake. Your marketing efforts (unless you have a huge marketing budget) will probably be more like a drop in a bucket than a big splash and it is unlikely that consumers will notice.
You want to choose a market small enough that you can make that market notice your marketing efforts. As your budget grows, your market can expand, but you need to consider what funds and time you have now for marketing your product.
Your market maybe be local, or include specialty shops or boutiques. You may sell just through one retail outlet or through catalogs to begin with.
Pricing is aligned with inventor’s costs
Most inventors don’t realize all the hidden costs in selling a product. For instance, selling to retailers through distributors means both the distributor takes a percentage of the wholesale price (sometimes more than 30%) and then retailer often takes 50% of the retail price (double the wholesale price). So if you decide to sell products this way, which many inventors do, you need to make sure that your target customers are willing to pay a high enough price so that you can produce your product and still make a profit on only 70% of the wholesale price, or 35% of the retail price.
You need to do market research to determine what price consumers are willing to pay and if they aren’t willing to pay a price that allows you to make a profit, you either need to choose different target customers who are willing to pay more, find a different distribution channel, or rework your product so it is cheaper to make, but still valued by your target customers.
Keep Marketing Expenses Below 10% of Sales
Once you choose your target market, marketing can be very expensive. You need to be careful of how you spend the limited dollars you have allotted to marketing. These are some tactics to use to make your marketing dollars go further.
Low Cost, Even Free Marketing Tactics
In store demonstrations allow you to build sales by investing only your time. You can also see if bloggers or websites will review your product and post their review online if you send them a sample.
Publicity is a great way to get a lot of attention. One of the great things is that publicity can be free. If you can interest news sources in your product, you, or in the story behind you and the product, there is a good chance they will do a story about you and your product.
You can also do contests, trials, and other events to promote your product and invite news people to the event. For instance, do you have a new bike product? You can organize a bike event, even for a favorite charity if you’d like, and have people try out your product.
Select Small Markets with Easy Communication
By choosing smaller markets, your marketing expenses will be much lower. Smaller markets have fewer publications and websites, so you will need to place fewer ads and the ads are also inexpensive. Ideally, you want a market with publications and websites that have good readership, so you can be sure that your ads are reaching potential customers. Also, you can offer to write articles for these media outlets and list your web address and that you invented such and such a product in your bio info.