Many local business owners say they know their communities very well. But often, these business owners base their understanding of a community’s demographics, attitudes and preferences on anecdotal evidence – not data. For example, a business owner might make assumptions about how the community perceives their business based on a small sample of feedback they personally receive from clients. While instincts and personal experience hold some value, they do not provide all of the information necessary to make strategic and tactical decisions that result in long-term success for a business.
Investing in a market analysis, rooted in market research, can uncover information about trends that may impact the future of your funeral home business. For example, observable shifts in your community’s population could present both short-term and long-term opportunities and challenges for your firm. The information that a market analysis brings to light can help you make proactive decisions, such as re-evaluating your funeral home’s marketing plan and product and service offerings. Subsequently, the insights you gain enable you to build meaningful connections with your client families and potential consumers, which can help position your funeral home for further future success.
While conducting a thorough market analysis may seem like a daunting task, you can enlist the help of a vendor who specializes in market research. At Homesteaders, your Account Executive can work with you to complete the market analysis and develop a strategy for acting on your results.
STEPS to Conduct a Market Analysis
You can conduct a market analysis in five steps:
- Determine the purpose.
- Explore industry trends.
- Gather demographic data.
- Understand your competitors.
- Collect additional data.
1. Determine the Purpose.
Before diving into your market analysis, you should consider its purpose – what do you hope to achieve for your firm? For example, are you trying to assess the threat of a new funeral home opening in your community, or are you trying to plan your hiring efforts for the next five years due to the projected growth rate of your community? Determining the purpose of your market analysis will allow you to home in on the specific insights that align with the opportunity or challenge you hope to tackle.
2. Explore Industry Trends.
Industry data can help you identify the broader trends affecting the funeral profession and supplement your community-specific research. Consider the cremation rate, for example. According to CANA’s annual statistics report, the US cremation rate is projected to reach 72.8% by 2030 – that’s an increase of 16.7% from 2020! While the industry projections may seem high for 2030, maybe your firm’s cremation rate is well below the projected rate, and you don’t have a fully built-out cremation service option. This information can help your firm prepare to discuss cremation as an option as more families in your community select cremation over burial. Homesteaders’ Preneed Motivators report is also a reliable source of industry trends, featuring the real reasons consumers make advance funeral plans.
3. Gather Demographic Data.
As part of your market analysis, it’s important to have a strong understanding of your community’s demographics. Start by collecting data points that can tell you more about the basics of your population size and makeup, such as total population, gender mix, ethnicity, income, education, marital status and age distribution (with an emphasis on age 65+).
Examining your community’s total population data, for example, can provide insights on your community’s growth rate and allow you to plan for what this data could mean for your funeral home’s long-term business viability. If the data indicates growth, are you prepared to expand your business (i.e., staff, facilities, etc.)? What actions would you take if the data predicts a trend of population decline?
Demographic data alone will help you begin to understand your community. However, you will further understand how to connect with your target customers when you analyze your competitors’ go-to-market strategies and collect additional data points surrounding your target customers, such as their psychographic behavior and purchasing habits.
4. Understand Your Competitors.
You can take several approaches to understand your competitors’ strengths and weaknesses. But, the most insightful market analyses explore your competitors’ product and service offerings, location, target customers, marketing tactics and disadvantages in the market and consumers’ perceptions of those competitors. Homesteaders conducts comprehensive local market research for funeral home customers, and we have identified four questions for gathering insights about consumers’ knowledge of and preferences toward funeral homes in their community:
1. What funeral homes in the area can you name?
Unaided name awareness is an excellent indicator of how well your funeral home is known in the community, especially when compared to the other firms serving your area. You can’t earn business if you don’t have strong brand recognition among the members of your community.
2. Which funeral home would you prefer to use?
The first question addresses awareness of your funeral home brand, while this question addresses preference. Simply put, awareness is attained by telling people what you do, and preference is earned by showing customers how you deliver on your promises and provide exceptional service that meets their needs.
The combination of the first two questions provides a strong indication of your brand performance. Ideally, your firm would have both the highest awareness and preference. If that isn’t the case, the next best situation is to have the smallest possible gap between awareness and performance measures. Minimizing the gap between these measures ensures that more families who are aware of your firm are likely to choose you over your competitors.
3. What word or phrase would you use to describe (funeral home name)?
This question asks respondents to provide a word or phrase that they associate with your funeral home. It should be asked in conjunction with a fourth question:4. Is the word or phrase you used to describe (funeral home name) positive, negative or neutral?
This follow-up question asks respondents to qualify how they perceive the word they used to describe your funeral home. The question is necessary because traits that you might assume to be positive may, in fact, have a negative connotation for some of your potential client families. For example, being the most “upscale” funeral home in your area may be a positive trait for some respondents, but others may feel it makes your firm unapproachable.
As another example, consider the word “established.” For some, the word may suggest stability and capability. For others, however, this word may connote inflexibility and limited service options.
Reviewing consumers’ responses to these questions can help you refine your marketing plan and implement tactics to lock down more market share.
5. Collect Additional Data.
The final step of conducting a market analysis involves collecting any additional data points you did not gather previously. These data points tend to go beyond standard demographic data and investigate who your consumers are and which digital and physical marketing touchpoints will resonate most with them throughout each phase of their customer journey. Examples of these data points include consumers’ psychographic behavior (i.e., behavioral preferences, personality, beliefs, opinions, interests, attitudes, values, habits and lifestyles), homeownership status, household size, number of children, marketing channel preferences (e.g., TV, direct mail, radio, Internet, social media, text messaging), technology adoption and more.
How to Act on Your Market Analysis Results
When you become equipped with the results of your market analysis, you’ll have the foundation you need to identify your target customers, digital and physical marketing channels and messaging. The most effective firms know how to match the right message to the right person at the right time and in the right context. For example, a 60-year-old sophisticated and wealthy consumer is unlikely to attend a “Pizza and Preneed” event at the local community center. However, they might be attracted to a “Preneed and Prime Rib” event in the banquet room of a local steakhouse. Alternatively, a 70-year-old couple living on a fixed income in a retirement community is likely to be excited about a free classic movie night or a simple meal at your funeral home. But you should also ensure that the services (or brand) you put forward match the consumer’s needs and preferences. Those sophisticates want to hear about your prestige services, while the discount-conscious couple might be more interested in your value brand.
Successful firms need to determine who is in their market, what they care about and what messaging and medium will be the best fit for converting those customers. The firms that do that well will quickly outpace their competitors and take ownership of the market.
To start locking down market share, you need to align your funeral home marketing strategy to each phase of your customer’s journey. To do so, you should consider how you currently engage consumers at each stage of the marketing funnel (i.e., awareness and consideration, purchase and loyalty) and determine if your existing marketing tactics and messaging resonate with your target customers. Contact your Homesteaders Account Executive for assistance conducting a market analysis or refining your funeral home's marketing plan.
This blog post is part of a three-part series: How to Build a Funeral Home Marketing Plan That Works. Read the third post in the series: How to Align Your Funeral Home Marketing Strategy to the Customer Journey. Subscribe to the Homesteaders blog below to receive updates!