1% of 4% of 7 Billion - Who's in your market?
Image by DonkeyHotey via Flickr
Big markets attract a lot of attention. After all, with that many potential customers you can see a path to huge revenues. The challenge is getting heard by that big market. On the flip side, a small market does not have a huge number of customers so the revenue potential is not as large. However, it is much easier to make sure that small market knows about you and your product.
Here in Iowa we are 1% of 4% of 7 billion people. While 3 million people in Iowa sounds like a big number, it is an incredibly small number compared to the earth's population. You have a choice when you start marketing your product or service. You can cast your marketing net wide and try to let as many people know as possible, or you can target your marketing on a small segment. Which is right?
If you need to scale large just to break even, you must cast a wide net and gain as many customers as you can, as quickly as you can. That means you will be spending a very large amount of money on marketing and sales. You likely will spend far more on marketing and sales than you do on your product.
If you have a product or service that gets you to profitability quickly, you have the option of starting with a small marketing budget pointed at a very defined, narrow grouping of potential customers. As you gain customers you can incrementally increase the size of the market to which you communicate.
Either way, you need to know who's in your market and make sure you have the funds needed to reach them.