Understanding and Defining Target Markets
Target markets are one of the most important concepts to understand when marketing your business. These are the customers that your product or service is geared toward and likely share common characteristics. They are who you should focus on when developing your marketing strategies. There are some key steps you can take to understand a target market.
Understand Your Product
Break down your business into the most basic components. Write out the features of each product or service you offer. Some questions to consider during this process are:
- What type of customer would benefit from your business?
- How does your business solve a problem?
- What gap does your business fill in the marketplace?
If you are an established business, request feedback from current customers. You may learn some things that surprise you during this exercise, but it will be valuable information.
Study Your Competition
Look at what your competitors are doing and who they are targeting. Using the SWOT method can be helpful to guide you:
- Strength – What are they doing well?
- Weakness – Are they leaving a gap in the market where you could fill that niche?
- Opportunities – Where is there a need for the product or service you are both selling?
- Threats – How is what they are doing or saying threatening to your business?
Thoroughly understanding your competition will help lift you past them.
Narrowing your focus is the next critical step. Common categories to segment by include location, gender, age, income, education, and marital status. You may also consider more personal characteristics such as lifestyle, values, and hobbies. Avoid biased data by using random sampling or placing quotas on the types of respondents chosen.
After you have defined the criteria, start collecting information about each segment. Learn what their buying habits are and what influences them. Step into their shoes and observe what is trending in their world. Use tools to collect analytics that can be compiled in a customer relationship management (CRM) system. This data will inform your marketing decisions.
Making blanket assumptions about target markets can be risky and waste valuable marketing dollars. Going through the above steps will give you a clear understanding of who you are targeting.
Defining target markets can help you advertise more efficiently and attract new customers. You speak directly to the people who will buy what you are selling, allowing you to build solid relationships.