Chapter 6 How to Identify and Analyze Your Target Market in 2017
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Although your products might appeal to a large group of people, it doesn’t make sense to market to everyone.
Your brand will have what is called a “target market.”
What is a target market?
You need to identify the people who really want or need what you’re offering. Targeting, or “segmenting” these people means you’ll be able to build your store for the right audience, efficiently using your resources to impress and attract your potential customers.
First, figure out the need for your product or service, focusing on what problem it can solve. Then refine your target market by identifying who has bought your product or service already. This includes target demographics, audience type, and any other attributes about your target customer segment.
If your product or service is brand new, a good alternative might be looking at your competitors to get additional insights.
The toughest part of this process is you must avoid making assumptions.
For example, if you want to start a handmade pet biscuit business, you are probably an expert on their many benefits. But don’t assume consumers know these things as well. They may not even know such a product exists. As tempting as this is to fill in the blanks, you should engage with your potential customers and conduct as much research as possible.
As your business grows you should continue to evaluate and possibly change your target market. Your target market is absolutely dynamic.
For instance, down the road you may want to expand and sell internationally. Or you might think you are catering specifically to men, when in actuality you are selling to wives and girlfriends who are shopping for their fellas.
Knowing who you’re targeting, and continually refining it, will ensure you’re on the right track.
In this chapter, you’ll learn how to conduct the research to accurately answer the following questions:
- What are the features of your business, products or services?
- What are the benefits of these features?
- How do the benefits help the user?
- How does your target market shop?
- What is the typical age and gender of your target market? Do they usually have children? What is their average income and education?
- What are their common interests? These can include attitudes, values and lifestyle.
- Is your target market comfortable with online? What web and offline marketing methods engage them?
Let’s dive in to target market analysis.
1. Gather Intel
Clearly defining your target audience — whether it’s senior citizens, busy moms or millennials in California — can help you answer questions and overcome obstacles as you kickstart your online store.
Some of the business questions you’ll be addressing include:
- Is the potential market for your product or service large enough?
- Do you need to alter your business idea to best appeal to this audience?
- Should you tailor your product or service in some way to maximize effectiveness?
- How can you target your marketing efforts to optimize reach with the most promising potential buyers?
The Right Action Takes Time
“I was running ads on Facebook with custom audiences and I was having a drop off. I would have a campaign and it would work really, really well at first, and then it would start fading,” says John Lott, partner at Spearmint Ventures. “My initial inclination was that the ad was just getting stale, but I was wrong. Where I was wrong was that actually what was happening was the people were changing. The mom who was buying that product was no longer in the same life stage. I had to adjust my audiences to be attentive. That took me six months to figure out.”
2. Create Customer Profiles and Market Segments
Those consumers who find your product or service appealing often share similar characteristics, which will help you fine-tune your messaging from top to bottom.
You can craft a customer profile to uncover those shared traits. This includes psychographic data about how they behave, and basic information to help you identify your audience.
Demographic criteria will get you started:
- Income level
- Education level
- Marital or family status
- Ethnic background
Psychographic criteria goes a little deeper, painting a more complete picture of your audience:
- Lifestyle preferences
Every industry, business and product is different, so these lists are by no means the end-all-be-all — more of a starting point to valuate market segment size and opportunity.
Don’t be afraid to make adjustments and include criteria that add interesting layers to your profiles — the better you know your customer, the better you can sell to them.
3. Be Specific
Narrowly defining your target customer is more of an art than a science.
As you get started, try to be as specific as possible. By starting with a detailed customer profile, you’ll be able to make the most educated decisions when it comes to building custom audiences and crafting compelling advertising and marketing campaigns.
New entrepreneurs often worry that they’ll be too specific as they conduct their research, fearing that it will limit their reach. In reality, identifying a specific target audience helps ensure that you make decisions that are dictated by your customers, which sets you up for long-term success.
Drill down to who your audience truly is: their attitudes, beliefs, and pain points. Understanding their age and income is the first step, but drilling down to the core customer problem is what will help set your products — and brand — apart from the competition.
Who said you can’t target multiple niche markets?
Check out Buffer’s Marketing Persona: The Complete Beginner’s Guide for a more in-depth walkthrough of how building out a multi-persona strategy can increase sales.
4. Tap Existing Resources
If you do a quick search online, you’ll often find existing resources that can help you pull together information about your industry, the market segment, your competition and your ideal potential customer.
The best part is, someone has already done the work.
In most instances, the information you gather won’t cost you a thing. However, the downside is that the research you find may not be as focused or useful as you’d like.
Below are a few resources to help get you started:
- Quantcast provides free, accurate and dependable audience insights for over 100 million web and mobile destinations
- Alexa transforms raw data into meaningful insights that will help you find your competitive advantage
- Google Trends uncovers where your target customers are predominantly located
- Ahrefs provides a tool to help you identify all the backlinks to any competitors, showing you which industries and third-party websites may be the most interested in what you have to offer. This is one of the best tools for finding SEO and online marketing opportunities.
All of this information will help you learn more about your target audience so you can develop a strong brand identity.
5. Look at Your Competition
In the last chapter, we showed you how to complete a competitive analysis. Now take all you learned in your research and ask yourself these questions about your competitors:
- What’s their market positioning? What are customers actually purchasing from them?
- How about their pricing? What are their customers willing to pay? Would they pay more if you offered something extra?
- What are customers saying on social media? What social media channels are they interacting with the most? What other interests do they list on their personal social media pages? What do they do for a living? What are their hobbies? How are they describing their business and products?
- Are reviews screaming with opportunity? What weaknesses did you identify from their reviews that you may be able to address with your business?
Depending on how well your competitor is doing, you may not want to go after the same exact market segment.
On the other hand, if their customers are extremely unsatisfied with current offerings, you may want to jump in. A smart business person will identify competitors’ weaknesses and overlooked areas of the market, and capitalize on them to drive business success and concentrate marketing efforts.
6. Conduct Your Own Primary Research
You can learn a lot about your target audience through primary research, which involves gathering data directly from consumers. Although primary research can be a little more expensive than other methods, it allows you to truly hear the voice of your customer and get answers to specific questions about your business.
Here are some things you can try out:
- Distribute surveys: Send surveys to existing and potential customers via mail, email or a web-based service like SurveyMonkey.
- Conduct interviews: Talk to consumers who might fit in your target market. For example, you could stand in a high-traffic area at a trade show and ask attendees to answer a few short questions.
- Assemble focus groups: Get feedback from a small group of consumers who fit your ideal customer profile via Q&A sessions and group discussions.
7. Look at Your Business in a Fresh Light
Now that you have some serious insight into who you are selling to, it’s time to ask yourself a series questions.
- Do you feel there are enough potential customers within your target audience to start a brand new business?
- Will your target market benefit from your product or service?
- Will this target market see a true need for it? Will they come back repeatedly to purchase?
- Do you understand what drives your target market to make buying decisions?
- Can your target market afford your product or service? If so, how frequently can they buy?
- Can you reach your market with your message? How easily accessible are they?
Answering these questions will help you understand if you are truly ready to jump into business or if you need to pivot your online store (and its potential products) to appeal to a different market.
It will also enable you to perform targeted marketing efforts that put the right message in front of key segments.
You’ll want to keep data on your target audience up to date. Every six to 12 months, conduct additional primary research and refine your customer profile accordingly. This will help you refine your product strategy and brand voice.
As the marketplace shifts and evolves, your ideal clientele may change. Get ahead of the curve, and you’ll also be one step ahead of your competition.
Check out the SBA’s target market analysis page for more tips.
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