One of the first things business coaches like me ask is, “What is your target market?”, “Who is your target market?” and then various variations of that question. The trouble is, (and it’s not just you reading this by the way), is that no-one ever taught you how to work out your ‘target market’ when you first set up your business. Even at the most basic level, people don’t seem to quite ‘get it’. My son took his GCSE Business Studies exam last year and whilst he was studying talked to me about ‘target markets‘ and although what he was being taught wasn’t entirely wrong, it missed out key questions that small business owners need to answer.
I’m not going to lie to you here, but probably THE most important thing you can look at, and spend time on before you spend cash and resources on social media and marketing in various forms, is really, and I mean really, getting to know your target market and ideal customers and clients. Not quite down to the underwear they wear, (unless you sell underwear), but pretty dam close.
So here are the basics and what it means to your business as you break down your target market, piece by piece. Within these basics are various other questions that drill down to more in-depth knowledge, but this is a great framework for small businesses to start properly or an existing business that needs to re-frame where they are going and who they are already serving. The benefits of doing this exercise is to save time, money, effort and other resources. This is not about just selling more to the right people at the right time, it’s about being a wise, skilful and knowledgable business owner.
Your Target Market – Population
This is fairly obvious. If you supply goods, products or services to the whole world, then we start internationally. I mean I know that people say that “Think big or go home” thing, but it’s a start. Effectively if it breathes, and has money, it’s the start.
Your Target Market – Potential Market
What interest is there in buying your products, goods or services? This should have been worked out when you were planning, researching or building your offering. (I write about a quick framework of how you can work this out HERE)
Offering products, goods and services to everyone quickly burns your resources, so this a first step in finding out whether you have or will continue to have a viable business going forward. In a world where digital downloads are key, selling 8-track tapes to the whole world will begin to preclude some people from your business offering.
Your Target Market – Available Market
Something that many business owners forget or skip over. You may have great products, goods or services but can people afford them? Take Tesla as an example. A large percentage of public minded people do probably want an electric car, but can you sell a £30,000 Tesla to everyone? No.
So the available market shrinks. Most people NEED double glazing, but can a young family on benefits afford your revolutionary heat capturing, sun reflecting windows and doors? No. So what size of a market is there that can afford your products, goods or services?
Your Target Market – Segment
Sensibly this where you go after the most valuable of potential customers and clients for your business. Whilst many business coaches, academics and commentators will all agree that you can’t sell to everyone in your target market, it would be fair to say that the success of a profitable and sustainable business and it’s owner, is looking to engage with customers and clients that not only will buy your stuff, but become advocates, ambassadors, referers and influencers for you and your brand.
Yes, ‘niche down‘ but don’t close the door on everyone that aspires to have what you offer. It’s a strategy for growth. Don’t believe me? Look at the iPhone. For years you had the latest iPhone and then came the larger screen, the larger memory, the cheaper and more value driven models. It solves the problems they’ve set out to solve, but are more inclusive of more people who aspire to have that ‘top model’ but can still afford AN iPhone.
So here we are with a qualified, available and legally able to buy market.
Your Target Market – The Actual Target Market
And now we’re boiling our target market right down to this point. WHO we decide to serve and help.
Every single business ever started and run is a problem solver. Now you’re working out who you WANT to serve and help. This may re-ignite the Simon Sinek perspective on your “reason Why’ and that’s good. It’s here that you really do know what you want to do, why you want to do it and who you want to do it for.
Your Target Market – The Penetrated Market
As business expert Larry Winget once said, “There is no such thing as a new idea.” He’s read thousands of books and it would be safe to assume that there are no new ideas, just different perspectives and strategies to get to where we want to be quicker. So as you look at your goods, products or service, who is already in your market place doing what you do and how well are they doing it? have they got a monopoly or are they serving their customers, which are actually your customers really well, or really badly? How will you and your USP’s make a difference? Can they make a difference?
Your Target Market – The Growth in Your Target Market
This last bit is mostly looked over. What is the potential for growth in your business? It’s like ‘finger spinners’. Bare with me here…
A couple of years ago, there was a ‘finger spinner’ craze. Pointless bits of metal and plastic that spun in between your fingers. (No idea either, when I’ve put it that simply) But you had the early adopters, the peak and the laggards. The people that made the most money were the ones who sold to the early adopters. The next were the ones that got on board as the craze took off and sold all their stock. And the ones that made the least and potentially LOST money were the ones that jumped on the bandwagon as it began to wane, thought it was going to go on forever or jumped on as the early adopters were putting them in a drawer to gather dust.
For a business to succeed there has to be an element of growth within a target market. So now you’ve drilled down, what is it, what’s it worth and how much effort and resource will it take to get your return on your investments of resource?
Hopefully you can now see how much researching and taking time to truly evaluate YOUR target market within this framework will not only help you put your resources, (i.e. time, effort, marketing, money, innovation, building, etc…), into the right places, but also help you focus on targeting the RIGHT people at the RIGHT time and create a profitable, sustainable and viable business for many years to come.
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