Loading...
Answers
MenuHow to target the right set of customers?
Hey there,So we are working on this product which will be a consumer electronic product but with a more design and fashion functionality rather than tech,the finishing price of the product at this point is around 300-400 dollars which makes it not a necessity but a luxury and not everybody will want to pay for it, i think one of the challenges we gonna have is to find a niche market and targeting people who will really convert on low ad budget,so my question is how do you think we can work this out? has this ever happened to you? will appreciate it,cheers
Answers
A couple of quick notes to add on top of some good answers:
1. Have you done any blogging / writing around the concept? If so make sure you have google analytics on your site and you have demographics functionality turned on. You will get some good high level demographic info on who is interested in your product.
2. Work up 1 - 3 personas of people you think will like the product look at gender, geo location, income, interests, careers, etc. of these personas. Find individuals or groups of people that fit into each persona and give them a survey. You may want to go to meet up groups or other gatherings that fit personas and speak to them. Offer to buy them coffee or sponsor your own coffee gather and use it as a consumer research group.
Hi, first of all if you have a consumer electronic product, never admit or mention that your product is not competitive at minimum with other electronics. Consumers are not stupid, even those who are willing to spend a significant amount of money will most likely not do it if is only aesthetics.
Always assume your consumer is smarter than you and try to over deliver.
Second, the price alone does not make it a luxury item. I will give you an example to illustrate how a luxury item comes to be:
Ferrari as well as Bentley are hand crafted cars with limited availability, their engines and raw materials might be better than the mass produced BMW and have a long history of market satisfaction - meaning they've been in business for many many years.
Consider Apple, their company started with the mission of delivering consumer grade, easy to use, modification free computers. They introduced heavy R&D into their machines and thus introduced fonts, paint, click and point mouse and much more. Over time their quality became reknown and through their continued innovation, their computers were priced at a higher range than others. But due to quality of both the hard ware and the technology consumers don't really mind paying their higher price margins. This market acceptance at a higher price helps make it a luxury because not everyone can afford it and there are entry level, problem solving laptops and computers you can buy if what you need is to simply have a computer.
Also, part of what makes their devices look and feel somewhat luxurious is the fact that they are heavy, they are made of typically single or coupled pieces of steel or some other alloy.
So with apple, you have dependable technology, heavy-steardy feel, high price acceptance, limited quanities for long periods of time after announcements, ongoing releases.
Apple's target market? Anyone who is willing to spend money to stand out, have a product that is limited, industrial art oriented consumers, graphic artists, music artists, any artist you can think of. Generation Y and Generation X who grew up with the brand. Music lovers and techies who enjoy the simplicity of technology and integrated functionality. App lovers (socially engaged mobile users)
Now consider Beats, purchased by Apple. Beats is touted as top of the line listening devices, however every professional grade testing proves that Beats is competitive with your average $29.99 headsets. Much more their headsets cost on average, including the packaging, only $16.99 - something Apple must have loved because the Beats sell for average $200 a piece. Apple has similar margins. However typical their sound might be, Beats was able to leverage the founder's industry & network to get free unpaid sponsorship from athletes and musicians, on top of that they promoted the customization of their sets which people saw and replicated. On top of this customization, as general consumer when you see your favorite athlete or singer or celebrity using Beats, you're going to wonder where and how much? This worked for Beats, because there are other "father-like" headphones like Bose's who are priced about the same. Beats found a hole in the headphone market and exploited it.
Another thing that Beats did (proven to work and not alone) is that they added random pieces of metal to the headphones bands to add weight to them. Because when we feel something heavy and steardy we often assume is high quality packed with high quality stuff... in Beats case, It was just metal to add weight.
Beats target market? Those who are looking for hip, colorful, attention grabbing, status touting headphones.
Finding a target market is key, since you didn't really provide any detail of your product Is hard to give you direct help, but I hope this helps you get sorted out and re approach your marketing strategy. Also consider that pricing is a key marketing effort. Not everyone knows how to properly price items, but what is most commonly done is take most direct competitor and add 15% on top. Assuming that less than the competitor's price already covers your costs and provides some profit.
Guys...use paragraphs. Spacing. Please.
Make it easier for everyone to read. No Gray Potato Smear.
OP: you're building a product you're not sure people want?
Lesson for next time: determine the market FIRST. Then build the product.
Apple didn't make the iphone because Jobs thought "This is cool to me, and maybe someone will want it." We could see that phones, TVs, cameras and other functions were all merging into a single device. They *knew* people wanted it before they made it.
Without seeing a picture of the thing, it's tough to say why people would buy. But your Price concern is not something to be worried about. What you want right now is the 10-15% early adopter market, not mass market penetration. If you need to know more about this, look for Simon Sinek's "Why" video.
These people will pay what you consider to be the "extra" money, so they can be the first to have a cool new product.
They can give you your raving testimonials.
But the product had better be cool.
People pay more for high end fashion all the time. Sunglasses. Designer jeans. Keurig coffee.
YOU ARE NOT YOUR CUSTOMER.
You mentioned that "the finishing price" is $300-$400 - is that your cost, or what you are going to charge the customer?
What is your profit margin?
You mention a low ad budget - why is that? You can build the cost of advertising/marketing into the COGS.
What is your exact manufacturing cost for the product, including the shipping cost (to you) and if you want to include free shipping to the customer, the the shipping cost to them, and the cost to package it and advertise it? Once you have that, create a reasonable profit margin to give you the actual sale price (allowing for future discounting).
If you truly are in the luxury market, you will not be discounting often (or at all.)
Now that price issues are out of the way - is this something that can be manufactured on demand quickly? Because what if no one wants it - you won't want a whole warehouse full of inventory if the product never sells. That's a nightmare scenario, better to have a minimum amount on hand and have a supply chain that can spin up to replenish stock. Get a good idea of your initial needs via a preorder site like prefundia.
Content Marketing - you need to figure out WHO you want to target and create personas that go beyond typical demographics....what are their pain points? how do they spend their days? where do they consume content to learn about products like yours, etc. Then figure out WHAT you want to tell them - each persona should have its own story. Then figure out HOW you want to tell each story - video, article, white paper, infographic, etc. Then and only then do you focus on WHERE to tell it - which channels - social? web? print?and so on. Too many companies start with WHERE because it is fun and sexy- but they fail because they don't know who and what they want to say....
Related Questions
-
How much equity should I ask as a CMO in a startup?
Greater risk = greater equity. How likely is this to fail or just break even? If you aren't receiving salary yet are among 4-6 non-founders with equivalent sweat investment, all of whom are lower on the totem pole than the two founders, figure out: 1) Taking into account all likely outcomes, what is the most likely outcome in terms of exit? (ex: $10MM.) Keep in mind that 90%+ of all tech startups fail (Allmand Law study), and of those that succeed 88% of M&A deals are under $100MM. Startups that exit at $1B+ are so rare they are called "unicorns"... so don't count on that, no matter how exciting it feels right now. 2) Figure out what 1% equity would give you in terms of payout for the most likely exit. For example, a $10MM exit would give you $100k for every 1% you own. 3) Decide what the chance is that the startup will fail / go bankrupt / get stuck at a $1MM business with no exit in sight. (According to Allman Law's study, 10% stay in business - and far fewer than that actually exit). 4) Multiply the % chance of success by the likely outcome if successful. Now each 1% of equity is worth $10k. You could get lucky and have it be worth millions, or it could be worth nothing. (With the hypothetical numbers I'm giving here, including the odds, you are working for $10k per 1% equity received if the most likely exit is $10MM and the % chance of failure is 90%.) 5) Come up with a vesting path. Commit to one year, get X equity at the end. If you were salaried, the path would be more like 4 years, but since it's free you deserve instant equity as long as you follow through for a reasonable period of time. 6) Assuming you get agreement in writing from the founders, what amount of $ would you take in exchange for 12 months of free work? Now multiply that by 2 to factor in the fact that the payout would be far down the road, and that there is risk. 7) What percentage share of equity would you need in order to equal that payout on exit? 8) Multiply that number by 2-3x to account for likely dilution over time. 9) If the founders aren't willing to give you that much equity in writing, then it's time to move on! If they are, then decide whether you're willing to take the risk in exchange for potentially big rewards (and of course, potentially empty pockets). It's a fascinating topic with a lot of speculation involved, so if you want to discuss in depth, set up a call with me on Clarity. Hope that helps!RD
-
What does it mean to 'grandfather you in' in the tech world?
It stands for allowing someone to continue doing or use something that is normally no longer permitted (due to changing regulations, internal rules etc.)OO
-
What is the average series A funding round at pre revenue valuation for a enterprise start up w/cutting edge tech on verge of our first client.
With all respect to Dan, I'm not seeing anything like that. You said "pre-revenue." If it's pre-revenue and enterprise, you don't have anything proven yet. You would have to have an insanely interesting story with a group of founders and execs on board with ridiculous competitive advantage built in. I have seen a few of those companies. It's more like $3m-$5m pre. Now, post-revenue is different. I've seen enterprise plays with $500k-$1m revenue/yr, still very early (because in the enterprise space that's not a lot of customers yet), getting $8m-$15m post in an A-round. I do agree there's no "average." Finally, you will hit the Series A Crunch issue, which is that for every company like yours with "cutting edge tech" as-yet-unproven, there's 10 which also have cutting edge tech except they have customers, revenue, etc.. So in this case, it's not a matter of valuation, but a matter of getting funded at all!JC
-
What are average profit margins in Ice Cream store business?
Hi! I am owner of an ice crean chain with 45 stores in Chile. We have stores in shopping centers, streets and also karts that you can put in events and parks. The average cost margin of ice cream (depends on the amount of materials you use in producing the ice cream) is around 40%. This is italian gelatto where you serve the ice cream without a specific measurement so your costs can vary due to the size of each portion you serve. About the brand you should focus on your unique value proposition and what kind of ice cream you are selling. We import the pastry from Italy and the fruits and milk from our country. Your ROI depends on your sales price and costs. If you focus on high market ice cream you can charge high and keep costs down.MF
-
I have this social media idea,but no coding skills. How do I get someone to do the coding (cant afford to pay them) and not give away half of my idea?
Dilip was very kind in his response. My answer might be a bit on the "tough love" side. But that's for you to decide. My intention, just for the record, is to help you (and those like you) on your path to success. And that starts with having a viable philosophy about entrepreneurial-ism and business. And I'm going to answer this because I get asked some form / version of this question very frequently from newcomers to entrepreneurial-ism. The scenario goes something like this: "I have a great idea. It's amazing, I love it, and I just KNOW it's gonna make me a ton of money. But I have no money right now so I can't afford to (fill in the blank with things like "to build it / create it / market it / etc" or "to hire the required staff needed to work in my business to sell it / develop it / etc"). And I don't want to tell anyone about my great idea because I'm worried someone will steal it and make MY million / billion dollars. But I can't afford to legally protect it either... So how do I launch without the skills to personally create the product AND no money to hire anyone else to do that either??" The answer is ... You don't. Look - let's be honest. All you have is an idea. Big deal. Really. I'm not saying it's not a good idea. I'm not saying that if properly executed it couldn't make you a million / billion dollars... But an idea is NOT a business. Nor is it an asset. Until you do some (very important) initial work - like creating a business model, doing customer development, creating a MVP, etc - all you really have is a dream. Right now your choices are: 1. Find someone with the skills or the money to develop your idea and sell them on WHY they should invest in you. And yes, this will mean giving up either a portion of the "ownership" or of future income or equity. And the more risk they have to take - the more equity they will want (and quite frankly be entitled to). 2. Learn how to code and build it yourself. MANY entrepreneurs without financial resources are still resourceful. They develop the skills needed to create what they don't have the money to pay someone else to do. 3. Get some cash so you can pay someone to do the coding. You'll probably have to have some knowledge of coding to direct the architecture of your idea. So you will likely still have to become knowledgeable even if its not you personally doing the coding. (This is not meant to be a comprehensive list of options... And I'm sure some of the other experts here on Clarity have others to add - and I hope they do) To wrap up - Here's my final tip to you that I hope you "get"... It's FAR more valuable to have an idea that a very specific hungry crowd is clamoring for right now - One that THEY would love and pay you for right now - Maybe even one they'd pre-order because they just have to have it - Versus YOU being in love with your own idea. [Notice I didn't say "an idea that some as-of-yet-undetermined market would probably love"] I wish you the best of luck moving forward.DB
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.