Every aspiring entrepreneur starts with a great idea, which can solve a burning problem. But many founders begin with launching a product without considering target marketing strategies. The target market represents a group of individuals who have similar needs, perceptions, and interests. If a significant number of users are not ready to pay for the problem they want to solve, this leads to a loss of money. Eventually, founders run out of resources and finally end up failing. So, here are some tips on target market selection.
Target market selection is a part of marketing activities and comprises deep inquiry and analysis up to the corporate level. Target market analysis involves a process to recast and build something innovative to differentiate your business from others.
An entrepreneur must ask himself, “ Is target market segmentation big enough to meet my sales goals yet not so massive I can't target it?” Research has shown that 42% of startups fail because they didn't find the right target market for their startup.
So, finding your target market is one of the most important decisions that a business should take before actually starting its business.
I think the mistake a lot of people make is to identify a target audience and then work backwards into creating a product for them. - Ricky Van Veen
To find the target market you need to break it up into addressable market segments, this can help you to achieve your startup targets. The following ideas have helped entrepreneurs to find a target market for their startups.
How to Find the Target Market for Your Startup
What is "Target Market"
Types of Target Market
Focus on the "Crucial Customers"
Find a segment for early momentum
Take a hard look at the value differentiation
Identify the demographics
Identify prospects that care about the key differentiation the most
How to recognize people with high affinity?
What is a "Target Market"?
A target market in general is people or a group of people who have the potential to buy your product or need your product. It is that segment of the market to which a business wants to sell its products. If a business knows what its target market is, it becomes easy for them to market its product.
With the help of this information, the marketing team can create campaigns that are only focused on that segment of the market. Moreover, it helps the production team to better their product according to their target market's needs.
Types of Target Market
Some of the most common types of the target market that a business focuses on are:
- Gender-Based - Example: A cosmetic company would want to target females in their campaigns rather than include men and children.
- Age-Based - Example: A toy company will focus to impress the kids with the products instead of impressing adults.
- Location-Based - Example: A new local Pizza shop will advertise it in its town or city instead of promoting it all over the country.
- Income-Based - Example: A luxury car brand always tries to promote its brand among people with high income whereas an economy car brand will come up with campaigns and offers focused on lower or middle-class people.
So following are target marketing strategies to grow your customer base.
1. Focus on the "Crucial Customers"
Put your efforts into focusing on the most crucial customers that have the highest probability of purchasing. Before launching a product you need to analyze your target market, if you are an entrepreneur who wants to build a business that will not only solve a problem but also be profitable then you will go a long way, you have to interact with your target market.
After choosing a target audience, talk to them, listen to them, and then observe those people to know if they are your potential customers. You are going to solve a problem that they are desperately looking for but you have to observe if they are willing to pay for the solution or not. Only after observing the target market, you should start working on solutions to their problems.
You, as a new company, cannot build trust in people if you provide them with revolutionary solutions. So, come up with a solution that is not too extraordinary for people. However, at the same time, you should be able to translate it into a profitable business.
"You just have to pay attention to what people need and what has not been done."--Russell Simmons, founder of Def Jam
Before you start your business you have to ask some questions to yourself. These are:
- "Whether the business can be scaled or not?"
- "What is the size of your target market?"
- "How many people can you possibly sell your product or How many people will probably buy your product?"
And last but not the least
- "At what price you should sell the product?".
2. Find a segment for the early momentum of business
Focusing on a segment helps in building the early momentum of the business more easily. This involves awareness and word-of-mouth marketing that usually builds faster across like-minded groups, and success stories resonate well across a segment of similar prospects. This also requires complex and wide research on all aspects of the startups.
Some of the great ways where you can start your research
- Public Forums/Facebook Groups
There are many online platforms are available now where people ask questions, share their problems, and share their ideas too. You can find insight into both your target market and also your competitors which can help to find a solution that people are looking for.
You can join some Facebook Groups where people from your target market are actively involved, observe them for a while, listen to their conversation, understand their pain points, and ask questions. This will help you to understand the problem they are facing and also look for a solution.
- Networking/ Events
You can start building your network with the people from your target market and the people who are solving any burning problem for their target customers. This will help you not only to understand how you can find your target market but also you can learn a lot of things that will help you on your startup journey.
You can also attend some live events, especially for startups, where you can meet with new people and also people from your target market. You can directly ask them questions if they are facing any problem or anything they want to make their life better.
- Talking to friends & family
This is not necessary that you have to find your target market from outside, there can be some problems your friends and family are facing which you can give them a solution for. There are many startups that started by solving a problem they faced by themselves.
This will help you not only build a profitable business but also you can build trust immediately and it may help you to come up with an idea that is unique and can differentiate your business from others.
3. Take a hard look at the value differentiation
Always take a hard look at the value differentiation that can bring prospects for you. In other words, try to initiate the feature that makes the business different and makes it stand out. Many aspiring entrepreneurs get it wrong, they think that an idea is already working, and if the business is doing well then it can bring a large number of customers for them also and they simply copy the business idea and try to modify the business model. It will be profitable for a short period but you will not be able to build a business in the long run.
If you want to be an entrepreneur and build an empire, then you have to use your creativity and come up with a solution that will differentiate your startup from the other companies and can bring you a large number of prospects.
4. Identify the Demographics
It’s very important to ask yourself whom should you market to and how you most efficiently reach them. This will include identifying the age, gender, geographic location, occupation, socioeconomic status, and other demographic and psychographic traits of the consumers who would be most interested in purchasing your product or service. The key is to identify a niche target market and go after market share aggressively.
5. Identify prospects that care about the key differentiation the most
When looking across the broader market, some prospects will say, "Yeah, the stuff is cool!!", but others will jump out of their chair and yell "that's amazing!! I need that right now.” In this case, always target the second group as they will be the easiest to sell to.
You are building a business not just to solve a problem but to make a profit too. So you have to identify whether the people are ready to pay for the solution or not. Many startups end up wasting their money on marketing and strategies without identifying the target audience first. So if you want to scale your business you have to find the right target customer who will care about your solution.
Now you may have this question in mind:
How do I recognize people that have a high affinity for my offering?
The target group that has a high affinity to the products being offered could be a certain company, in a certain vertical market, in a certain geography or they might be consumers that already own a particular product and also have some hobbies which are somehow related to your business.
This is where entrepreneurs need to get super specific about targeting these groups. Start asking questions like
- "What is the smallest business that loves this stuff?"
- "Do product businesses love it more than services businesses?"
- "Which location (urban or rural) do they love most?"
- "Is there a certain type of small business owner that loves it more? Why?"
The segmentation will depend on the entrepreneur’s ability to be able to identify the characteristics of an ideal, easy-to-close prospect. If you can find the right people that have a high affinity in your niche then definitely you will be able to close the sale.
These points would certainly help in bringing profit to the company and increasing your customer base. What strategies are you following to define your target market?
What are the 5 steps in starting a target market business?
- Shortlisting Ideas.
- Picking the right idea.
- Planning and building your Most Valued Product or Service.
- Pricing your product or service.
- Releasing your product or service.
Why target selection is an important factor?
It helps you to determine and focus on a particular audience or type of product and service. It also helps with less spending on customer acquisitions.
What is the definition of target selection strategy?
It is a strategy applied by companies and startups to start their businesses with products or services for identified markets.
What is a target market example?
For example, a toy company for children, a make-up company for women, and any company that makes winter apparel.
How is the Purpose of a Target Market important for any business?
When companies identify a target market, then they can influence product or service design. Market strategy can also be enhanced.