22. Macro Perspective: Get the Big Picture

The first part of this section focused on the micro, or internal, aspects that drive your business. The research up to this point has been focused on your customers and has been gathered from company database records (or your best guess if you don’t collect this information). Now we’ll shift to an external perspective to seek information about market segments, competitors, and the market environment. The blending of information about both the internal and external environments will help identify opportunities for business growth. The combination of both the micro and macro research becomes the Market Opportunity Analysis (MOA) section of your plan.

A macro perspective is an understanding of the market and industry in which you compete, the potential market size for your solution (projections of the available market size, revenue, and market share), and your competitors. Macro research will include examining the issues and events outside of your control (such as the economy) that may impact your business. Companies that learn to anticipate market, industry, and competitor dynamics have a distinct competitive advantage. They discover opportunities and quickly respond to them because they have already thought through their next strategic move. Businesses that are not prepared for obstacles and uncertainties are often blindsided. These companies can get derailed for periods of time; or worse, they can fail due to unforeseen issues.

Your research in this section will include the following:

1. Sizing the market opportunity for your products and services.

2. Defining your target market.

3. Competitive research to determine your unique differentiation in the market.

4. Macro-environmental issues and trends to anticipate changes that are outside of your control but still impact your business.

Market Segmentation and Target Marketing

Clearly and accurately defining your target market(s) is one of the most important, if not the most important, part of developing your marketing plan. If the target market description is not accurate or is too broad, the rest of your marketing plan will not be on point. If your messaging and marketing strategies are directed to the wrong target market, how could they possibly be effective?

Identifying a target market starts with market segmentation. Market segmentation is the process of defining and selecting all the possible segments of customers who would be interested in buying your products. Begin by identifying the broad market segments that buy your products and services, then narrow this to the one or two markets that have the strongest need and ability to purchase your solutions. Factor in issues such as the ease of reaching and selling into the markets, competitor market share, and other factors.

If you sell many diverse products and services, or if you sell into many different industries or geographic locations, you may have several target market definitions. They may be defined by demographic and psychographic characteristics. Demographics are items like age, income, gender, occupation, and so on. Psychographics are lifestyle traits, such as hobbies, sports, and special interest groups. Market segments should be mutually exclusive with no overlaps.

Use the following criteria to define your target market. The first section, “Identifying Target Market Segments,” summarizes common characteristics of primarily consumer buyers, although several factors can be used to target business buyers. The second section, “Business-to-Business (B2B) Target Markets,” summarizes the attributes of buyers in a business market. Be as specific as possible to define an accurate description of your customers. The more you narrow and focus on precise characteristics of buyers, the more targeted your marketing becomes.

Identifying Target Market Segments

1. Demographics

Consumer: Criteria such as age, sex, income, occupation, education, household size, geography, home ownership, marital status.

Business-to-Business: Criteria such as industry specialty groups, geography, level in organization (C-level), size of organization, number of employees, revenue, type of asset, buying cycle, seasonality.

2. Psychographics

How do a prospects’ lifestyles, interests, activities, and opinions affect their buying behavior?

3. Need and Problem

What problem are you solving for the target customer? How much time or money will your solution save? How big is the problem for various target markets?

4. Revenue Potential

How much revenue do you anticipate each segment will generate?

5. Growth Potential

How much do you anticipate the target market will grow and change?

6. Loyalty Potential

Does the target segment(s) tend to be loyal customers or do they buy based on price?

7. Responsiveness

How fast is a prospect likely to respond to your products and services? What are the “no haggle” factors you should consider?

8. Ability to Target

The ability to reach a customer through a targeted marketing program is an important consideration, and will impact marketing expenses and budgets.

9. Lifetime Value

What is the estimated lifetime value for a specific market?

10. Decision-Making Power

Who is the buyer versus the user? Who makes the actual purchase decision and who is involved in the decision-making process?

11. Usage

Are users of your product or service high, medium, or low users?

Business-to-Business (B2B) Target Markets

1. Specific Industries

Include the SIC/NASICC number for each of the industries in your target market. Defining the specific codes will be valuable to you as you create marketing programs to reach these audiences.

2. Specialty Groups

Groups may consist of trade or professional organizations, government sectors, exclusive clubs, special interest groups, and so on.

3. Geographical Regions

Some businesses are exclusively local while others use technology to find a broader reach. Large companies typically have geographical regions defined using their own unique descriptions, such as North America, CALA (Caribbean, Latin America), EMEA (Europe, Middle East, and Africa), and APAC (Asia Pacific and China).

4. Job Title and Responsibility

C-Level (CEO, CFO, CMO, COO), Senior Executives, Directors, Senior Managers, Managers, Procurement Officer, and so on followed by their area of concentration (human resources, marketing, sales, operations, and so on).

5. Size of Organization

Target based on company size that may include total revenues and/or number of employees. Try to go beyond broad descriptions such as small, medium, and large. These descriptions vary widely by company. For example, the Small and Medium-Sized Business Market (SMB) could be defined as fewer than 500 employees in some companies, and another company might define small as less than 50 employees.

6. Type of Asset

This is critical information for anyone targeting technology or manufacturing businesses. For example, if you sell a software product, you will need to understand what type of operating system the company currently uses and perhaps what enterprise applications are installed. If you are trying to sell a certain type of machine, you can target companies with an install base of certain equipment.

7. Price Range of Buyers

How sensitive to price are the buyers of your product or service?

8. Buying Cycle

Does your market buy products or services on a seasonal basis only at a certain time of the year?