Before defining your marketing strategy and action plan, you need to know if your goals are achievable. To find out, you'll have to do a little research. So let's see how to create a market study.
The better you understand your market, the better your marketing decisions will be.
So start by clearly identifying it.
In the case of Mimine, the online store is targeting the French children's clothing market. At first glance, this market appears both large and prosperous.
After all, as long as the French have children, they'll have to be dressed, right?
Yes, but it's not that simple. If the demand for children's clothing is linked to demographic changes, this can impact your plans.
It's one thing for the French to have children who need clothes. But their available clothing budget is another question. Unless you already have an in-depth knowledge of all of the economic factors that influence demand, I would advise against trusting your instinct.
Collect and Analyze Market Data
Conducting market research requires resources and a clear methodology, and those depend on your organization's size and resources. You have three main choices for conducting market research. You could:
Work with a company that specializes in research.
Use an online tool (such as Attest, who I work for) to conduct the market research yourself.
Use the results of someone else's study.
Mimine resources are scarce. You pick option three and try to see if the results of one of these studies are available online.
Let's start by asking our friend Google (whose mission is to "organize the world's information and make it universally accessible and useful"):
The good news: the problem is not a lack of results.
The bad news: the majority of links present information that's either:
Continue to research until you find trusted sources. It's a good idea to use multiple sources to get a balanced set of predictions.
We'll use Euromonitor International, a worldwide market research provider of many products and services for this course. They even have a report on children's wear in France! Instead of buying it, let's take a look at its executive summary here.
This market study summary tells us several things:
The French childrenswear market is slowly declining in volume, but growing slightly in money spent.
The demand is growing for second-hand clothing and collaborative sales platforms.
What can I learn from this?
First off, that the market is gigantic, but it's somewhat saturated. Mimine can't compete head-to-head with the ready-to-wear giants. Given their massive sales volumes, they can afford to lower their prices. With hand-sewn clothes, Mimine cannot afford to reduce its margins to increase sales.
However, sustainability is becoming more important, so you advise Arthur and Zoë to focus on their market niche: scalable clothes for children.
Your market is like a large cake. If you keep all the cake to yourself, you have a monopoly. 🎂 If you divide it up, you get healthy competition. 🍰
For Mimine, at this stage, the desire to corner the entire children's clothing market would be "to have eyes bigger than their stomach."
The real question is then: what share of the total market does the niche market represent?
To give you a rough idea, you can compare the search terms with Google Trends.
You can see that the French are not actively looking for scalable clothing as much as they're looking for regular children's clothing. It isn't a very good sign. But it doesn't necessarily mean that the demand is non-existent. For one thing, this might not be the same terminology consumers use in their searches!
On the other hand, if your target audience isn't searching for your products, it could cost you more to acquire customers.
When you face such a lack of information, you'll have to improvise.
Let's assume that:
The total market for children's clothing in France is €4 billion (a big cake).
Scalable clothing represents only 0.1% of this market, namely, €4 million.
Fifty percent of sales are online, i.e., €2 million.
If these estimates are realistic, then Mimine could potentially have a €2 million market, which would be more than enough to keep Arthur and Zoë busy and profitable. However, these estimates aren't verified because quantitative data is scarce and not easily searchable for niche markets. You'll have to deal with uncertainty and compensate for it using qualitative data.
In this case, you notice that online second-hand clothing stores manage to do well in this very competitive market as do new collaborative sales platforms.
Peer-to-peer sales sites, such as Craigslist, also have a large number of ads related to children's fashion. In France, a similar site is called Le Bon Coin.
These sites enforce the earlier observation that the purchasing behavior is changing in France and that customers are more aware of waste.
The main appeal of clothes that grow with the child is to avoid such waste. So, initially, Mimine seems to be aligned with this shift in demand.
Target the Relevant Audience
Who do you want to promote your offer to?
Depending on the type of business, all organizations have different targets. For example, does the business primarily sell:
To other companies (B2B for business-to-business)?
Directly to the consumer (B2C for business-to-consumer)?
Regarding Mimine, you would ask: would we be better off selling the clothes to distributors (B2B) or directly to our customers (B2C)?
Because Mimine's clothing is handmade, its ability to produce and distribute clothing is limited. Arthur and Zoë would certainly not be able to meet the mass distribution requirements. If they wanted to sell B2B, they would have to find ways to increase production - which could weaken their main selling point.
To maintain designer integrity, they decide to distribute their products themselves (B2C).
Even though the clothes are made for children, Mimine will target the parents who will purchase them.
Identify Your Ideal Customer
In the first part, you learned that a large part of marketing is to analyze your target audience to reach it better. During your market study, you define the customer type, also known as its persona.
To do this, you'll segment it using:
Social-demographics: age, sex, geography, family size, educational level, income.
Behavior: lifestyle, taste, motivation.
You can even name your persona.
Mimine's persona will be called Leona.
Demographic: Leona is a 30-40-year-old woman with two children. She lives in a city and has a university degree. Leona earns more than €55,000 a year and spends €480 a year on children's clothes.
Behavioral: Leona is a progressive, white-collar eco-citizen; she eats organic food and is motivated by well-being and social recognition.
Identify Your Competitors in Similar or Related Markets
Unless your product is genuinely one of a kind (unlikely) or you've managed to create a monopoly, you won't be the only one wanting a share of the market. So it's up to you to identify and learn from your competitors to gain a competitive advantage.
There are two types of competition:
Indirect competition, offering products different from yours but meeting the same needs. For Mimine, it would be traditional children's clothing distributors (Kiabi, H&M, etc.).
Direct competition, offering the same products or services as you. From your research you discover that Mimine is not the only company to sell scalable clothing on the internet. 😮
A company called Little Woude is already established in France. You can check out their website here. Is it a disaster? No, because being the only company in a market is not always a sign of power. Most of the time, it means that the market doesn't exist or is not attractive enough. At least the presence of Little Woude confirms that there's a market for scalable clothing.
The question is whether there's room for two (or more) companies in this market.
Working on the assumption that:
The online sales market for scalable children's clothing is €2 million each year.
It's just you and Little Woude sharing the market.
So, with a 50% market share each, you could make up to €1 million in sales. You're not going to be able to accomplish that at launch and the first year. After studying Little Woude, you decide that a 10% market share in the first year would be a good start.
Do you remember trying to set a realistic goal in the previous chapter? In light of the market study, it would seem that making €200,000 in revenue (10% of €2 million) over the first year is a more realistic goal.
Arthur and Zoë will need to get 2,000 orders of €100 to reach their annual goal. This represents a minimum of 167 orders of the same amount per month.
In this chapter, you've learned:
It's important to collect data on major market trends, employing methods and levels within your company's budget.
How to design a composite picture of your ideal customer by building a persona.
How to study the competition to estimate the size of the market that you could realistically capture.
Now that you have the marketing goal, the next step is to define your strategy to achieve it. See you in the next chapter.