Market and product: who do you serve, and what do you sell?

Video: how to describe your market, customer groups and products in the Business Planner.

"Anyone could be a customer" sounds ambitious, but a financier reads it as: this entrepreneur doesn't know yet who they are working for. A strong marketing section therefore starts small and precise. Which customer groups do you serve, what do they need, and what do you sell them at which price and margin? In this step, you set that out, from the market as a whole down to each individual product.

The Business Planner follows the marketing mix that E. Jerome McCarthy once summed up as the four Ps: product, price, place and promotion. In the planner, it is worked out in five tabs: market, product, competition, promotion and distribution. This page covers the first two.

Market and offer in the planner

1. 01

   Describe your offer and your market

   On the Market tab, you write a few paragraphs about what you offer and the market you operate in. Think of the area, the type of clients and the developments you see.

2. 02

   Divide the market into segments

   For each customer group, you record a name, an estimated size, a description and their key needs. Later, you choose these segments as the target group for each product.

3. 03

   List your products and services

   For each product, you fill in the category, pricing model, price, gross margin, unit and expected volume per year. Then you describe the product and what sets you apart.

4. 04

   Look at your portfolio

   At the bottom, the planner puts all your products in a chart of price against margin. Products with a low margin or an unusual price stand out right away.

From product to revenue

Price and volume per product are not a box-ticking exercise. Together, they form the basis for a revenue stream in your financial plan. Under Revenue, you can link each stream to a product from this step. That way, marketing and figures fit together, and a reader can see where the revenue comes from.

Example: a salon with three customer groups

The demo plan in the planner is a hair salon in De Pijp, Amsterdam. The owner distinguishes regular clients from the neighborhood, clients who deliberately choose color and care treatments, and passers-by and newcomers to the city, many of whom prefer to be served in English. Each group wants something different: the regular client wants a regular stylist and a quick appointment, the color client is looking for expert advice.

That leads to five products: haircuts, color and care treatments, hair care products, a haircut subscription and chair rental to a freelance stylist. In the portfolio chart, the owner sees at once that the hair care products have a much lower margin than the treatments. That is a reason to keep the product range small.

• Segment: a group of clients with similar needs, not a target group based on gut feeling.
• Pricing model: one-off, subscription, hourly, usage-based or retainer.
• Gross margin: what is left of the price after the direct purchasing costs.
• Differentiation: the reason a client chooses you and not someone else.