Understanding Your Target Market

Market Fundamentals

VERSIÓN EN ESPAÑOL

Good knowledge of your target market is essential for developing a sellable product.  Understanding the lifestyles, buying habits and interests of your end customer will help you to develop a product that sells.  Focusing on the key components of a successful product - function, size, color, pattern/texture, packaging, price and story - will contribute significantly towards good product development.

Market research includes studying two different aspects of the market:

1. Market Fundamentals- aspects that don't change quickly in the market, such as global buyer expectations for quality and customer service, market segmentation, and standard product categories.
2. Market Trends -  demands that fluctuate with more frequency, such as colors, motifs and lifestyles.

All market research should also carefully study prices to insure your pricing is aligned with the market.

Global Buyer Expectations:

Buyers in the global marketplace have certain minimum expectations when selecting products. The expectations are often referred to as Universal Market Demands. Because the global market is full of competition, if your products don't meet these qualifications then buyers turn to other options.  These expectations include:

1. Product Design - Buyers are looking for unique and innovative products; they value functional products more than decorative products; they want products adhering to market standards of size, material and finish.
2. Price - Buyers want prices that are competitive with comparable products in the market; prices must match the quality and design of the items (high quality products can sell at a higher price, etc); buyers also are looking for prices that are stable and won't change dramatically during the year. Price is often the most critical factor in a buying decision.
3. Quality - Buyers are looking for good quality products and, most importantly, buyers require consistent quality.  This is an area of constant challenge for artisans.  Quality is measured in terms of good workmanship, color, size and design.  If a buyer orders 10 red baskets of 12cm diameter they will expect that all 10 baskets are red and are 12cm in diameter.  When developing a new design it is imperative to know you can produce it with consistent quality, particularly when producing large quantities.
4. Delivery - Buyers expect delivery on-time - every time.  Any delays in delivery must be communicated to buyers immediately.  Buyers also expect you to produce and ship an order within 90 days and to fulfill re-orders in the same timeframe, or faster.  Buyers also expect you to organize all shipping and packing for delivery without any breakage.
5. Service - Buyers need to know the factors affecting your business so they can plan around them.  Communication is key to attracting and retaining customers.  Customer service involves quick, clear and thorough communication.  Communicate all information, especially any problems or delays.  Good communication and good customer service can resolve any problem or delay.

Market Segmentation

The global marketplace can be divided into different classes or segments. To understand them better, they can be located on a graph that shows price, volume and design/quality.  The result is a pyramid with the "mass market" at the base, the "mainstream market" in the middle, and the "high-end or luxury market" forming the peak.   Determining where your product falls on this pyramid helps define the price, volume and design expectations of your buyer.  Most artisan-made products fall in the mainstream market.

Mass market - This market is driven by price.  Buyers are looking for the lowest price and will sacrifice quality and unique design in order to obtain a low price.  Sales volumes and purchase orders are very high (ex. 10,000 units per item).  U.S. retail stores in this market include Wal-Mart, Target and Kmart.

Mainstream market - Consumers in this market are looking for a balance between price and unique design.  They are willing to pay more for a product and in return they expect the product will be of better quality and more unique than mass-market products.  Volumes are large to moderate (ex. 1,000 to 100 units per item).  Retail stores in this market include Pottery Barn, Macy's (and other department stores), Sundance, Anthropologie and VivaTerra.  Most fair trade and artisan-made products fall within this mainstream market.

High-end or luxury market - Consumers in this market are driven by quality and designer brands.  They seek out the newest fashions and will pay a premium price for products made by known designers.  Volumes are small and exclusive.  Buyers are looking for the highest quality product with the most exclusive, innovative design.  Retail stores in this market include Neiman Marcus, Saks Fifth Avenue.

Tips for researching these markets:

Most fair trade and artisan-made products fall within the mainstream market.  A careful study of prices, product standards (size, labeling, etc) and popular product categories in this market is recommended.

Many design trends originate in the high-end market and then migrate to the mainstream market and mass market.  Study the high-end market for trendy colors, design motifs, shapes and textures.

Familiarity with the mass market is helpful but perhaps not as important as the mainstream and high-end markets.  Keep in mind that many customers will shop at mass-market retail stores for some items and in the mainstream or even high-end markets for others

See our list of product trend and market research resources for helpful websites and publications for researching these markets.