What does it mean to define a target market?
From the moment you came up with your business idea, you probably had a specific customer in mind. When you tweak your service or product, you do it with them in mind. When you write your promos, you highlight the features that will interest them most – and use language that they get.
This is a great way to think. It gives focus to everything you do. But you’re probably making a lot of assumptions about what your target customers really want, and how much they want it. When you define your target market, you’re doing a little research to make sure you’re not misleading yourself about who’s going to spend money with you.
When to do it
It’s a good idea to define your target market before launching your business. The exercise will help you test a lot of assumptions before you sink too much money into the wrong things. It’s a lot less expensive to change direction at this early stage.
But even if you’ve been in business for years, it’s helpful to keep defining your target market to stay in touch with who your customers are.
What will you know at the end?
Defining a target market can give you three important pieces of information.
Is there a market? Dig around and see if there’s enough demand to sustain your business. Are people (or businesses) buying your category of product? What portion of that market is gettable for you?
Who's in the market? Once you’ve confirmed there are customers out there, start to get more focused. Who are those people?
What's their age? Do they have certain types of jobs? Where are they most likely to work or live? Do they have common interests? Are they more likely to be men or women? Do they have a lot of money, or are they on a budget? These are the demographics of your target customer. Start by going after a specific cross-section of the market. That way you can get to know your target customers even better.
How do they think? Once you've identified who your target customers are, you can start to find out what makes them tick.
What do they care about? Use this information to promote the product benefits that are most relevant to them. Where and how do they shop? Try to get your products into those places (and make sure you're online if that's how they like to buy). Where do they get information? Run your ads, promos and PR in these places. Who do they take advice from? See if you can enlist those key opinion leaders to give you some profile.
Where to get information about your target market
The internet is a good place to start looking for demographic data. Search for statistics on your target customers. You should be able to find credible research that’s been done by governments, trade and industry groups, universities, marketing institutions or even other companies who serve that same market (check out their annual reports).
Once you’ve got some of this basic information, go talk to your target customers. Nothing beats getting their input, either one-on-one, through focus groups, or by sending surveys.
Example of targeted marketing
Let’s assume you have a video production company offering engagement, wedding, and new baby videos. On a really basic level, your potential customers are all couples who are engaged and/or pregnant. Resist the temptation to stop there. You don’t have a big enough budget to market to them all.
Try targeting a subgroup like unmarried double-income couples, aged 25 to 35, who live within two hours of your studio. They should have money to spend on recording upcoming life events, and they're nearby so you can easily meet with them.
This is also a group you can get to know. Find out what local 25-35 year olds care about. Where do they shop? Where do they get their information? Who do they take a lead from? Maybe there's an Instagram account they follow closely – so see if you can get a credited photo posted there, for example.
Defining your target market is just the start
As you get underway, however, you’ll want to keep learning more about your target customers. The more you know them, the better you can serve them – and the smarter (and more cost-effective) your marketing can be.
You don’t need to get too carried away with this type of research in the startup phase of your business. You’re just aiming to confirm there’s a market there, and to learn a little about who they are. It’ll slow you down if you do a heap of research now.
Get in touch with us. We'd be happy to help your business get started.