Trying to promote your product or service to everyone can be costly and can miss the mark.
Knowing who your ideal customer is (based on certain characteristics) will help to focus your marketing efforts on those who are willing to pay for your product or service. It will also help you to work out if there are enough of your ideal customers to make your business idea viable.
What is a target market?
A target market describes a particular group of consumers within your market who will be most likely to purchase your product or service. You can have more than one target market for your business, however one will usually be dominant. This is called your primary target market and is usually where you would direct most of your marketing effort.
The most important question to focus on when defining your target market is whether they have:
- a need for your product /service, and
- the willingness and ability to pay for it.
The first step in understanding your target market is to ‘segment’ the mass market (every consumer) into a subset that may be interested in your product/service.
Generally, market segmentation is based on factors such as:
- Geography: Where do they live and work? People may prefer to do their grocery shopping close to home, or seek childcare services close to their place of work or older children’s’ schools.
- Demographics: Gender, age, occupation and income. Your product or service may appeal more to professional women in their fifties earning a high income, or men in their twenties working in creative industries, earning a lower income.
- Psychographics: What are their values, activities, interests and opinions? Does your product or service appeal to those who like to care for the environment while doing something good for themselves, or people with a larrikin sense of humour who like to get out of the city on holidays?
- Media: Where do they typically source information about products or service from? Do they seek information on particular social media channels, from the radio, or local newspapers? Do they trust in celebrity endorsements?
Defining these characteristics may sound complex, but if your business is already up and running, you can start with what your current clients or customers look like.
Next, try to define your target market in a phrase. For a local bookkeeper, this may be “owners of small service businesses with fewer than five staff, located in Perth’s southern suburbs, who are not technically savvy and seek recommendations for service providers from their friends and business network.”
Checking out your competition can be worthwhile to see if there is a gap between what they offer and what a segment of the market may want. For example, there may be a popular meal kit service operating in your area but no one offering vegan meal options at the same price point.
Understanding the benefit of your product
When you’re defining your target market, it’s important to understand exactly what would motivate a potential customer to purchase your product or use your service. More importantly than the features you are offering, you must try to understand what benefits your offer brings to your ideal target customer. For instance, the feature of a home cleaning service is that you end up with a spotless house, the benefits are saving time, reducing stress and enjoying your free time at home without worrying about doing that job.
By understanding your target market/s you can develop messages that resonate with them and promote your product or service more effectively to the right customers.