Today, small businesses can realistically market to anyone, anywhere in the world. At the same time, customers can choose to patronize any one of the literal millions of businesses that sell online.
As consumers, we’re overwhelmed by the options. As entrepreneurs, we’re overwhelmed by the competition.
That’s why it’s vital for entrepreneurs to find the right target market early on. By identifying exactly who they want to serve, brands can increase their chances of cutting through the digital noise and connecting with the people who actually want to buy their products or services.
What exactly is a target market?
You guessed it: a target market is a specific market (a group of consumers or organizations) that businesses target with their product development, marketing, customer experience, and branding efforts.
Your target market won’t include all your customers, but it will include your best and most frequent customers. Here’s an example: If you make upscale, eco-friendly kid’s clothing, your target market is environmentally-conscious parents with enough disposable income to regularly purchase your products. You will probably make sales to people outside this market (like grandparents who purchase your products as gifts), but the vast majority of your sales will come from people within your target market.
Your target market can help you make important decisions for your business, such as what products to offer, how to price them, and how to market them.
How to define your target market
What not to do
Before we get deep into the list of things to do, let’s quickly go over potential pitfalls to avoid.
- Don’t be afraid to pursue a niche. With a global market, it’s now possible to succeed in very small niches. For example, there is a real company that makes luxury toothpicks. I don’t know about you, but I’ve never bought a luxury toothpick. I don’t even have friends who buy them (or if they have, they’re not sharing). But evidently, someone out there is buying them. There are over 300 million people in the U.S. alone; you can build a successful business even if only one person out of a thousand will buy your product … as long as you’re effectively reaching that one person.
- Don’t make decisions based on assumptions. It’s easy to unconsciously assign characteristics to your target market based on your personal experiences. These assumptions can easily be based on skewed data. For example, if you ever watched TV in the 2000s, you might naturally have a deep conviction that women really, really like yogurt. If you’re starting a yogurt company, though, I recommend questioning that belief before using it as a foundation for your marketing strategy.
- Don’t get stuck in a rut. Your target market will change over time based on factors like the economy, politics, and advances in technology. The businesses that fail to adapt will simply fail, no matter how large and powerful they are.
What to do, step by step
Start with demographics
Demographic qualities include age, gender, income, familial status, education, and location. These characteristics often aren’t enough to make someone buy from you (when’s the last time you bought something solely because you’re a woman?), but they can often determine if someone won’t buy from you (because if you don’t have small children, you probably aren’t buying diapers).
Your goal for this step is to determine who is likely to need your product and services, and when.
Refine with psychographics
If you haven’t heard the term before, psychographics is simply a fun and brief way to say “hobbies, interests, values, attitudes, aspirations, and other psychological qualities.”
Appealing to the psychographics of your target market will help you stand apart from the competition. For example, Patagonia built its brand by appealing to people who would pay a premium for quality, durability, and environmental responsibility.
Your goal for this step is to determine who will find your brand appealing. Think about your brand values, your mission, and the specific qualities of your product.
Check out the competition
Spend some time analyzing the competition that already exists in your market, and try to pinpoint what their target market looks like.
You can get a good understanding of who the competition is targeting by looking at the following things:
- Their slogans, taglines and mission statement. These are usually jam-packed with a brand’s value proposition, their mission, and their vision of their target market.
- Their website: Consider the images they’re using, the language on the page, their overall aesthetic, and the most prominent calls to action.
- Their products and product descriptions. You can find clues in the specific words they use and the design. What’s the image they’re trying to cultivate?
- What’s their pricing strategy? Consider both the amount they charge for their products, and how it compares to their competitors. For example, right now the Gap is selling women’s clothing for prices ranging from $7-$498 (the range will probably be different by the time you read this article). They also sell T-shirts for about $25. With this data, you can make a reasonable guess as to how much their average customer is willing to spend.
Your goal for this step is to find a niche that isn’t being filled yet and determine exactly what you’re going to do differently than the competition.
Sum it all up
At this point, you should have a pretty good idea of the answers to the following questions:
- Who is going to need your product, and when?
- Who will find your product appealing?
- What niche isn’t filled by your competition?
When you add all the answers together, you’ll have your target market. For example, let’s go back to our earlier example—you’re going to sell upscale, environmentally-conscious kid’s clothing. Here’s what you might have learned and decided:
- In your demographic analysis, you determined that the people most likely to buy your product are parents with children between the ages of 6 and 12, who have enough disposable income to regularly drop a couple of hundred dollars on their children’s clothes. Since the average age of parenthood is 26 for women and 31 for men, your clients are likely to be in their 30s or 40s. Also, since income is closely tied to education, you can also infer their educational background.
- In your psychographic research, you learned that environmentally-conscious parents generally don’t want to buy a lot of articles of clothing (since there’s an environmental cost to each piece of clothing that’s manufactured). That means your target market is also likely to want clothing that’s durable, versatile, and easy to care for.
- In your competitor research, you might have identified popular kid’s clothing retailer Hanna Anderson as a primary competitor, since they offer organic cotton clothing that they advertise as being comfortable and high-quality. However, you’ve also found a niche—since Hanna Anderson is your primary competitor, you can compete by offering a different aesthetic
With all these factors combined, you’ve gone from a product (upscale eco-conscious kid’s clothing) to a specific target market:
- Upper-middle-class parents in their 30s and 40s,
- With children ranging between 6-12 years old,
- Who want high-quality, eco-conscious clothing that is also durable and practical,
- With a unique aesthetic that suits their children’s personalities and self-identities,
- And is willing to pay a premium for a brand that meets their needs and shares their values.
Finding your target market can be an inspiring process as well as a valuable and practical one, because it allows you to get a deeper understanding of your customers and the difference you can make in their lives.
Now that we’ve walked through the steps you’ll be taking, it’s time for you to go through them with your own brand. So, what are you waiting for? Go find your people.