The Keys to Identifying Underserved Markets
Nowadays, competition is fiercer than ever before. Markets open and close quickly, and adversaries can come from around the corner or around the globe. Consequently, success or failure depends on how well and how quickly businesses can identify an underserved market, a niche that needs their services or products. Data analytics, mapping software, social media monitoring tools, and personas provide that capability.
As with many other business endeavors, finding an underserved market is all about identifying a problem and coming up with a tangible and profitable solution. The process involves not just creating an innovative product but also nailing down a demographic niche that stands to benefit from it.
Due diligence seems like a common-sense initial task for building a company, yet many businesses do not seem to take that step. In fact, CB Insights found that close to half (42 percent) of all failed companies shut their operations down simply because there was no market need for their products. No matter how well-developed an organization’s marketing plans might be, they cannot close that gap and create a need where none exists. So the first step in finding a market niche is pinpointing a problem that your business addresses.
Technology is helping level the playing field and allowing small business owners to compete with Fortune 500 companies. “Digital technology is driving many changes in consumer behavior and the business environment,” says George Collins, principal at Deloitte Digital.
Adopting advances in technology enables these companies to access new markets and target new consumers at a relatively affordable cost. The proof is in the annual report. Tech-savvy small businesses earned two times as much revenue per employee and were more likely to have a diverse customer base, according to a study by Deloitte. Yet despite the great financials, 80 percent of companies do not take full advantage of current technology.
And as with just about any CRM-related project, it all starts with data. Today, companies have more information and tools to monitor their performance than ever before. Just about every step that an employee, a partner, or a customer takes is recorded somewhere somehow. Every electronic message sent; every banking transaction completed; every click on a website link; and every step in a supply chain is noted somewhere. In today’s world, data is a commodity whose value is incalculable.
Consequently, companies find themselves awash in information. The collective sum of the world’s data is expected to grow from 33 zettabytes (1 ZB is 1 trillion gigabytes) in 2018 to 175 zettabytes by 2025, a compound annual growth rate of 61 percent, according to IDC.
But by themselves, data points are of no value. They only become important when they are correlated and lead to business insights.
One problem has been the sheer volume of information, which has been too large and too complex for most organizations to easily analyze.
“Every company is trying to use data to understand how their customers make purchasing decisions,” notes Bill Salokar, vice president of client solutions at SKIM Group, a market research agency.
Artificial intelligence has emerged to enable companies to make sense of their information, and computer processing power has grown in leaps and bounds. Increasingly, companies can now take advantage of a process called data mining that lets them take terabytes and petabytes of information and collect, correlate, and analyze data points.
To perform the analysis, executives need tools to transform information into actionable insight. Previously, skilled data analysts were required to process the data, but today, many tools for high-speed data analytics are available from vendors like HubSpot, MiniTab, and Tableau.
Consequently, data analytics has become key to finding new niches and helping businesses reach underserved communities.
As technology advanced, the huge data collections splintered into a handful of related activities. One of them is mapping, which is also being used to help companies find underserved consumers.
After collecting and consolidating data, businesses design their own formulas and calculations in search of new markets. The solutions then present visual representations on maps, and executives use the information to pinpoint underserved markets.
Organizations can then determine the demographic makeup of their new target markets, highlighting factors such as the number of other businesses in the area or the median income, and apply their formulas. Color-coded heat maps can highlight areas or ZIP codes that correspond to potential underserved markets. Companies can then further explore these opportunities and decide if it makes sense to attempt a foray there.
Patience is required to exploit these tools. “Not every marketing executive intuitively understands the power of mapping software; sometimes, there is a learning curve involved before they start to exploit its capabilities,” explains Geoffrey Ives, president of MapBusinessOnline.com.
Such metrics can be applied to a number of items, like consumer demographics, facility design, and shipping costs. After companies paint the picture of where their opportunities lie, they build a marketing plan to create top-of-the-funnel awareness so potential customers think of them when looking for the very services that they sell.
In the past several years, many marketing functions moved online, changing traditional marketing approaches and creating new opportunities for finding underserved constituencies. The online market is packed with various needs, ethnicities, interests, lifestyles, and affiliations. Many niches emerge and, in some cases, expand rapidly. Often, they consist of thousands and even millions of potential customers that businesses have not considered previously because they are one or two steps removed from their primary targets.
Sifting through the possibilities is challenging because individuals interact with social media in different ways. In fact, four types of audiences exist, according to Zoe Devitto, a content marketing strategist at FollowupBoss.
- Active audiences engage with companies on social media regularly.
- Aware audiences see social media marketing materials but engage only occasionally.
- Latent audiences view social media marketing but do not engage at all.
- Non-audiences fit into a target market but do not encounter your products or social media marketing at all.
In addition, new outlets emerge online in a haphazard manner, consist of a wide range of options, and attract a broader range of potential competitors (since there are no geographic barriers). And it doesn’t help that best practices are still being developed.
SOCIAL MEDIA MANAGEMENT ADDS INSIGHTS
So where do you begin to find your new niche? The first step is getting a good read on how customers now interact with you, and social media monitoring tools provide such an entry point. Solutions like HootSuite, SproutSocial, and Sprinklr focus on direct brand mentions. They are designed as a first layer of information and present companies with opportunities to respond and reinforce positive interactions and mitigate negative ones.
New social listening tools, like Awario, BrandWatch, NetBase Quid, and Zoho Social, dig a bit deeper into these interactions. They also collect and analyze data from a variety of digital conversations and try to evaluate how customers feel about companies on social platforms. They gather a broader spectrum of interactions, covering relevant topics in a market and not just direct interactions with companies.
Social listening tools monitor industry trends as well as social media conversations. They keep track of hashtags, news coverage, and relevant keyword searches and then create links to all the information in easy-to-follow dashboards that can be viewed at any time.
Both social monitoring and social listening are important for crafting social media strategies to bring new customers into the fold. They exist not as separate entities but as different items on a spectrum for analyzing data and identifying underserved markets. Marketers leverage these products to focus on customer interactions in public online spaces and ideally help them differentiate the brand from the competition.
Once you understand what your audience is saying about you, you need to dig downward and figure out where they hang out online. Social media is a broad, all-inclusive term, but there are many variations on the theme. In addition, new options emerge as markets emerge and morph.
In many cases, marketers tend to focus their efforts on younger demographics, hoping to build relationships that span years or even decades.
Twitter appeals to younger audiences. In fact, 38 percent of Twitter users are between the ages of 18 and 29, and 26 percent of users are 30 to 49.
Instagram also focuses on younger generations, with 35 percent of users between ages 25 and 34 and 30 percent between 18 and 24.
Surprise, surprise, surprise: Older generations increased their Facebook use in the past four years. In fact, the share of the Silent Generation (born between 1928 and 1945) using Facebook has nearly doubled.
TO BETTER KNOW YOUR CUSTOMERS, CREATE PERSONAS
Once you know where your audience is, you can clarify who makes up that group. Traditionally, companies have built customer profiles and used them as a marketing cornerstone. They typically present generic demographic data, like a person’s name, age, address, and purchases. Personas are a recent variation on that theme. They supplement that information with insights from other sources. If the customer accessed a website, personal information is captured by tools like Google Analytics, which divides audience information into demographics and interests and then takes the personality building process a step further.
Personas do more than list individual customer characteristics; they create a fictional representation of a person resembling the most typical clients. They try to dig deeper than customer profiles and include personal data, like whether the client has children, where they get their news, which social media platforms they use, and how they spend their time.
Eventually, they become a mashup of behavioral characteristics, like their buying habits, motives, attitudes, and positive and negative trigger points. Sometimes, companies give names to the fictional characters so they spring to life. Increasingly, companies even create multiple personas, which helps to identify current and potential underserved opportunities.
The next step in the process is reaching out to these individuals or businesses and creating awareness, with materials like emails, blogs, and company news. Here, businesses again have many options to create an impression, including the following:
- Optimized search: Experts recommend weaving a business’s city, county, and region naturally into website content to create local awareness of your services.
- Social media: Social media bolsters website traffic and is an easy way to engage with customers, so post corporate interactions, product news, and deals on social media. Internet users spend roughly 144 minutes on social media each day, Statista reported.
- Email: While very common, email remains a good tool to reach customers. You can send information about new deals and products via email to help generate online and in-store foot traffic.
- Direct mail: Because social media and email are so common, sometimes this channel is overlooked, but it is still effective.
A best practice is sending the same messages regardless of the channel selected, according to many marketing experts.
Companies today are under constant pressure to extend their customer bases and develop additional revenue sources. As a result, they are on the prowl for underserved markets.
Recently, a wide and expanding range of new technology tools emerged to help them in that quest. Data analytics, mapping, social media monitoring, and personas have the potential to enable companies to broaden their reach. The variety of options available increases daily, so organizations need to monitor technology development to find the best solutions for unlocking their underserved markets.
Paul Korzeniowski is a freelance writer who specializes in technology issues. He has been covering speech technology issues for more than two decades, is based in Sudbury, Mass., and can be reached at email@example.com or on Twitter @PaulKorzeniowski.