FIVE STEPS TO IDENTIFYING YOUR TARGET MARKET19 Nov 2015
Startups have products and services that are of interest to many different customers. You have limited resources, especially if you are an early stage startup. So you need to prioritize which customers to target. Focusing on a segment allows to you to build momentum early. A key element of your value proposition is “ who are you selling to?” it’s a simple question, but a sloppy market segmentation can lead to a lot of sales trouble in the future. Read on for the six quick steps in which you can zone in on your target market.
- Understand the problem you attempt to solve
When you begin to define the target market for your proposition, you first step should be to understand the problem that you’re solving. Then you can start to work out who is most likely to need a solution to this problem.
- Define your Target Market
When you start to define your target market, you need to think about who your customers are going to be and profile them. You can profile them on the basis of:
Demographics – age, gender, profession, income, ethnic background, marital status, etc.
Psychographics – interests, values, likes, dislikes, lifestyle, etc.
Behavioural – How do they use the internet or media? What sites or publications?
You can’t close on everyone in your target market. Your segment should be big enough to make sales yet not so big that it is impossible to target. The tighter the segment, the easier it is to get traction. You can always expand your horizons later.
- Identify the customer
Identify the key features that make you different. Then identify customers who will value your key differentiators. Start to list all the different types of customers that face the problem your business will solve. Ask yourself relevant questions about the customer. Segregate them by location – for example, high net worth individuals tend to live in certain localities, by geography, by personal preferences, income, etc. Ask yourself other types of relevant questions about these people and define them in as many relevant ways as possible.
- Who will gain from the value in your offer?
- Who will be affected most by this problem?
- Who will have the most to lose by not dealing with this problem?
If you can determine that the cost of not sorting out the problem is greater than the cost of dealing with it, then you know you can provide value. Remember to include factors like cost, ease of use and other features, as these are the factors that make up the value in your business.
- Reach your target market
Today, everything is niche. Recognize people who have a high potential need for your offering. Get specific. If you are targeting small businesses, for example, start asking questions – what’s the smallest business that really, really loves this stuff? What’s the largest? Do product businesses love it more that services businesses? Are there locations (urban versus rural) that love it more? Is there a certain type of small business owner that loves it more? If yes, why? Your segmentation will depend you being able to identify the characteristics of your ideal market. Gather intelligence from marketing data and target customers to results in high value sales and loyal customers.
It’s essential to continually research to stay current on market trends. It’s also important to see if and how your current and potential customers evolve. Once you have researched the answers to some of these questions you must look at the market and think about why you are in a unique position to solve the problem. In some marketplaces, there might not be a solution to this question, but in certain marketplaces there might be an overwhelming response. If you are unable to answer the question, you either have the wrong target market or the wrong offering. Do more work before you start to target your potential customers.