6 Fatal Mistakes Every Entrepreneur Should Avoid When Selecting Target Markets

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1. Improper sizing of the market. Most Entrepreneurs over estimate a need for their service or product because they did not properly collect secondary research.

2. Criteria is not properly created based on meaningful characteristics that would have the best impact on revenue. Age, income, education are not meaningful enough to segment the data. Most do not know what custom attributes they should include for their specific target market because all markets are different and there is no formula for all markets. Instead its a process one must follow.

3. No understanding of key indicators that will effect their respective markets. Do not realize how politics, environment or other factors affect demand for their product or service. They do not have a holistic understanding of how markets and economics work.

4. Lack of understanding of the 5 forces of Industry Competition.

5. Wrong Segmentation or market entry strategy. They don’t spend enough time on research or evaluating data properly. Instead they want to jump right into selling or doing business. Laziness is another problem. Use the wrong strategy or tool for the job and the house falls down.

6. Tactics with no strategy in selecting markets. Entrepreneurs like tips and tricks but do not understand that strategy is required to execute the tips and tricks so they get the outcome they desire. A poor customer development model is the worst mistake one can make. By their nature Entrepreneurs are technicians that had an entrepreneurial seizure and went into business for themselves. They are typically not strategists so tactics and tips are what they follow instead of strategic planning.

You will notice that AUDIENCE DEVELOPMENT is the most critical aspect to one’s entire business. If you get it wrong than only luck will save you from despair and no business. Serendipity marketing is for those who like to rub a genie lamp and wish for people to hire them. Its not a recommended way to run a business or start one. Get this one handled and your success will follow.

There are different types of Customer Segments. If you choose the wrong one and the wrong business model you will fail.

1. Mass Market
2. Niche Market
3. Segmented
4. Diversified
5. Multi-sided platforms

EXAMPLE:
Market Need
Market Drivers

The primary market driver for Whale Awayä in the United States is the regulation created by Congress to protect endangered species. Effective October, 1993, regulations promulgated by the National Marine Fisheries Service of the U.S. Department of Commerce to enforce the Endangered Species Conservation Act, the Endangered Species Act, the Marine Mammal Protection Act and the Magnuson Fishery Conservation and Management Act will “disallow any further extensions, waivers, or interim permits” issued to allow the incidental by-catch of marine mammals while fishing in U.S. waters. Currently, regulations protecting these endangered species have been circumscribed by loopholes established to provide a grace period for the U.S. fishing industry to develop fishing technologies that protect endangered species. The loopholes have now been closed, and regulations require the use of the “most advanced technology” available to alleviate mammal by-catch. However, no technologies other than Whale Awayä currently exist to solve this dilemma.

Under the law, the only alternative to using the “most advanced technology” is the complete cessation of fishing during periods when marine mammals are known to be in a particular fishing area. Ceasing fishing operations over these periods of time will create an economic disaster for fishermen. As an example, over 30% of a the catch of a typical fishery located along the East Coast of the United States is brought in during the two month period in the fall when harbor porpoises migrate. Thus, a significant portion of a fisherman’s income is at risk due to regulatory pressure. Whale Awayä is the solution for fishermen to meet the regulatory requirements and continue operations.

A second market driver for Whale Awayä is that it addresses other important needs of fishermen. The use of Dr. Lien’s device has been proven to reduce the number of marine mammal entanglements in fishing nets. This minimizes the amount of damage done to nets, reducing net repair and replacement costs. Also, undamaged nets can catch more fish, thus improving yields. Testing in Newfoundland found these benefits to be economically significant. Our market research with fishermen revealed that they are looking for ways to improve fishing yields, reduce operating costs, reduce equipment loss and keep the government out of their way. Whale Awayä meets the needs of our customers from both a regulatory and an economic perspective.

Market Size

There are roughly 12,500 commercial fishing vessels in the United States. The distribution of the industry by location is shown in Appendix I. Gill net fishing, the industry sector that has the largest by-catch of cetaceans (please see Figure 3 for a breakdown by net type), is the primary target market for Whale Awayä. Gill nets represent the fishing technology used on 16% of all domestic fishing vessels. Approximately 2,025 domestic vessels deploy about 9 million feet of gill nets, representing 46% of the total commercial fishing equipment in the United States. Gill nets represent a large and highly concentrated target market with a small number of players using most of the equipment (please see Figure 4). In addition, 86% of the domestic gill nets are found along the eastern seaboard (please see Figure 5).

The 9 million feet of gill net translates into roughly 30,000 nets in use domestically. Since five Whale Awayä units are required per net, the maximum market volume will be 150,000 units per year. Currently there is no competition in this sector of the market.

Ideas for gathering competitive information

• The internet – This is a powerful tool for finding information on a variety of topics.
• Personal visits – If possible, visit your competitors’ locations. Observe how employees interact with customers. What do their premises look like? How are their products displayed and priced?
• Talk to customers – Your sales staff is in regular contact with customers and prospects, as is your competition. Learn what your customers and prospects are saying about your competitors.
• Competitors’ ads – Analyze competitors’ ads to learn about their target audience, market position, product features, and benefits, prices, etc.
• Speeches or presentations – Attend speeches or presentations made by representatives of your competitors.
• Trade show displays – View your competitor’s display from a potential customer’s point of view. What does their display say about the company?

Secondary Research
Secondary research exploits published sources like surveys, books, and magazines, applying or rearranging the information in them to bear on the problem or opportunity at hand. A tire sales business owner might guess that present retail sales of tires is strongly correlated with sales of new cars three years ago. To test this idea, it’s easy to compare new car sales records with replacement tire sales three years later. Done over a range of recent years, this should prove or disprove the hypothesis and help marketing efforts tremendously.

There are many sources of secondary research material. It can be found in libraries, colleges, trade and general business publications, and newspapers. Trade associations and government agencies are rich sources of information GALES’ Directory is available at any public library.

Sources of Secondary Research:
ASAE Directory of Associations Online
Ask a Librarian U.S. Library of Congress
Bureau of Labor Statistics
Business Research Lab
Center for Business Women’s Research
Economic Statistics & Research
Fedstats.gov
Internet Public Library
Population & Demography Resources

Primary Research
Primary research can be as simple as asking customers or suppliers how they feel about a business or as complex as surveys conducted by professional marketing research firms. Direct mail questionnaires, telephone surveys, experiments, panel studies, test marketing, and behavior observation are all examples of primary research.

Primary research is often divided into reactive and non-reactive research. Non-reactive primary research observes how real people behave in real market situations without influencing that behavior even accidentally. Reactive research, including surveys, interviews, and questionnaires, is best left to marketing professionals, as they can usually get more objective and sophisticated results.

Those who can’t afford high-priced marketing research services should consider asking nearby college or university business schools for help. For more information, download the Missouri SBDC’s “Market Research Workbook”

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    interesting post and well written, these are common mistakes and Most Entrepreneurs over estimate  it, first they do not proper research on the market or on his idea,  they never try to get help from professional of related business, they have no idea of time management and money management in short they starts business without perfect business plan 

    Regards,
    Jessey Ellen

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