You can't be everything to everybody

Want to be caught between a rock and a hard place?

Try being a home-improvement company in Portage. Big-box giant Home Depot and Wisconsin-owned Menards are both within easy driving distance. Portage Lumber Do It Best confronts that situation every single day.

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You wouldn't know there was any worrisome competition by talking to Dennis Dorn, who co-owns the 52-year-old business with his brother, Ron. The Dorns are succeeding because they understand their target market and have designed their company to earn their target customers' business.

"Who is your target market?" is the second of four core strategy questions every business must answer. (No. 1: "What business are you in?")

Target market refers to a group of customers and potential customers with similar needs ? needs that differ from those of other potential target markets. For example, diners seeking inexpensive, fast food are a different restaurant segment than those who desire fine dining.

Representing only 30 percent of customers, but 70 percent of the company's revenue, Portage Lumber shines with contractors, its target market.

"Contractors are relationship driven, so we hire relationship-oriented, knowledgeable salespeople. And we listen to contractors to identify what they need to succeed," Dennis Dorn said.

For example, the company now rents equipment to contractors. Store associates deliver construction materials and equipment to job sites as needed. A new billing system helps contractors keep track of purchases by specific project. Further, Portage Lumber keeps prices competitive by belonging to a $3 billion national buying cooperative called Do It Best.

Portage Lumber's product and service offerings save contractors time, and saving time is worth a lot more to contractors' financial success than competitors' "lowest product price" promise.

And more time enables contractors to spend more time hunting, fishing and golfing. The result is a loyal and growing customer base.

Where does the other 30 percent of Portage Lumber's business revenue come from? The answer is retail consumers living in and near Portage.

The company doubled its retail space by adding a Design Center that appeals to retail shoppers.

Portage Lumber succeeds with its two target markets because they are highly synergistic. Serving retail customers well helps Portage Lumber succeed with contractors. Why? Because contractors' clients now have an easier time selecting flooring and other products the contractor will install. A restaurant, on the other hand, trying to serve two segments ? fast food and gourmet ? will likely fail.

Strategically focused companies wisely give up revenue opportunities to win more target market business. In Portage Lumber's case, the company closed its $1 million construction division because potential contractor customers saw this as direct competition. "We've picked up larger contractors' business since this decision. We'll be better off in the long term," Dorn said.

Lowe's, Home Depot's No. 1 competitor nationally, is opening stores in markets where Home Depot is located. "Lowe's has mastered the female customer," Dorn said. That insight reflects his understanding of the value of a strong target market focus.

Would a Lowe's store in Madison or the Dells hurt Portage Lumber? The answer is unclear.

Whether and how the Dorns evolve their business would shape Lowe's impact on Portage Lumber's success.

Every company has one or more target markets. If you don't consciously choose your target, you essentially serve all segments, which is a sure-fire recipe for marketplace mediocrity, low margins and flat to declining sales.

Think strategically. Which target market holds the key to your business truly thriving?