The market

Clients

The final topics of the platform are designed to get to know your customers and the market better. Usually, the beneficiaries of social enterprises are those who experience the problem, but someone else pays for the services. These are your customers. Without earning customers' loyalty, there is no chance to build a sustainable social business model and ensure long-term financial stability for your organisation. We invite you to examine your market - to understand who your customers are, how many there are and what is important to them. The answers to these questions are crucial to the commercial success of your social enterprise!

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Let’s start from the beginning

Who is your customer?

First of all, answer the question as accurately as possible - to whom will you sell your products or services? Without knowing and accurately naming your target customers, you run the risk of directing your marketing and other resources in the wrong direction, which will not only not increase sales, but will simply lead to a loss. 

Are they people or institutions? Is it possible to specify anything else - geographically (Klaipeda city residents, regional schools), according to income, budget (if it is an institution), education, other characteristics (age, marital status, profession). Try to be as accurate as possible. 

Another important aspect is to answer the question of whether your customers will only buy your goods or both the goods and the impact. Of course, most often the answer to this question is not A or B, it would be more accurate to imagine and display distribution of customers on a scale: "I want to buy your product" -> "I want to buy both!" -> "I want to buy the impact being created". 

Commercial customers

This type of customers is relevant to social enterprises that participate in the single market and sell their services or products in competition with other similar enterprises. For example, you set up a cafe where you provide job opportunities for refugees, or your enterprise sells jewellery made by hard-working single mothers. Your potential customers can choose from all the cafes in the city and all the jewellery in the world, so in such a business model, it is imperative to ensure that your service or product is competitive in the market. Your products or services must be attractive not only from a social point of view, but also superior to your competitors in terms of price, quality, design and other features.

Impact buying customers

On the other side is the situation where your customer buys the impact you create. Most often, such clients are state institutions and municipalities. Such customers are willing to pay for the problem solved, so your evidence that the solution you are proposing is really working and creating the promising social impact is far more relevant to them. If the state wants to address the psychological health problem of the elderly, and you can substantiate the fact that your decision reduces seniors’ chances of developing depression by 75%, it will probably no longer matter to the client whether your solution is to visit seniors on a daily basis or give them sports training. We do not want to say that impact buying customers will care about your solution at all, or that you may not care about the quality of service - these nuances remain the cornerstones of the business. It is important to understand that when selling impact, the methodology, its reliability, and the quality of service are an integral part of your solution. A solution that can create the positive impact that your customers are willing to pay for.

To sum up, let’s get back to the question: what is your customer group? Name it as precisely as possible: is it a person or an institution, in the whole of Lithuania or in a specific city, what income or budget do they have. Name any other characteristics that would help to narrow and define your customer group. 

Most likely, your enterprise will have more than one customer group. Since their characteristics may differ from each other, we do not recommend trying to join them all into one. If we try to describe several customer groups as one, it is possible that the definition will become similar to “all people”. To avoid this, several different target groups should be named and the exercises below performed on each of them. For the sake of simplicity, start from the one that seems most important to you - because it is the biggest or because you plan to start with them. 

Ideal customer profile

If you already have a definition of your target market in mind, we invite you to take a closer look at it by creating an ideal customer profile. Just as when analysing your beneficiaries, it is important to step into the shoes of a particular customer, to understand how he or she thinks, behaves, and why he or she makes decisions. This will help you decide which channels are best for reaching your customers, how to communicate with them, how to tailor your sales process. 

When thinking about the sales process, it is important to understand that often consumers make decisions because they want to solve a problem or meet a need. Speaking very primitively, when buying glasses, people solve a vision problem, and when they buy a cell phone, they satisfy their need to connect and interact with other people. Think about what needs the people or institutions you want to sell your products or services to have or what problems they want to solve. 

With that in mind, fill out your ideal customer profile. The sections and questions in the table will help you. Remember that these questions are for guidance only, you can supplement them in your mind or shift them in the right direction for your particular case. 

Tips

Personalize everything

Imagine a specific person, with a name and surname. If possible, draw a portrait of it on a piece of paper, or choose a photo.

Be specific

When filling in the table, think of situations where he or she is facing a problem.

I think that…

Formulate the answers in the first person. For example, “I think that ..”, “I’m scared because…”, “I’d really like if…”

Note:

If your target market consists of other institutions or organizations (B2B or B2G sales), fill in the table thinking of the person who would make the decision whether to purchase your services or not. For example, a school principal, an employee of the relevant municipal department, and so on. 

In this case, answer certain questions by thinking more about their professional rather than personal experiences. For example, what productivity indicators they need to achieve, what complicates their work, what results of their work are welcomed and encouraged in the organization. 

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Ideal customer profile

What is the name of your ideal customer?

Who?

GENERAL INFORMATION

Career? Education? Family situation?

DEMOGRAPHICS

Age? Gender? Income? Location?

PERSONALITY

Character traits? Style of communication?

VALUES

What's important to them?
What motivates them?

Situation

LIKES/ DISLIKES

What do they like to do? What dislikes do thry have?

CHALLENGES

What challenges arise because of the
problem?

BEHAVIOUR

How do they behave when facing the problem?

FEELINGS

How do they feel when dealing with the problem?

WISHES

What are they dreaming about? What would be an ideal situation? What would be considered as a success?

Environment

WHAT DO THEY SEE?



WHAT DO THEY HEAR?

What are the things that friends, family and other people say?

WHERE DO THEY GET INFORMATION?

From people around, the internet, books, specialists...

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The size of the target group

Just like analyzing your beneficiary audience, in target market analysis we will also cover how to estimate the size of your target group. After all, the financial flows of an organization depend on the demand for your product. This time, we will take an additional step and calculate the size of the market not only in terms of the number of potential customers, but also try to self-assess the size of the market in euros.

Data, data, data

In order to calculate the size of the market in which we operate, it will be necessary to search for data, statistics, research, to accept several assumptions. There is no one right way or one universal formula to calculate the market size. Your path to the end result will most likely be dictated by the information and data you already have and can find. 

If you are going to produce a highly commercial product and compete in the market with it, for example, selling coffee beans, it is very possible that calculations of the size of the coffee bean market have already been made. Therefore, we first recommend looking for such data.

Can't find anything?

If reliable information cannot be found, look for data to help you self-assess market size. For example, a social enterprise produces lipsticks for women and intends to sell them in the neighboring Latvian market.

We start with data that there are two milion Latvians. Half of them are women. Information can be found that approximately 65% of the population falls into the age category for which our product could be relevant - so we calculate that there are 650 thousand people who could be interested. We now have a number that takes into account demographics.

However, not all Latvian women use cosmetics, and if they do - we do not know how often. So, let's take a look into market research and survey results. Statistical estimates can be found that, on average, one woman spends 7.7 euro on this type of cosmetics.Finally, we can calculate that the market size is 5 million euros.

Once you know the size of the market, you need to decide what market share you are going to occupy. Suppose that realistically we plan to occupy 3% of the market in the first year. This means that our plan and goal is to earn € 150,000 this year. 

Knowing this figure, you can assess whether the market size is sufficient and whether your enterprise could be financially sustainable. 

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Calculate the size of your target market

As mentioned before, there are many different ways in which market size can be calculated. For example, if you are going to work with children and sell services to schools - count how many schools you could sell your services to. Then multiply the proportion of schools you plan to reach by the price of your service. Another way could be to estimate the size of the market by summing the turnovers of all competitors. 

It is unfortunate, however, that there is no single magical algorithm or universally accepted sequence of steps for calculating the market size. It depends on your unique case and what data can be found. Don’t be intimidated if you need to make some vague assumptions. Getting at least a slightly more accurate number will be far more useful than guessing blindly. 

Market size is one of the most important metrics in your business planning - so we recommend investing time, completing thorough data analysis, and trying to get as good an estimate as possible. 

NUMBER OF POTENTIAL CUSTOMERS

Find data on how many people (institutions, etc.) would be motivated to buy the impact and / or product / service you are creating?

AVERAGE EXPENDITURE

How much does the customer spend on such services / goods / social impact on average per year?

MARKET SIZE IN EURO

Multiply the number of buyers by their average expenditure

YOUR MARKET SHARE

Evaluate how much of the market you want to occupy/occupy

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