Lesson 3

USS Biz Trek

Lesson 3: Race to Planet Mirania

Briana: Hey guys, listen up. We just got our mission assignment!

Lalo: Cool, what is it?

Briana: It says, "Go to Planet Mirania, make first contact, and set up trade negotiations."

Jeff: Sounds easy enough.

Briana: Well, not really. We have competition... the Gornya.

Jeff: They’re the fiercest traders in the business!!! If they make first contact, the Miranians will be too scared to talk or trade with anyone else in the galaxy!!

Briana: That’s why we need to do our research. We have to find out what the Miranians want and what the Gornya are planning.

Lalo: Don’t look at us. We know what you mean by "research," and we’re not climbing on any ship or peeking through any more portholes — especially not the Gornya’s. Right, Jeff?

Jeff: Right!

Wanted: Target Customers

Now that you have chosen the business that’s right for you, it’s time to start thinking of ways to attract customers. Like our pioneering crew, you must find out exactly what your customers want.

In theory, almost anyone could be your customer. But in reality, you don't have enough time to sell to everyone. You need to focus on the customers who really want or need your product. These people are called your "target" customers.

Seventeen-year-old Todd Gilliard, the 1999 NAACP ACT-SO gold medal winner in entrepreneurship, is a good example. While working in an art gallery, Todd noticed that many customers needed their art delivered and installed. Todd saw an opportunity to start a business, so he made a deal with the owner of the art gallery to offer art installation services to their customers. Now Todd runs Art Installers, Inc. Click here to read more about Todd’s ideas for finding customers. Then use your browser’s back button to return to this page.

Find the Niche

As a small business owner, you can do something big companies can't do. You can serve the needs of very small groups of people and make good money doing it. For example, a kid in your neighborhood might make a nice profit selling cupcakes to his scout group. But a big company would go broke if they tried the same thing, because there aren’t enough customers in this target market.

Directing your sales message to a very small, well-defined group of people is known as niche marketing. Niche markets you might consider are your family, your neighbors, and people that belong to specific organizations such as scouts, 4-H, church groups, school groups, or sports teams. The advantage is that you already know a lot about what these friends want and need and the prices they’ll pay.

Here are some guidelines for choosing target markets:

Don’t try to market to everyone in the world. Choose a group of target customers that you can identify.
Don’t make your market too small. Send out the message to enough people to support your business growth.
Choose a market that you can reach. There’s no need to sell your lawn care service to people all over town if you only want to mow yards within six blocks of your house, right?
Choose a market that’s interested. You should have some reason to believe the people in your market want or need your product.

The Five P’s of Marketing

Good marketing is never haphazard. The right product must be presented to the right people, at the right price, at the right place, with the right promotion. All this takes planning!

Product: A product can be any good or service that has benefit to your customer. It can come in many sizes, colors, styles, or forms. It’s up to you to determine what product features your target customers want.
People: These are the groups of target customers that you have chosen for your business. Get to know them well!
Price: The sales price is mostly determined by the cost to produce the product. In most businesses, the price is also influenced by demand. A high demand for a product means the price can go up. But a low demand may mean the price has to go down. Competition also causes prices to go up and down.
Place: Where will customers buy your product? Are you selling door-to-door? Do you have a booth in a craft show? Do you market on the Web? An important part of your advertising plan will be to choose where to do business.
Promotion: How will your customers learn about your business? Promotion is everything you do to advertise your product including advertising, one-on-one selling, special sales or offers, handing out business cards — anything you do that gives customers an opportunity to buy.

Setting the Right Price

Knowing how to set prices when you first start a business is very difficult. You want to make a profit, but you are afraid that you may set your price too high and no one will buy from you. Or you may set your price too low and get lots of customers, but you won’t make enough profit. The goal is to price your product high enough to make a profit, but low enough so that the customer gets a bargain.

The going rate: When you start a business, one of your first projects should be to find out what other businesses are charging for the same goods or services. Once you find the average price in your community, this is called the going rate.

The cost of goods: The cost of goods is the money it costs to produce, manufacture, or purchase the product you sell. It includes the raw materials, supplies, equipment, and shipping directly needed to produce your product.

The general rule for setting prices is to figure the cost of goods for your product, then double it. This figure will be the price that you want to sell your product. In order to accurately know this price, you must keep very good records of your cost of goods.

Keeping it Straight

A good way to keep records of your cost of goods is to set up a card file. Make a card for every product you sell. On each card, record the following information:

name of the product
description
date purchased
amount purchased
purchase price
additional costs for materials or shipping
any other miscellaneous costs

At the bottom of your card, add up the total cost of goods for that item.

Time to Get Trekkin’

The customer is your number one priority. If you want to stay on track, you need to make sure you keep in close contact with your customer’s wants and needs. To help you with this, click on each of the activities below.