How to identify your target market
- SHARPEN YOUR FOCUS: One of the most effective things you can do to market your product smartly and efficiently is narrow your gaze – in other words, prioritize. Which efforts should you prioritize? Here are three tips to help you focus your marketing approaches:
A. Determine what needs your product fulfills.
B. Use a funnel approach.
C. Emphasize primary value propositions.
- A. DETERMINE WHAT NEEDS YOUR PRODUCT OR SERVICE FULFILLS: Who is most likely to use your product? As you answer this question, consider factors like age, buying power, geographical location, and marital status. Take, for instance, a recent college graduate who has just started her first job – she will have different needs than a mother of four teenage children. Both women require food and shelter, but at the same time, they might choose to spend their discretionary income in very different ways.
- B. USE A FUNNEL APPROACH: For some entrepreneurs, it might be helpful to think of the market selection process as a multiple staged funnel. For example, your first bucket might be gender. If your product or service is gender-specific, you can immediately narrow your audience. Your second filter might be age range. If you manufacture surfboards, marketing your product to octogenarians might result in very limited success. Your third and final sieve might be income level – the family purchasing a Kia probably occupies a different income bracket than the family purchasing a Lexus.
- C. EMPHASIZE PRIMARY VALUE PROPOSITIONS: Who is most likely to be interested in the values your product or service offers? Suppose your company makes a baby stroller that is easy to fold into a compact, portable shape. What types of parents will value it? Perhaps it is those who travel frequently. Maybe you manufacture a DSLR camera that can withstand drops onto hard rock and submersion in water. In this case, your target market might be outdoor enthusiasts who shop at stores such as Patagonia and REI. Whatever your product or service, list out the core values that your product offers, and then draw a line (or lines) to the demographic groups that prioritize these values.
- OBTAIN DATA: Choosing the right markets also means infusing conclusions with objective data. This data might come from a variety of sources. As you work to gather it, here are some guidelines in mind:
A. Gather survey data to identify potential markets.
B. Draw on existing data aggressively.
C. Look to your own network for data.
- A. GATHER SURVEY DATA TO IDENTIFY POTENTIAL MARKETS: Metrics are a great way to pinpoint promising demographic groups. This might mean conducting surveys via e-mail blasts or newsletters, or you might find it worthwhile to contact a marketing firm that can help you gather preliminary data. Either way, the key is to collect demographic data in your surveys. This can enable you to correlate positive responses to your product or service with specific demographic groups – the same groups that you should later target.
- B. DRAW ON EXISTING DATA AGGRESSIVELY: If your business offers a product or service similar to those already on the market, do as much homework as possible. What demographic groups are buying these products? When do they buy them? Which specific products in the entire lineup are most popular? There is a plethora of data that you can find online to gather a macro view of the type of customers who are purchasing products similar to what you will offer. You can also build your own micro view of specific types of target customers.
- C. LOOK TO YOUR OWN NETWORK FOR DATA: The next time you are with family or friends, look at what products they use. Would they purchase your own product or service? Asking questions as straightforward as, “Would you use this? Do you have a need for this product?” or, “Do you know anyone who would use this?” can provide you with valuable data. You can also tap into your network of business colleagues, funders, and mentors. Ask them to carefully examine your product or service, maybe even to the extent of trying it for several days or weeks.
You should be able to answer these questions
- In what industry are you offering your solutions?
- What is your market segment and how big is it?
- How was your market evolving in the past years?
- What opportunities are driving your market?
- How will the market’s needs change and why?
- Are there obstacles that make it difficult to either enter or exit the market?