Finding a target market is critical to success in business. Focusing on a specific group of people helps you pursue clear goals and make excellent products or services.
This week, we are going to talk about target markets at length. In this post, we’ll talk about:
- What a target market is
- Why they’re important to your small business, and
- How to find the best target market for you
What is a Target Market Anyway?
A target market refers to a group of potential customers to whom a company wants to sell its products and services. Every successful business has a target market. Finding yours will help you start your company, or if you’ve already started, increase revenues and improve your return on marketing spending.
There are myriad reasons as to why having a target market is useful for your small business. The biggest one is simple – you can focus your marketing efforts on specific people with similar attributes.
It’s good to cast your net wide in some ways. That’s how you explore new markets and discover new needs. But once you have a good idea of what you want to do, you need to focus. That means zeroing in on a market whose needs you will meet better than anyone else. This will help build a foundation for your brand that will serve you for years to come.
As you might expect, data analysis is important to finding and establishing your target market. We’ll talk about that in more depth later. The main point to remember now is that data will help you understand your target market beyond what you can discover from observation alone.
Figure Out What Makes Your Small Business Special
Every business has unique strengths, weaknesses, opportunities, threats, and goals. You need to know yours. Sometimes that means writing a business plan, and other times, that means figuring out details with a business partner.
This exercise helps you clarify your goals, both short-term and long-term. This makes it much easier to figure out who you want to serve and how you wish to do so.
If you have a current audience, take a moment to think about them. Who are they? What do they like and dislike? What do they spend money on? Where do they get their news? How do they make purchasing decisions? Does your current audience match your target audience?
1. Check Google Analytics.
Google Analytics is one of the best tools out there for data analysis. Even better, it’s free! Granted, you need to have a website with some amount of traffic before this is useful.
Google Analytics makes it easy to see what people are looking at on your website and how they are finding you. You can also see how long they are spending on your website and whether they are doing what you want them to do.
If you look at this information for long enough, you will notice patterns emerge. This can tell you a lot about how your existing audience behaves and how that lines up with your expectations.
2. Engage your audience and ask questions.
It seems simple enough, right? Sometimes the best way to see how your business is doing is to ask people who already interact with your business. That can be through a focus group, or a survey, or even a Facebook post.
Starting conversations helps brands succeed, especially when that means asking for feedback. You might even be surprised at the amount of feedback you receive. With so many people quarantined and active online, you may even find a surge of people who have considerable time on their hands.
3. Research the people engaging with you and your site.
Research goes a long way in business. Spend some time learning about your audience.
Don’t just stick to dispassionate research through Google Analytics, though. Find specific people and try to understand what they want.
Here are some questions to consider asking yourself. Who are my main customers? Where are they from? How old are they? What are they interested in?
All of these questions are important to ask at this point, as they give you the necessary insight to tailor your marketing efforts.
Why Ask These Questions?
By evaluating your business before pursuing a target market, you can see where you currently stand in different areas. This gives you the necessary information to come up with a plan. Simply put, you cannot plan for the future if you do not understand the present state of your business.
Business evaluation shines a spotlight on how to spend your money. You learn about your current customers and intended customers, giving you the insight you need to meet their needs.
Take a Look at Your Competition, Too
Competitive analysis important for small businesses. There are a few reasons for this. You might work in a field where there isn’t much data. Perhaps you are trying to identify target markets by looking at competitors. No matter what, though, you need context that can only come through observing rival companies.
By looking at businesses who are your direct competitors, you get a feel for who their target markets are. Their markets will probably resemble yours, but with a few differences that you can use to your advantage.
Watching your competitors also gives you a sense of business trends. You can see what kinds of products or services your target market are pursuing or leaving. Similarly, you can monitor other businesses’ spending and sales trends, giving you a sense of how much you need to spend and how much you could potentially earn.
The Role of Demographics & Psychographics
Demographics are how we break a population down into smaller groups. Some examples of demographics include age, gender, location, and income. Demographics are quantitative, meaning they leave no room for interpretation.
Psychographics allow us to predict consumer behavior. Psychographics include personality, values, interests, and opinions. These are all qualitative and can be interpreted in different ways.
Both are important to your small business. You want to think about the demographics and psychographics of your target audience. To help you understand your target audience as people, you can even create customer personas (fictional people with defined demographic and psychographic qualities).
This is the essence of finding your target market. Pick an audience with customer demographics and psychographics that your company is well-suited to serve by meeting their needs.
Once you figure out your target market, you can use any number of tools to reach out to them. One of the easiest ways that we often recommend is Facebook Ads. You can narrow down audiences by super-specific demographic and psychographic qualities.
Finding Your Niche
A niche market is a segment of a larger market that can be defined by its own unique needs, preferences, or identity that makes it different than the market at large. In short, this means that a niche is essentially a more narrow target market.
Having a niche is vital for the growth of your small business. You can absolutely release products with a wide market in mind, but you still need to focus your efforts on those that are most likely to buy your product.
As we define it, you’ve found your niche “when you’re able to make very specific products for very specific people with a very specific message.”
Put another way, you find your niche when you make something with good product-market fit and pitch it to a well-defined target market with well-crafted branding.
As a thought exercise, think of any subgroup of people. This could be anything from people who work from home, cat owners, or even those who’s work has been affected by COVID-19. In fact, for the sake of this exercise, let’s say these three qualities define your target market.
You already make pet toys, so you’re in a unique position to create something for cat owners who are now working from home because of COVID-19. You can find people like this online and find out what they want. If you found out that they wanted, for example, a quieter scratching post so they can focus on working from home during quarantine, you can make that.
Thus, this becomes your niche because it’s where your abilities (to make cat toys) and your target market (cat owners who are working from home because of COVID-19) meet.
You’ve Got Your Target Market & Your Niche. Now What?
You’ve got a good idea by this point on how to find a target market and a niche. It’s simple: now you reach out to your target market. You can do this through a number of ways, such as:
Once you’ve reached this point, it’s really just a matter of wisely spending your marketing money and consistently reaching out to people. From a strategic standpoint, what we’ve discussed in this post is the most important thing to get right. A well-defined target market makes all the hard work of sales and promotion much more efficient.
Finding a target market for your business can be tough. It’s worth the effort, though. Power through the struggles until you find people with needs to be met whose needs you can meet. Once you figure that out, everything else will be much easier!