You’ve got an innovative business idea that you know could potentially impact an entire industry or even the world. You’ve put your heart and soul, sweat, tears and time into building this product. But, there’s one looming question left unanswered: Who’s your target market? The target market means the people who are most likely to:
- Buy your product.
- Be interested in your services.
- Read your content.
Identifying your target market is one of the first and most crucial steps for startup success. It’s also one of the most difficult to complete, with limited resources available that explain how to do it. We’ve compiled the most important steps that will help you strategically and accurately define your target market.
1. List features and benefits.
Identify the main differentiators or benefits that your product or service provides. Once you have a strong list, think about who would benefit the most from your product’s features and capabilities.
(Questions to consider at this stage: What is the purpose of your product or service? What need does it fulfill or problem does it solve?)
For example, if you want to start a business that delivers low-cost healthy snacks and lunches for kids. One of the benefits of this service could be that it cuts out the time to go to the store, compare products, and prepare the meals and snacks for children. Since one of the key benefits is time, your target audience may be busy parents.
Another way that you can view this is as a problem and solution. Who would benefit most from solving this problem, and who is viewed as responsible for solving it? This will help you form a general idea of your target audience, but you still need to hone it down even more.
2. Match to demographics.
One way to narrow down and define your target audience is to match the benefits of your service with demographics. Then rate each demographic on how likely each one is to buy your product. Some of the key characteristics to consider are:
You should also consider interest, hobbies, values and other preferences. In the example of healthy snacks and lunches, the audience may be narrowed down to upper middle-class parents with college degrees that live in urban areas and are health-conscious.
3. Remember to focus.
Often entrepreneurs are tempted to target an audience that is too broad. Part of the reasoning could be because they are worried that they will miss segments of potential customers. However, maintaining a strong focus helps businesses put their effort, time and dollars into the groups that are most likely to result in conversions.
Eventually, it may be smart and profitable to expand your original audience. But, in the beginning especially, it is best to start out with a focused and clear idea of very specific target audiences. Once you have captured that audience well, you can tackle other prospective audiences.
4. Know your competitors.
Are there people that are doing something similar to you? If they have already captured a specific target base, you’ll need a differentiator or you need to significantly improve what they are doing.
Be an innovator or an imitator. Innovators are rare. They create completely new ideas. However, imitators vastly improve previous conceptions and make it their own. Some of the most famous brands are imitators. McDonald’s was inspired by White Castle. Google’s search engine technology was an improvement to previous attempts like AltaVista.
5. Find or collect your own data.
Do you have any customers yet? If you do, poll or survey them. You can also do a beta version and a small focus group to gleam data. If you don’t have your own data, find data from other sources.
What opportunity is in the market? Look for data that can quantify the demand. Don’t just assume that parents in urban areas are more likely to spend more money for healthier products, scour for research and data that can validate or extinguish your claim.
Once you’ve identified your market, it will be easier to form clear and more effective strategies. Your target audience can determine what social media channels you use for content and promotions. It also will be used to craft your pitches when attracting investors, gaining new customers and hiring ideal employees.
Even after following all of these steps, identifying your target market and growing your company can still be a full load. When it comes to managing it all, ask how StartUPLabs can help.