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Wednesday, December 8, 2010

Customer Profile Example

Target Marketing
Here is a customer profile of Marine Art of California, a start-up company in Newport Beach, marketing the works of California artists through a direct mail-order catalog. The product line is a unique combination of art, gift items and jewelry, all tied together by a marine or nautical theme.

Who are my customers?

1.  Profile:
Economic level: middle to upper-class
Psychological makeup: art lover, jewelry lover, fashion conscious, ocean lover, eclectic taste, college educated, discriminating buyer, upwardly mobile life-style.
Age: 35 to 55
Sex: Male/Female
Income level: $75,000 and above.
Habits: high-expense entertainment, travel, marine-oriented hobbies (shell/dolphin collectors, scuba diver, boat/yacht owner, etc.), patrons of performing arts, concerts and museums.
Work: professional, business owners, business executives, middle management, interior designers
Shop: middle to high-profile retail establishments.

2. Location:
Orange County: coastal areas - home value of $500,000 and above.
San Francisco County, San Diego County, San Bernardino County

3. Market size:
Mail list purchased through wholesale mail list companies. The consumer base will range from 20,000 to 100,000 in the first year of operations.

4. Competition:
Minimal due to unique 2-pronged marketing concept of marketing exclusively California marine art, custom-designed jewelry and giftware by way of (1) direct mail-order catalog and (2) retail showroom. No known operation in their category.

5. Other factors:
As acting distributor for several artists, I am able to retain exclusive marketing rights and, in most cases, have contracted to purchase at 10 to 15% below published whole sale price lists.

STP and Feasibility

Segment, Target & Position ("STP")
Identifying those certain variables which are relevant to our product is called "Consumer Profiling". We indicate the age range, gender, income, educational level, psychographics, hobbies, interests, or other pertinent information identifying your group or market. Can you determine from looking at the U.S. Census how many people fill that profile? (See  http://factfinder.census.gov/home/saff/main.html?_lang=en ).



Once you have made the profiling, you can target your efforts on a more focused group within that segment and to winning them as your customers. We need to know what they buy, how they spend their time, and how to reach them and communicate with them. Which marketing vehicle can we use to best reach them: direct marketing, advertising on the TV, radio, newspapers, magazines or what?

Positioning is the act of designing the company's offering and image so that they occupy a meaningful and distinct competitive position in the target customers' minds. We must develop a market-focused value proposition as to why the target market should buy our product. We may consider the proposition on service like quick delivery of the product, or selling tender meats and poultry, or in the case of a car, reliability and safety.

Feasibility
Once we have determined whom our potential customers are, we need to know if it is worthwhile to target this group. Are there enough profiled customers out there to buy enough of our product so that it is feasible to go into this business? We wouldn't want to start a business and find out that the targeted group is not interested in our product or there aren't enough of them when they do buy in order to satisfy our own goals and profit levels.

We must also consider the price at which we expect to sell our product. When all is said and done will the quantity sold at the price offered be enough to make a profit. In order to determine this we must know how much it will cost to open our doors. What will the start-up costs be? Will we need to rent or buy space? Purchase equipment and supplies?

Operating Budget
Once you have established how much you will need to start your business you will have to create an operating budget. Determine from your start up costs those that will recur over time, such as your rent, electricity, salaries, advertising, etc. These recurring expenses are the start of your operating budget. These recurring expenses will mostly be Fixed Costs. These Fixed Costs will be used to determine your breakeven point, that level of sales at which you don't make a profit or a loss -- you come out even. Mathematically the formula is
Breakeven point (units) = Fixed Costs divided by (Selling price minus the Unit Variable Cost)
This means that you have to determine a sales price.