Excuse me for being M.I.A. over the last month, but I was busy producing the National Black Arts Festival’s 1st Annual Winter Ball (“The Art of Change”), featuring special guests Dr. Cornel West and Big Boi from Outkast. I won’t go into all the details of the event (although it was fabulous!!), but I do want to give you a little background about how this event relates to the importance of market analysis.
The NBAF Winter Ball was a great success in terms of attendance, donations, branding, cultivating new sponsorship relationships, and overall visibility; but more importantly it was a great success in targeting a new market for the organization. Many established arts institutions are dealing with a generational gap that threatens their future; the National Black Arts Festival is no different. Their patron-base is comprised of Baby Boomer art lovers, who have been core supporters since the organization’s inception 20 years ago. In many respects this is a huge accomplishment, as relatively few arts organizations have been able to sustain support from their target market over two decades. However, in terms of future sustainability it is problematic, because this demographic is retiring and eager to pass the baton to a new generation.
In October, I joined the newly established Collective Renaissance Guild, a group of dynamic Urban Gen X professionals, charged with cultivating arts patronage and cultural leadership among our peers. As the planners and hosts of the NBAF Winter Ball, we were very successful in:
· researching, analyzing, segmenting and targeting our market.
· creating the right programming,
· galvanizing the right opinion leaders and gatekeepers,
· formulating the right targeted message,
· and communicating our value through the right communication channels.
The results, 450 of Atlanta’s Urban Gen X elite, with the resources and ability to support National Black Arts Festival over the next 20 years, showed up and were thoroughly engaged.
Why is analyzing your market so important? First, you need to find an attractive market, meaning a group of people or organizations that have the ability and the desire to buy/fund your work. Secondly, you have to understand their needs, wants and behaviors, so you can develop messages and select strategies/tactics that will create demand for your work. Finally, regular analysis will protect you from pending threats (e.g. investment in an internet platform on the verge of mass exodus) and open your eyes to new opportunities (e.g. being a first adopter of a new marketing and distribution channel).
For example:
In 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there. (The Economist, January 2008 issue)
Many music industry firms missed this critical shift in the needs/behavior of their customers and are still scrambling to adjust their business models so they are less reliant on physical media sales (e.g. CDs). Good market analysis might have warned of this dramatic disruption.
In the non-profit arts arena market analysis will not only get more “butts in seats,” it will help secure grant money. According to the NEA, arts policymakers in the US are becoming increasingly concerned with measuring an artist’s ability to directly serve their community. Translation: Artists need to be able to prove to granting organizations that they effectively meet the needs of their community. How will you prove this without first researching the needs of your community and measuring your impact?
Alright, let’s get down to the nitty gritty. How do you do a market analysis?
Step 1 – Define your market.
Determine your market based on qualitative/quantitative responses to your work. Test your market. Try your stuff out in different demographics and see how they respond. When people do respond, learn as much as you can about their needs, wants, desires, hopes, behaviors, and frustrations.
Step 2 - Determine your market size.
Once you have a pretty good idea of who is responding to your work, it is important to understand how many of those people exist in given geographic area. For example, Fractured Atlas serves emerging artists. It is nearly impossible to measure the size of the emerging artist market, because the dividing line between emerging and emerged is very subjective. However, we were able to prove a sizable US market by looking at the number of visual and performing arts degrees awarded each year, along with supportive research on the number of people with arts degrees that pursue arts related careers.
Step 3 – Determine you market growth rate.
You need to know if your market is going to grow or decline in the future, so you can create the right marketing plan. For example, Hip Hop music is experiencing 4% growth in the Gen X demographic, but is seeing a 6% decline in the Gen Y demographic. An artist working in this genre has to decide whether to milk sales from Gen X or to adopt the new musical genres emerging within the Gen Y demographic.
Step 4 – Determine market profitability.
Its not just about size and growth, it is about buying power within a market segment. Gen Y wields significantly less buying power then the Boomers, who have the lion’s share of economic power in this country and the most spending discretion. However, an artist could create a fan base among the Gen Y demographic that will grow for 20+ years. Additionally, artists or arts organizations have to look at the costs in targeting a particular market. Maybe Gen Y will bring 2 times the gross revenue over the life of the creative offering, but it might take 3 times the expense to capture their interests over the Boomers. Which demographic yields a better net profit margin? In what time frame?
Step 5 – Discover or create distribution channels.
Find out how your market is gaining access to similar creative offerings. Do you have access to those channels? Can you create new channels for delivery of your creative offering? Can you make existing channels more efficient and gain an advantage in the market?
Step 6 – Determine the key success factors in your market.
What works? You can look at your own experience or that of other artists and arts organizations to determine what creates demand in your market. For example, theCollective Renaissance Guild targets Hip Hop elite. A key success factor in marketing to this demographic is having a powerful opinion leader vouch for your legitimacy. Therefore, we solicited sponsorship from Uptown magazine, who gave us a full page ad in their December issue.
Other success factors to be aware of include: access to essential unique resources (e.g. theatre in the East Village of NYC); access to distribution channels (e.g. search engine optimized website for ticket sales); and technological progress (e.g. cutting edge software for filmmaking).
There are many other research/analysis points to consider, but much of it relates to your particular set of needs and your unique creative offering. However, I hope this blog at least communicates the importance of knowing your target market.
(Originally published on FracturedAtlas.org December 15, 2008)
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