Finding the Underserved Customers

When starting a new business, or launching a new product line within an existing business, the customer is a good place to start. Who are your customers? What problem of theirs are you trying to solve? And then, how are you going to solve it in a way that wins their business?

Here’s one way to set yourself up for success: find the underserved customers.

Instead of competing for the attention of the same customers that other companies are already after, find the ones they aren’t. Find the ones that no company does a good job reaching, and create something specifically for them.

Stories of companies using this strategy fill the pages of business books, but perhaps the largest such company is Walmart. In the beginning, Sam Walton created Walmart to bring the discount shopping and department store experience to rural neighborhoods that were long ignored by the larger chains and franchises. By serving underserved communities, he was able to build a business that grew quickly, free from most forms of competition.

So instead of trying to reinvent the wheel, find a segment of the population that doesn’t have access to the right solution to meet their needs. This may be a geographical segment. It may be a segment that is currently priced out of a certain market. It might be a segment whose needs are not met perfectly by any of the options available to them and would be better served by a more specific solution.

Find the underserved customers and make them your target. If you can win with them, you can have a market all to yourself.

New Markets or New Products

Most businesses will hit a point in time when they have to make this decision. Things are going well with the existing product or product line. You are profitable and ready to take the next step and begin to grow and expand beyond what you are already doing.

You have two key options:

  1. Expand your current product offerings into new markets, or
  2. Develop new products for the market you are already in

Most companies at this stage don’t have the money or resources to do both. And so the decision becomes an important one that sets the stage for the future prospects of your business.

Let’s look at each option in a little more detail.

Expand to New Markets

The appeal of option #1 is that what you have already works, and there is a huge swath of the market you’ve yet to reach with it. This isn’t always true, so it’s important to be truthful with yourself. If you’re already reaching everyone in the market, this option is likely not right for you.

New markets can include a number of different things. It can mean new geographical markets, states, regions or countries that you’re not currently advertising or selling in. This is the most obvious interpretation of new markets, and the one most people will think of first.

But it can mean new audience segments which your messaging is not already aimed at. For example, a company offering an online high school diploma might advertise to parents of school age children in order to get them to sign up their kids. To reach a new market, they might then advertise to adults who lack a high school diploma or its equivalent.

The advantage of the new markets strategy is that you are able to leverage a strong, proven product. Your existing business model works, and you have satisfied customers who will vouch for you. But the test is whether or not your marketing team can find the right strategy in the new markets, because it likely won’t be the same strategy that you’re using today.

Develop New Products

The appeal of option #2 is that you know your customers better than anyone else does. You know what needs they have because you are already filling at least one of them. And so you know what other solutions they are looking for.

With a new products strategy, you can do one of three things. First, you can create ancillary products that you can upsell and cross sell to your existing customers. The best example of this is Amazon’s “Customer who bought this, also bought this” feature.

Second, you can create different versions of your existing product. Perhaps you want a slimmed-down, lower cost model that appeals to a more price-conscious consumer or a feature-rich, high end model to appeal to a luxury consumer.

Finally, you can create a new product that leverages your company’s knowledge in an entirely new direction. This is the riskiness, and has elements of the new markets strategy as well since you are targeting a new audience.

Which is right for you?

That’s a decision I cannot make for you. You need to fully understand your industry and your customer base. Do the research to find out if there are, in fact, other markets out there for you to tap or other problems you can solve. And if you can test your way into one or both options above at a low initial cost, you can prove to yourself which option is best.