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Customer Profile

FastTrac, Kauffman Foundation

Do Aunt Molly and Cousin Fred really represent the customer who will make your product or service successful?

By identifying and knowing your customers, you can assess their needs and consider if your business concept will meet those needs. Research will assist you to determine the customer group most likely to purchase and use your product or service. This group will become your target market. Your target market may be businesses or consumers. By identifying your target market, its demographics, and its buying and spending habits, you will be able to focus your marketing and advertising efforts more effectively.

In the preliminary stages of your market research, you may have multiple potential markets for your product or service. You will want to use a variety of methods to pinpoint the markets that are most likely to receive your business concept well. Creating a customer profile is one method of describing the individuals who make up your target market. A customer profile can provide a clear picture of the type of person or business you are planning to serve. This information helps to drive your marketing strategy, promotional design, and sales process.

The Chooser vs. the User

Sometimes the customer who chooses your product or service is not the end-user-the person who uses it. For example, you might create a great board game for children. But children are not the ones who actually buy your game. The child is the User, but the Decision Maker is probably the child's parents. The Buyer may be the mother or the adult who picks the game up at the store. The Influencer is anyone who provides the Decision Maker and Buyer with information. In this example, the Influencer may be the child's teacher, another parent, a neighbor, or family friend. In this case, the child might also play the role of the Influencer as well. When you describe your customer, consider whom you will be marketing the product or service to and who will buy it.

When another business is the customer, you typically have multiple persons in these roles. In the chart, you can see the purchasing steps and different roles in selecting a proposal from a new marketing consultant.

B2B vs. B2C Markets

Businesses can target other businesses or consumers. Your customer profile will vary depending on whether your customers are businesses or consumers. Entrepreneurs often refer to this distinction as B2B (business-to-business) or B2C (business-to-consumer) markets. While some products or services may only be marketable to other businesses or only to individuals, some may fit both categories. In that case, careful analysis can help you determine which market has the greatest potential.

Whether your business is B2B or B2C, you will want to look for demographic and psychographic information.

Demographics- Customers may be grouped by similar variables such as age, gender, occupation, education, or income levels, geographic location, industry, number of employees, number of years in business, products or services offered, or other defined criteria. Generally, the Census Bureau, government, or industry sources provide demographic information. Studies and trends are usually reported using predetermined variables from these sources.

Psychographics- Customers may also be grouped by similar psychographic variables such as values, beliefs, buying patterns, perceptions, and lifestyle choices such as recycling, fitness, travel, and hobby interests. Psychographic variables provide insights into how and why customers buy. Although this information is valuable to know, it is harder to collect and find because customers' preferences change over time and this type of information often must be collected directly from the source.

As part of your Marketing Plan, you will create an expanded profile of the potential customers who make up your target market. For example, a golf ball manufacturer who is trying to identify the type of golfer most likely to purchase its product will want to look at the characteristics of customers in the golf market. The golf ball manufacturer needs to know demographics on customers: where customers purchase their golf balls, how often they buy them, how much they pay, and their psychographic factors for buying golf balls, such as perceived value, desire for prestige, and price range.

You can collect demographic information about your intended customer from the Census Bureau and other secondary research sources that track consumer information. Psychographic information may require using surveys, interviews, and other forms of primary research to collect information specific to your intended customer.

When businesses are your customers (B2B), you will want to collect general market information about them. This type of demographic information can usually be obtained from the Department of Commerce, Small Business Administration (SBA), or industry experts. Psychographic information for businesses may be harder to locate as secondary research. B2B data may be collected from conducting informational interviews or reading about businesses you are interested in, contacting trade associations, industry experts, and others who are familiar with the industry or business group. You may find yourself doing industry profiles not only on your industry but also on your customer's industry if the two are not the same.

Marketing a product or service to a business has some major differences from marketing to individuals. In sales to businesses, you may have fewer, larger customers, which can increase your efficiency and profits as well as your risk. Energy Sentry products help conserve energy used by home appliances. Selling these products to individual consumers would be prohibitively expensive, so they developed a marketing strategy to work closely with local power companies. The devices were then sold in large batches; one rural power company bought 9,000 units for its customers.

Before deciding which customers are the best fit for your product or service, you will want to consider their distinctive aspects. For example, when marketing to businesses, does a proposal need to be submitted for each sale? Do these customers expect to negotiate prices and terms? Such considerations can affect the profitability of your business.

© 2007 Ewing Marion Kauffman Foundation. All rights reserved.

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