I plead guilty to enjoying a cold beer or two, and I’ve watched with amazement as the decade-long bull market in the craft beer industry shows no signs of abating.
By Neil Mahoney
Wants and needs are things we all have, but our lists differ depending on our lifestyles, self-perceptions, and work requirements. Needs are things we absolutely must have—such as food, clothing, and shelter, but some of these things also can be wants. We need food and shelter, and could get this by foraging for roots and berries and living in a cave. But few of us want to do this. You may want a McMansion and a limousine, while others might want a four-room bungalow and pedal a bike to work. Twenty or 30 years ago, few of us needed or even wanted a computer in our homes. Today a very high percentage of us need at least one, while an even larger percentage wants two or more—plus a cell phone, an iPod, etc.
Aside from the very basics of life, wants and needs change over time. A century ago, horses, hay, barns, and blacksmiths were necessities. A stable of horses and elegant carriages were what many people wanted. Today it’s cars, wide-screen TVs, and iPads.
Depending on the businesses we’re in, our customers and prospects all have needs—products and services they must have in order to operate efficiently and effectively. They have wants, too—and this is where Sales & Marketing come in. When you have a product or service you want (there’s that word again), you explore and evaluate the options that are available to you—and in every situation there’ll be a small percentage of people or businesses that account for 75 percent or more of all sales, while the large majority will account for just a small fraction.
Smart Marketing is all about identifying or anticipating the major wants and needs of the few top markets and market segments, then figuring out how to best attract and satisfy them better than the competition. Wants and needs can change—or be changed—and smart marketers try to do this.
A large office supply chain recognized that many small to mid-sized businesses used its copy facilities occasionally or quite often. To induce them to become more frequent, more loyal customers it improved the appearance and utility of the area where its copy equipment was located. This not only brought in more business for its copiers, it increased the likelihood that those customers would shop for other office products they might want or need. In short, the chain added greatly to its customer-prospect base.
In identifying those prospects who hold the most promise for large sales and profits, it’s important to remember that virtually every market is made up of several segments that have different wants and needs—as well as characteristics that conform to the 20-80 rule or hockey stick shown by Pareto’s curve:
Here’s an example:
Hardware and Hand Tools
The hand tool/hardware market has three major segments: 1. Light Do-It-Yourselfers. 2. Moderate and Serious Do-It-Yourselfers, 3. Professional Contractors. Each group has vastly different wants and needs, however. They also shop and buy very differently, and this is something to consider for any products you have to sell, whatever the market.
Light Do-It-Yourselfers comprise 70 percent of the 80 to 90 million people who buy hand tools in the U.S. each year, but account for only 20 percent of the spending. They have little brand awareness or preference. They buy their hand tools where it’s most convenient for them—supermarkets, department stores, variety stores, or their local hardware store if it’s handy. They usually buy low-cost items, and many of the purchases are done on impulse so they don’t spend time looking for bargains.
Moderate DIYers are best described as average homeowners who change washers in leaky faucets, paint trim, or fix a leaky gutter or broken window. They’re mildly brand conscious and don’t mind paying a bit more for perceived quality, but don’t fancy themselves to be Pros, and don’t try to emulate them as the Serious DIYers do. They are similar to the Serious DIYers as to where they shop, however. They’ll usually shop at the big-box home improvement chains where they can get good prices, but they’ll also be seen at hardware stores or department stores that are known for specializing in hand tools. Together, they and their Serious DIY brothers and sisters account for 25 percent of the buyers, and 25 to 30 percent of the spending.
Serious DIYers resemble Moderate DIYers in many other ways, but they’re much more proficient. These people upgrade bathrooms and add decks to their houses. Like kids who strap on their holsters to play cops and robbers, when Serious DIYers strap on their tool belts, they become the electrician, the plumber, or the home builder. While their shopping habits are similar to those of Moderate DIYers, they’ll also be seen at contractor supply houses, where the Pros most often buy.
The Pros—who are only 5 percent of the purchasers of hand tools in the U.S. —account for a whopping 50 percent of all the dollars spent. They shop at the contractor supply houses because the salespeople really know their stuff, and the stores cater to their needs—especially assured, on-time delivery. The Pros can’t afford to have their crews standing idly around waiting for the truck to show.
As this article shows, it’s vital that you:
Neil Mahoney is the founder of Mahoney/Marketing and has 30 years of experience at all levels of sales and marketing, including stints at General Electric, ITC Inc., Bausch & Lomb, and ABC Broadcasting. Visit www.mahoneymarketing.com for more information.