Zero in on your target market by using Market Segmentation.
First of all, is your product international or national in scope? Or is it more likely that you will sell it primarily in your own region or community?
In the case of our charter business, our primary market is actually national or international – tourists who come to this area from all over the world. Our secondary market is local – people who have a special event to celebrate, a company meeting or retreat to plan, or company coming from out of town.
Let's say that your primary market is local or regional, and that you live in a community with a population of 25,000 people. The first thing you'll need to do is research the demographics of your community, and divide it into market segments:
- Age: children, teens, young, middle, elderly
- Gender: male, female
- Education: high school, college, university
- Income: low, medium, high
- Marital status: single, married, divorced
- Ethnic and/or religious background
- Family life cycle: newly married, married for 10 – 20 years, with or without children.
This information should be available to you through your local town , hall, library, or Chamber of Commerce – and the more detail you can get, the better.
Next, you need to segment the market as much as possible using psychographics as your guide:
- Lifestyle: conservative, exciting, trendy, economical
- Social class: lower, middle, upper
- Opinion: easily led or opinionated
- Activities and interests: sports, physical fitness, shopping, books
- Attitudes and beliefs: environmentalist, security conscious.
*Note: if you are a B2B company, you'll also need to consider the types of industries available to you, and their number of employees, annual sales volume, location, and company stability. In addition, you might want to find out how they purchase: seasonally, locally, only in volume, who makes the decisions? It is important to note that businesses, unlike individuals, buy products or services for three reasons only: to increase revenue, to maintain the status quo, or to decrease expenses. If you fill one or more of these corporate needs, you may have found a target market.
By now you should have a picture emerging of who you think your ideal customer is … or who you want it to be.
Depending on the nature of your business, you might even be able to write a description of your customer. "My target customer is a middle-class woman in her 30s or 40s who is married and has children, and is environmentally conscious and physically fit."
Based on the numbers you uncovered in your research, above, you may even know, for example, that there are approximately 9000 of those potential customers in your area! It may well be that 3000 of them are already loyal to a competitor, but that still leaves 6000 who are not, or who have not yet purchased the product from anyone. Do the research!
Lots of times prospective customers don't know about your company, or can't tell the difference between your company and others. It is your job, once you know who your best customers are, to 'target' the group that you've identified - even if you have competition.
In addition, you may decide, using the example above, that you'd also like to extend your target market to include women from 50 to 60 years of age. If you go back to the basic reasons why people purchase goods or services, and can find ways to target your efforts to that age group, you may be successful in capturing a bigger share of the market!
On the other hand, what if you 'specialized' your product or service and then researched your target market, only to discover that there are probably less than 75 people who will buy from you?
First of all, if those 75 are corporate customers who will spend hundreds on your product or service annually, then you have nothing to fear. But if those 75 are only going to spend $10 every decade on your product or service, you need to go back to the drawing board of planning your business and perhaps determining a wider target market. At least, though, you are armed with all the information you need to start again, or go in a different direction.
Let's face it - there's a market, and a target market, for everything.
If you don't think so, remember pet rocks?
Author Marilyn Guille owns Comprehensive Virtual Editing (CoVE) Services, which provides press release writing and distribution, general and business writing, editing, and ghostwriting services. Guille has been a professional freelance writer for over a decade, and lives on a classic boat on which she and her husband do sightseeing charters.