Know Your Market

Know your Customers

A clear definition of your intended customer type(s) must be known in order for you to effectively design many aspects of your business, from your product, your marketing campaigns and interior designs to the strategies you will use to combat competitors. The more that you know about the people that will walk into your shop and use your product, the more effective your efforts will be to attract and retain repeat business.

Ask yourself: who is (are) the customer(s) for my business? Yes, we realize that these are coffee drinkers, but what else do we know about these people? What is their background? Are they on their way to or from work? School? An attraction or event? How old are they and what are their tastes in style, food and music? What are social issues of particular concern to these people?

Tailoring your business model to the most likely sources of local business is a smart approach. Consider the coffee shop at the base of an office building with a steady pedestrian traffic of white collar workers: understanding the approximate demographic, traffic patterns and interests of these people will allow you to creatively apply ideas to your business (perhaps, a meeting area for private conferences away from the workplace) and products (such as, quick lunch snacks for the captive in-house audience or office bundle packages of to-go brewed coffee) that will help to engrain your business as part of the office culture. This approach would be similar, with entirely different results, in a location that is, for example, directly across from a high school or college or a drive thru along a busy interstate highway.

A targeted understanding of your intended consumer will also help you to effectively market your business in those places and using the methods of communication that will be most effective; for example, direct mail to a surrounding residential community may not be effective in areas where the majority of your intended consumers are commuters from elsewhere - it is always more cost effective to take a finely targeted approach to reach your individual market segments (no matter how many there may be) rather than the “shotgun” approach of throwing out a broader and weaker message to a wide audience.

Know your Competition

Do you think that your only competitor is that big name coffee chain store around the corner? Think again.

Your competition is everywhere around you and in places that you may not expect, from the local restaurant, fast food business, movie theater concession stand, convenience store, ice cream parlor, mega-retailer, gas station and even your consumer’s own home! With all of the potential competition from sources of coffee and other beverages like sodas and ice cream frozen drinks, it is very important that you project a consistent image meeting the needs of your identified target consumer.

Objectively review every possible outlet for coffee and competing products within a geographic territory that is appropriate for your region (including but not necessarily limited to sodas as there are regional variations of competing products) meeting each of the standards of performance that will define your business in the eyes of the public, namely:

1. Convenience of a coffee shop location - How easy is your product to access? Are there barriers that would prevent a consumer from visiting the coffee shop, such as an inconvenient unprotected left turn from his or her normal morning commute? Also in this category, consider the standard of “speed of service” (which is sometimes separated into its own category). We believe that there is an appropriate expected speed of service defined for each type of coffee shop location, differing greatly from a sit down retail location to a drive thru. Be sure that the speed of service does not present an inconvenient obstacle for the customer.
2. Consistency of the experience - This is arguably the most important of the four criteria identified here and the central foundation of any brand. Studies have shown repeatedly that consumers prefer a product that is known to be “acceptable” rather than risk an unknown product that may be either “exceptional” or “poor”; more than anything else, a customer wants to know what to expect from a coffee shop. The anxiety generated from an inconsistent experience (product & service) may be enough by itself for a consumer to avoid a coffee shop altogether.
3. Quality of the beverage - This criteria is regularly grouped with the term “value,” but we suggest that you be careful not to do this and instead focus solely on the resulting taste. Identifying the true quality of the resulting beverage will allow you to establish an objective review of your beverages versus your competition and then educate your patrons accordingly to accurately recognize not only “what” identifies a quality specialty coffee beverage, but “why” it is that way. Taste is subjective and each individual will prefer different styles of drink, roasts and varietals or blends of coffee; however, we find that even the uneducated palette will prefer a better quality beverage even if they cannot explain why. With a product as complicated as coffee, it is sometimes difficult to separate real value from what is the “perceived value” or the value associated with what uneducated customers assume is associated with a product, normally resulting from marketing techniques (this coffee is very expensive, so it must be good!); we suggest that you cut through all of that and first identify the true quality of your own product and that of your competitors, then build a marketing and price strategy to optimize the perceived value of the product.
4. Cleanliness of your coffee shop - This is the most simple criteria to judge and subsequently maintain to excel beyond your competition. Regardless of whether a business is geared to an informal crowd of bikers and teenagers or pinstripe gray suited diplomats, everyone prefers a clean environment. Remember that cleanliness does not sacrifice your ability to personalize your space or inhibit free expression; never confuse a clean environment with a sterile one.

For each of these criteria, outline all of the potential target customer demographics that are shared between your business and your competition to gain an objective overview of where the market potential exists either in a new market niche left open by gaps in competitor performance or in direct competition with an existing supplier.

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