4 Tips to Analyze Your Market for Maximum Profit
It doesn’t matter what type of business you’re running or even the industry you’re operating in. Navigating the complexities of any market is a challenge, to say the least.
First, you must ensure that your product or service can justify its existence. You never want to end up as a “solution in search of a problem.” Then, there are a myriad of different factors that are largely beyond your control. Worldwide events can shift markets dramatically and without warning, as the events of 2020 went a long way towards showing us.
Yet, at the same time, any successful entrepreneur you respect has at least one thing in common: they took the steps to analyze their market as much as possible. They learned the intricacies of how it worked. They learned what was in their control and, more importantly, what wasn’t. Then, armed with this knowledge, they could make strategic and more informed decisions to maximize profits across the board.
You can, too. It may not be as easy as flipping a proverbial light switch, but it’s still a more straightforward process than you might think. You have to keep a few key strategies in mind along the way.
1. It Begins With Your Target Audience
As an entrepreneur, part of the reason you went into business for yourself is that you wanted to make money. But another part has to do with the fact that there was an audience out there that you were passionate about serving. They have problems; you have solutions. They’re looking for ways to make their lives easier. Your product or service can meet that need.
Understanding your target audience thoroughly is the only way to ensure you’re filling that role. You need to know not only their needs but also their buying behaviors.
What do they like, and what do they dislike? What do they need, and what do they want? How much disposable income do they have on average? Where do they live? These are just a few of the many questions with answers that should dictate the direction of your organization.
Skip tracing is an example of one of the many techniques used in various industries to learn more about the people a business has dedicated itself to serving. It uses public records, online databases, social media, and various other sources to help professionals track down people who may be hard to find, intentionally or otherwise.
Skip tracing in real estate, for example, is a great way for investors to find the owner of a property of interest. Professionals have used it for years to find and purchase under-valued real estate.
Skip tracing can help you gain the knowledge you need to understand your audience in this way. Are those people one-off examples, or are there many in a neighborhood with whom you can start relationships to corner the market?
These are just a few of the many questions that can be answered by understanding your target audience and working your way back to maximizing profits.
2. Don’t Forget Your Competitors
Along the same lines, you’ll also want to fully understand your competitors and the lengths they’re willing to go to to serve a target audience. After all, the overlap between yours and theirs is likely significant, so it’s in your best interest to understand what you are up against.
When you use techniques like skip tracing and others to analyze your competitors, you learn a few valuable things immediately. First, you identify what those competitors are doing incredibly well. Then, you learn what they’re not doing well at all. You should focus your attention on the latter, as they represent gaps in the market and opportunities for your business to exploit.
3. Putting Customer Segmentation to Work
Customer segmentation is another way to maximize profits by going after not necessarily the largest possible audience with a product or service but the right one.
For example, say you have four distinct products. You wouldn’t want to market them all to “anyone and everyone.” Break your target audience into smaller chunks and tailor your offerings to those unique needs.
The more segmented you can make your customer base, the easier it is to always match the right product or service with the right people.
4. Proactive Pricing Strategies
Finally, always remain flexible and explore various pricing and marketing strategies to maximize your reach and revenue.
This is another area where the insight gleaned from audience segmentation will be helpful. If most of your audience for Product A is people over 65, suddenly, you know which marketing channels to focus on and which not to. You also understand that this audience has more disposable income than people under 21. As a result, you can adjust the price until you find the maximum they’re willing to pay without alienating any other segment.
Depending on the traction you can gain, you may even want to shift from a traditional pricing model to a subscription-based model for recurring revenue. It all comes back to your audience and what they both need and are willing to support.
Understanding Your Market is an Ongoing Effort
In your quest to dissect your market and maximize your profits, there are ultimately two key things to be aware of. The first is that knowledge will be the most important weapon you have. If you want to make the right decision at the right time based on your market, you need to do it based on facts. You can’t make those decisions based on gut instinct or intuition.
Secondly, this knowledge has an expiration date. Again, the world changes rapidly, especially in the fast-paced digital era. Anything you learn today may need to be updated a year or two from now, regardless of how comprehensive your efforts were.
This is why analyzing your market to maximize profits isn’t something you “do once and forget about.” You need to do it periodically to ensure you understand where the market is and, most importantly, where it might be headed. Only then will you not just be able to get to the cutting edge but stay there regardless of what life throws at you.
