In this video, I’m going to describe how you identify your market and how you specify your Avatar. Hi there, Matts Rehnstrom here, Shaper of Business Excellence. And welcome to this series where I go through all of these important business excellence components.
All of the Business Components Mesh
These components are very important for you because if you can understand them, then you can excel in them. And if you excel in them then you will build or improve your business quite a lot I would say. So they’re very important and also the relationship between them.
As I said in one of the earlier videos when I started this series, I said that people are working within one or two or three of these components. But others are working with one or two or three of other components and they never talked to each other because there’s separate departments or separate levels in the organization.
They don’t understand that everything here is like a mesh. You need to talk to each other. You need to understand others’ components as well as your own. You can’t just excel in your own if you don’t excel in the others as well. Or understand them pretty well, I would say. So that’s why this is so important.
For a couple of videos, we’ve been looking at a higher level of these components. And in the, I think it was two videos ago, we delved into the business model. Where I talked about these different nine components that we have within the business model and that the business model components like shooting away into connecting to a lot of the other components.
Market Identification and Customer Segmentation
We have a couple of these components in this chart that connects to a lot of the other components. And we talked about then, the value proposition in the earlier video. But today I want to talk to you about the customer segments and how do you get into what segments, what customers do you have and that we will do then if we move down to the market identification.
Here, we can see that the market is not just the market, it’s out there, it’s the market. We don’t really know it’s a fuzzy if it’s like in the cloud, they’re out there. However, we need to understand what is out there and we need to divide this market into segments and we want to make these markets into customers or clients.
What is a Market?
And just to understand the difference a market is when they haven’t bought from you. A customer is when they have bought or bought from you or buying from you.
So when I’m coming into your store, if I’m walking on the street outside, I’m the market. I’m looking into your display window and I’m “huh yeah, yeah ok” then I walk on. Maybe I wasn’t the right segment in the market. Maybe you’re selling women’s shoes and I’m a guy and I don’t want to buy shoes for my wife or my daughter, so I just go on.
What is a Customer?
But if I opened the door and go in and I buy shoes from you, then I become a customer. And there are different levels from market to customers but I won’t go into detail right now.
Let’s go back to the market identification and the different segments. If we deep dive into, we zoom in a little bit more. Then we can see that we have these customer groups or market segments. Customers is what we want to deliver, and the market is what they look like out there. And those two bind together, but here then we have a word that is called the Avatar.
What is an Avatar?
And the Avatar is specifying in detail what your customer segment or what the what your ideal customer looks like. What customers do you want, Oh, I want a customer like this, or I have a customer like this.
I have a customer like this and one like this and so on.
You need to describe these customers in detail. And it could be in:
- What kind of income they have
- Their net worth
- They drive these kinds of cars,
- They have long hair or short hair.
- If they are interested in fashion or not.
I mean there’s a lot of things in your business that you need to look for, so there’s no general avatar script where someone can say, “Oh, fill this out and you will be happy because now you will understand everything about them.”
There are basic characteristics such as gender, age, family situation, where they live, income level and so on. Because most of the products that we deliver, we could target to that, but as I said, some of them might be totally irrelevant for your business. So you need to then specify these different avatars and if you do that, you will have come a long way.
Why Is Customer Segmentation Important?
And I see a lot of organizations that they don’t really know what clients or customers they have because they never specify them. They understand like elderly care, which I worked with. Of course, I understand I help elderly people because it called elderly care. So no rocket science there, but we can go in there and look into the elderly people that we serve. When we do this, we may find that:
- Some might have kids that still around in the city
- Some may have a spouse
- Some are totally alone
- Some need help at a facility
- Some can take care of themselves at home
- This many are women or this many are men
And why do that, why, why is that important? Because maybe if we’re helping them out with shower and more intimate a things, then it might be that the customers would prefer that a woman helps a woman and a man helps a man. I don’t know, but that is ways that it could be in your business as well.
So you need to go into and understand all those different segments because these different segments have different requirements, different wants, and needs. And I will get back to that in the next video.
So if we zoom out, we’ll see that this market identification moves over to the next one, the next component. So here we have a relationship that is very important. So we’ll refine the segments to avatars that we have found in this segment work and we will them deep dive into and understand what can we deliver for them.
Avatars and The Product Portfolio
And then we will put the product portfolio that I talked about in the earlier video, the previous video I would say and what we’ve talked about in this video. And we will combine them into then to understanding all the details of the wants and needs. But that’s for the next video.
And if you want to have this poster, you can download it for free by clicking here and we’ll take you to a page where you can download it. Then you can follow along. You can read more in detail because it’s hard to see on this video and you can print it out if you like to understand it in more depth. With that said, let’s go and shape our business for excellence.