How to define your target market in 2021 - and why is this so important?
Achieving business success is easier when you know what is going on within your target market. But how do you define this?
Let’s start with some theory: definition of “target market”
Your business might be prospering, even if you are not aware of the groups that make up your target market; however, once you define this, you will have a chance to achieve even better market results.
This is because your target market is the very group of people or organisations that you expect to be your main customers. They are the ones that will generate a vast amount of your company’s sales. So, from a business perspective, it is crucial to be able to identify them correctly.
The concept of a target market is not a new idea or one that only applies to big companies. Even smaller players on the market should know their target market so they can use this information to improve their product or service.
Why is defining your target market crucial to achieving success?
The people that make up your target market are the ones that love your product or service. When you know who this applies to, you can take advantage of that knowledge.
But how can a properly defined target market help your company?
- You can use your knowledge about the potential target market while the product is still in the development phase. This will allow you to improve your offer to better meet the needs of the intended target market.
- Increase sales and client satisfaction by offering your product or service to a specified group of customers that share similar needs.
- Are you looking for an idea for a new product? Take a closer look at the groups that make up your target market. You will find that these people still have many problems that your company can solve.
These consumers are the key to dominating your niche and achieving consistent growth. So focus your attention on them, but remember to seek new opportunities as well.
Why should the target market be specified in the first place?
Imagine that you are running a beauty salon. You could say that your target market consists of women. To some extent, this statement is true, but it is missing one crucial point.
Within any target market, various groups should be specified.
Even beauty salons can target different groups:
- men and/or women
- older or younger clients
- patrons from a local area or the whole city
- people interested in basic services or complex treatments.
There are many ways to divide your customers and define your target market. The most popular ways are:
- Geographically (by country and/or region)
- Behaviourally (why do they buy this product and how often?)
- Economically (average income, amount of savings)
- Psychographically (main interests and preferred lifestyle)
- Demographically (gender, age, occupation, marital status)
How to define your target market
STEP 1: Understanding the market - what are their needs?
There are different types of customers that you can spot in the market. Take a closer look at them and learn about their needs.
STEP 2: Understanding consumers - what are some problems that they face?
Your (potential) customers all have problems that they need to deal with every day. Your product should be the one that solves them. List the issues that the groups from step 1 have and find out how your service can help solve them.
STEP 3: Understanding your product - define your main benefits
People buy value, and not just a product or service. Start by determining the value proposition that your offer provides. In other words, define how your product addresses client needs and how it solves their problems.
STEP 4: Ask additional questions about the defined target market
During this phase, you should double-check your findings. Dive deeper and ask yourself:
- Is this group big enough?
- Do they need the product? Can they afford it?
- How can you reach them?
STEP 5: Confirm your assumptions
You can rely on experience or intuition to define your target market; both are good places to start. But you will need to confirm your assumptions during the next phase.
Confirm your ideas with relevant data
It’s not possible to properly define your target market based only on assumptions. So, how can you confirm your ideas properly?
Using data to define your target market is a necessary step towards understanding your potential customers. Taking a data-driven approach also helps ascertain the size of the chosen market and its demographics, and it’s very useful in determining consumer behaviour. Analysing the data allows you to decide who should be the primary target group for your product or service.
Confirm your hypotheses, understand your customers and achieve success.
There is no way to understand your customers without talking to them. Interviews or surveys are very useful and are often the best ways to find out what your clients are thinking and confirm your hypotheses.
A professional service or product validation interview is the best way to gather information about customer needs and problems and help you understand how to provide a good solution. Plus, listening to your customers allows you to discover insights into aspects that you would never have considered on your own!
Although using data to find the proper target market is worth the time and effort, it can also be quite challenging.
Feel free to reach out to our team for support. We’ll help you identify and analyze relevant data to define your target market and also conduct interviews with potential clients to confirm your hypotheses.