How to Identify Your Target Market
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- Category: Business Development, Business plans, Finance & accounting
Up Next: Key Strategies in Market Research
A business exists because it offers a solution for a problem people want to get rid of. Consequently, the biggest mistake a business can make is failing to clearly define who they are solving a problem for—their target market.
Without a thorough understanding of your target market, you can’t make smart choices about your front end offers. Everything you do in your business will always tie back to the specific market you serve. Your marketing strategies, pricing model, and product or service mix are all oriented toward your target market. Even before you start an enterprise, you have to ask yourself if there is enough demand for your product or enough need for your service. You also have to understand how to communicate with your customers and investigate their behaviors to discover new opportunities. As a current or future business owner, your first objective is to understand who your target market is and how the people in it think and behave.
In this blog, we will walk you through the fundamentals of identifying your target market
so you can make sure your time and money are being invested effectively and yielding the best return on investment. Generating qualified prospects can boost your conversion rate because you’re naturally focusing on people who are more likely to purchase your offerings while spending less time with customers who are a poor fit. Next month’s blog will explore Key Strategies in Market Research—practical methods you can use to confirm that your target market aligns with your assumptions. You can also get our book, To Dominate Your Competition, for a deeper dive on how to find your target market. What is a target market? It’s a group of people with similar traits such as age, income, opinion, location, or interest. This group is willing to purchase a particular product or service from your enterprise because it solves a problem for them. The target market is unique to each business or industry, and it can be broad or specific in scope.
Market research is not always easy, but it is critical to the success of your venture. You need it to confirm assumptions and understand purchase motivations so you can stay ahead of the competition and take advantage of larger trends. No matter how good your offer is, it is a waste of time, money, and energy if you market to the wrong audience
Identifying your target market can be challenging, but we can guarantee that it will pay off in a business lifetime, so stay committed to your efforts as you work through this information.
Let's start with a smooth, detailed process to discover your target market.
You probably already know who your target market is—or who you want it to be. Before you read further, describe who you think your target market is in two or three sentences on a piece of paper or mobile device. As you work through this process, you may observe that you were correct in your assumptions, or not. Either way, this blog will reveal valuable insights about your target audience.
You need to find a group of people that has these four characteristics when you set out to identify your target market:
- Demonstration of a particular need, want, or desire that your product or service satisfies.
- Financial ability to buy the solution to their need, want, or desire.
- Possess the authority to make the decision to purchase your product or service.
- Access to your enterprise, through a physical location, I, catalog, or the internet.
First, do an inventory of the offers you provide to your customers.
Answering the following questions about your product or service will assist you in finding the community of people with the characteristics listed above:
- What is the need, want, or desire your products or services fulfill? Remember that there can be more than one need or desire.
- What do your solutions cost?
- Who has the power or authority to purchase your product or service?
- For example, daycares provide products and services for children, but their parents are the people who decide to make a purchase.
- Are your products or services accessible, and how?
- Do you offer a high-end product or a low-cost option? Do you carry large items, like kitchen appliances, or small goods, such as household cleaning or maintenance items?
Second, let’s look at the demographic characteristics (demographics) of the individuals who need, can afford, access, and decide to buy the solutions you are offering.
Answer the following set of demographic questions about the people who use your product. Keep in mind that some demographic information may be less important than the rest, depending on your industry and the market you are trying to capture.
- Is your target market made of kids? Teens? Adults? Seniors? Overall, what is the age range that your product or service caters to?
- What are the earnings they have to make to afford your product or service? What is the nature of their earning (household income, business income, investments, )? What level does that need to be? Low? Medium? High?
- Do your solutions appeal to women, men, or both?
- Where do they fit in the overall family life cycle? What generation are your prospects? Based on the age range you identified in the answer to the first question, are they baby boomers? GenX? GenY?
- Are they from specific nationalities? Does it even matter for your product or service?
- What ethnicities are they from?
- Are they married? Single? Divorced?
- Does your product or service cater to large or small families? How relevant is a person’s family size for your solutions?
Occupation or Industry
- Does your product or service attract people in a specific occupation or industry?
- Does my solution target people from specific religions (Kosher, Halal)?
- Is the language relevant to my product or service? Do the people who use my products or services speak another language?
- What is the educational background or level of education that your prospects need to have? High school? University?
Third, let’s look at the psychographic characteristics of the people that need, can afford, access, and decide to purchase your offering
We relate to those as psychographics because they are connected with human emotions and feelings. Psychographics, contrary to demographics, are qualitative characteristics of the people in your target market. These include but are not limited to a person’s personality, core values, attitudes, interests, or lifestyle. You can gain many valuable insights from these characteristics that allow you to interact and communicate with your target market in the ways that they respond to best.
Answer the following questions on your target market’s psychographics.
- What kind of lifestyle group does your audience fall into? Can they be classified as conservative, trendy, travelers, or soccer moms? Are they thrifty or extravagant? Are they savers or spenders?
Values + Beliefs
- Would you look at them as environmentalists or safety conscious? What are their values and beliefs?
- What kind of attitude do they have? Are they positive or negative? Open or critical? Are they strongly opinionated or easily led?
- Are your prospects leaders or followers? Do they rely on others to tell them what products they need? Do they need others to educate them on what is trendy or what works?
Activities + Interests
- What hobbies do they have, and how do they use their spare time?What are their interests?
- What social class does your target market belong to? Lower, middle, or upper? Do they prioritize spending on luxury items?How much discretionary income do they spend?
Fourth, put all the information you have gathered from these exercises into a specific sentence or statement.
What do all the discoveries tell you about your ideal customers?
You can now create a clearer picture of who you are targeting. At this point, you can visualize who you think your ideal customer is. Put on paper a 1-2 sentence statement about your target market by being as specific as you can. Compare that with your initial thoughts at the beginning of this blog.
As an example:
- Your prospect is a successful retired professional; healthy elderly man, aged 60 to 80, who is single, makes more than $500,000 per year and is physically fit. He has an active interest in economics and politics and attended a university.
- My target customer is a frustrated woman business owner, married or single with grown-up children, between the ages of 35 and 60, and has a business income of at least $200,000 annually. She is determined to grow her business, and she makes all the decisions to lead her company.
If you want to learn more about how to use this newfound knowledge of your target market to outperform competitors, you can refer to Dominate Your Competition. The next blog will focus on key strategies to approach your market research.
Devoted To Your Business Growth,
When you don’t know where you are going, look where you came from.