One of the keys in business is to have a product or service that consumers want. Without it, you may end up with a lack of revenue stream and closed doors. But just having a product is one thing. Knowing who specifically needs your product is another. Welcome to the world of target markets.
What’s a Target Market?
According to the Small Business Encyclopedia, a target market is “a specific group of consumers at which a company aims its products and services.” Sounds simple, right? Well, not exactly. Often, business owners are very general in determining their target market, hoping to get a bigger slice of the pie.
For instance, if you own a salon, you might say your target market is anyone who has hair; if you’re selling phone cases, maybe you’d say your target is anyone with a cell phone. Here’s the hard truth: your target market is not everyone.
In theory, having everyone be your target sounds great. In reality, no business no matter the size, can be everything to everyone.
Why Do I Need to Know My Target Market?
Knowing your target market is the first step in determining who you market your products toward. Having a clearly defined target market provides guidance along the road of growth for your business and can help you improve your product or service based on feedback from actual customers. Without having a clear picture of who your target market is, you may be wasting time, money and energy on the wrong people, people who won’t even think about buying your product. If you are focusing all your efforts on the wrong market, you may be missing opportunities to increase sales or even losing sales to your competitors.
Why Isn’t My Target Market Everyone?
Simply put, not everyone is interested. Think of it this way: when determining who you want to market your product to, you may look at demographics as part of your research. However, “everyone” is not a demographic, nor a specific group of people. A target market is all about specific characteristics that your desired customers possess.
Another consideration is the fact that it just isn’t possible. Let’s consider this scenario. Imagine you wanted everyone in Sioux Falls, S.D., to be your target market. In 2017, the population of Sioux Falls was estimated to be 176,888 according to the U.S. Census Bureau. If these people were to order your product, it would be extremely difficult, if not impossible, to meet the demand. In short, narrowing your target market can help your business be more efficient.
How Do I Determine My Target Market?
There are many criteria that can be considered in determining your target market. Here are a few areas to consider:
These four categories can be helpful in determining your target market as they allow you to narrow down each category to the customers you feel best fit with your business.
Putting It All Together
Having a clearly defined, reasonably sized target market can allow your business to put time and effort in to those who are interested in the business, and weed out the ones who aren’t worth your time.
Make Your Business Dreams a Reality.
You’ve built a business and made your dream a reality now it’s time to explore how better to organize and/or outsource your accounting function.