“Know your market.” We hear this phrase all the time, and I agree it is essential advice for the owners and managers of any business, big or small. But what exactly does it mean? A lot of folks confuse the term “market” with “customers” — but it’s more than that. I define “market” by breaking it down into three components:
Customers: The people (or other businesses if you’re a B2B company) who buy or are likely to buy your product or service.
Competition: The other businesses that are trying to sell similar products or services to roughly the same customers you are planning to target.
Industry: The broad world of businesses that operate in your field, some of which may be competitors.
In short, knowing about your customers is important, but it’s not enough.
Besides knowing what products and services your customers want, how much they’re willing to pay for them, whether they prefer buying online, etc., you also need to know about what other businesses are trying to cater to them, what their price points are, how they market themselves, and more. And beyond learning about your competition, you should know broader industry trends that may or may not be in play with your actual competition. For example, a landscape architect should know about trends like recycled materials or green roofs, regardless of whether its local competition is actually taking part in these trends.
I sometimes suggest visualizing a flea market: “Knowing” that market means knowing not just who shops there, but who the other vendors are and what they’re doing (competition), and what products are hot these days (industry).
Here’s the critical point: When you have a clear vision and understanding of all three components of your market — customers, competition and industry — you’ll be well-positioned to define your business’s competitive edge. When you know what an audience wants, what the competition is (and isn’t) doing, and hot trends, you can tailor your business’s products and services accordingly. And when you do this consistently over time, always keeping an eye on your market and adapting to shifts both big and small, you’re doing exactly what you should be doing to keep your business on a profitable track.