How To Identify Your Target Market
Updated June 24, 2022
When you own a business, it's important to target potential customers who have a genuine interest in your products and services. Identifying the right consumers can make all the difference in the success of your business and can help boost your revenue in the long run. In this article, we define what a target market is, explain the importance of identifying your target market and provide you with the steps to find your own target market.
Related: How To Identify a Target Market
What is a target market?
A target market refers to the demographic you want to reach with your particular products and services. When you have a business, for example, your target market refers to the specific group of people to who you want to sell your products and services. Target markets often have the same characteristics such as the following:
Consumers who share these characteristics often value the same products and services. For example, people with higher incomes are more willing to purchase more expensive clothing. Narrowing down these characteristics can help you find your target market. Keep in mind that businesses may have more than one target market. In this case, they may have a primary target market and a secondary market that while not as large, may have growth potential in the future.
Why should you identify your target market?
Identifying your target market can help you make more strategic decisions regarding your business. Essentially, it paves an effective, affordable and efficient way for you to generate more business. Here are some additional reasons as to why you should find your target market:
Strategic marketing plans
Identifying your target market allows you to reach a specific group of people through various sales and marketing tactics. For example, the better you know your target, the more effective marketing plan you can create. A successful marketing plan accounts for the best ways to reach your target market and decides on marketing messages that will resonate with them the most.
Important business decisions
Identifying your target marking and developing a marketing plan can help you make strategic decisions regarding product distribution, product prices and overall promotion efforts. This can help your business cut down on time and unnecessary expenses.
Product development and adjustments
Identifying your market and its particular needs can help you create products and services that better meet their interests and needs. Knowing your target audience can also help you make strategic adjustments to your current product lineup to make them more desirable for various consumers.
Understanding your target market can help you secure more sales from consumers who are genuinely interested in the products and services you have to offer. For example, instead of casting a wide net and targeting a group of people with varying interests, knowing your target market ensures you're reaching people who can add to your revenue.
Identifying your target market ensures you're not sitting back and letting your competitors boost their revenue while you take a shoot on new clients and customers without knowing their interests. Having a competitive advantage can help you find more success in your industry overall.
How to identify your target market
To run a successful business, you need to know who your products and services appeal to the most. Keep in mind that targeting a particular market doesn't mean you're excluding certain consumers from your products and services. Rather, it helps you focus your money, time and resources on people who are more likely to do business with you. Use these steps to identify your target market:
1. Identify your existing customers
Before you consider your target market, reflect on your current customer base. Consider their characteristics and interests and look for commonalities. Likely, other people with the same characteristics and interests may also benefit from your products and services. It's especially important to identify your current customers who generate the most business for you. From here, you're better equipped to narrow down your target market.
2. Check out your competitors
Scoping out your competition can help you identify your target market more efficiently. Determine who they're targeting and who they're currently targeting. Aim your efforts on other markets and focus on any niche markets they may have overlooked.
Related: What Is a Competitive Analysis?
3. Analyze your offerings
Compile a list of your current products and services and their unique features. Then, list the specific benefits they provide. For example, a clothing store may offer winter clothing that benefits prospective customers who want to stay warm during chilly months. Helping them stay warm and filling this need may attract other customers because they already see how the store's offerings are helping others with the same need. Therefore, the clothing store is generating more business and therefore, more money.
Once you've made a list of the benefits your products and services provide, create a list of people who could benefit from your offerings. Essentially, list people who need that your products and services can fulfill. Using the clothing store example, it may choose to target consumers who want winter shoes to complete their ensemble.
4. Segment your larger market
Once you've determined your overall market, narrow it down by looking at various demographical factors such as age, location, marital status, income level and gender. Doing this helps you identify which groups are more likely to buy your products or services.
You can also consider their lifestyles, personality and specific interests or hobbies. For example, think of how they'll use your products and services in their everyday lives and what features they may find the most appealing.
5. Re-assess your target market
Once you've identified your target market, evaluate your decision-making process. Consider whether you included enough people to fit your criteria, whether your target audience will truly benefit from your products and services and whether or not they can afford your products and services. It's also important to determine whether or not you understand your target audience and its own decision-making process. If you happen to have more than one target market, consider catering your marketing messages accordingly.
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