Marketing 101: Choosing your target market

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What is a Target Market and why do I need one? 

A target market is a portion of the population that will have interest in, acquire knowledge of and pursue investment in the product and/or service.

Why do I need one?

“Why?” is a very hard concept to explore, but in a generalised proposition i say this: “how do you expect to sell your product /service without customers?”

So, given this brief account of ‘Target Market’ let’s know apply it in practice and theoretically explore its concept.

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A pure example is Jane, who is 30 years of age and sick of working a day in and out job for 9 hours a day, let alone the overtime! She is acquiring huge debts she can’t afford to repay. She decides she wants to open a flower shop mixed in with her home-brewed recipe for magic seedlings that grow flowers in 5 minutes! She wants to open her shop on the corner of her local shopping precinct. She completes the registration of her business name, business number, tax obligations, business plan, and acquires local investors to capitalise on her unique flower shop idea and concept. She has her shop open in a few months.

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But, how is she going to attract customers?

I’ll make reference to journals, internet sites and professional personnel to highlight the significance of the information contained within. Take from it that you wish and apply in practice.

1. Define Your Target Market:

What: Define your target market for your business, that is, who are your customers?

Information to obtain regarding your target market includes:

  • Demographics:
  1. Average Age with standard deviation (i.e. 35+/-10 years)
  2. Gender: Percentage of Male/Female
  3. Marital Status (i.e. single, engaged, married, divorced, widow)
  4. Average Income level: This will be different if your are an online business because your market audience is huge and defined by search engines and online advertisements. This demographic category only needs attention when your a retail shop owner and your services/products are aimed at your local area. Obviously because your  potential market audience is much smaller and localised.
  5. Educational level
  6. Occupation
  7. Ethnic background
  8. Explain motivating factors for purchasing from your business: Is it a luxury or is it essential? See below for examples.
  9. What value does the product/service bring to the market? i.e. a card for a birthday brings the value of thoughtfulness, a car brings a modality of transport in both luxury and essential benefits, a mobile car service operator brings piece of mind to consumers when travelling in their cars.
  10. The psychographics of your consumers (see below)
Luxury Versus Essential:
  • Car (luxury/essential?)
  • Timber flooring (luxury/essential?)
  • Fan (luxury/essential?)
  • Coffee (luxury/essential?)
  • Shoes (luxury/essential?)
  • Longe suite (luxury/essential?)
  • Holiday (luxury/essential?)
  • Sports injury cream (luxury/essential?)
In any case above, their would be a degree of both luxury and essential motivating factors impacting on the decisions consumers make to purchase a particular product between different days. It is best to judge what types of lives your consumers live on average (i.e busy 9-5 working hours? stay at home mother?, business individuals?, athlete?, etc). By obtaining this information you can conclude rationally that there is a degree of need versus luxury for a particular product/service within different population groups (demographic).
Psychographics of your consumers
Consider the following:
  • Personality
  • Values
  • Attitudes
  • Lifestyle
  • Behaviour
  • Interests
How do I obtain the information?
  • Research: The bureau of statistics for your country, state, and suburb/area (metro/rural).
  • Questionnaires
  • Surveys

Q.Its best not to assume or guess the information (above)….why?

A. Because your cheating yourself. Lets face it, we may know somethings about our market audience but not everything. Even if we do know- we need to back the statements/data up with real information. Information that makes sense to the investor/bank. Its just like referencing your information if you were to complete a PhD, no peer reviewer’s are going to tick you off on completing your research study without hard facts and data to support your information. It is the same in business. No hard facts, no investment. Simple.

Plus, your business may fail….

Q. So, what can I do to make sure my business won’t fail?

A. Obtain relevant data from your target market (as per your demographic information-as outlined above)

When?

The information regarding your demographic/target market should be done during development of your business and marketing plan. If your business plan is already complete, update it with your new target market information- if necessary.

Why?

Business individuals need to define their target market because, if they don’t they have no systematic approach to formulating their unique marketing plan to achieve maximal capital gains.

Evaluate your decision:

An important phase in any market plan is to ask, “Are their enough customers as per the target market chosen?”. Get a rough number. An estimation is all that you should be after, because then you’ll know the likely success of your business. A good rule of thumb is to use the 1:3 rule. In any business venture of all those that know of your business, hear of your business and see your business only about 30% will ever act and then another 30% of that 30% will ever buy. Your odds could flourish with strategic marketing and sublime value for money.

Other factors to consider:

Look at your customer base:

  • who are your customers/future customers? do they currently buy from you? if not where do they buy from? sort information into categories (i.e. local retail, time of the week). Obtain this type of information through surveys. You can utilise this information to up sell your products/service through other businesses in partnership. Tabulate your information and see which retail stores obtain the most traffic from your survey forms. Approach them, sell your idea and partner.  Even if the stores aren’t in your local area, this can work as a benefit for you-becase now your entering into a new demographic, and thus potentially increasing your market audience. As long as it works- its a benefit. It doesn’t hurt trying.

Review your current customer trends:

  • Who are your current customers and why do they buy from you? Again, collect this type of information throughout business operations, utilise membership forms and collect a database of information, survey your customers (on agreeable terms). Tabulate the information (if not already) and categorise the information into common groups (by demographic, time of day sale, date of sale, purchase cost, products purchased) and analyse the data to find common traits. ask yourself, which ones bring in the most business? It could be assumed that more individuals like them could also benefit from your products/services.

Other relevant information

  • By narrowing your target market, you are making your business plan more attractive to investors.
  • By narrowing your target market you will have a stress-free experience in compiling a marketing plan.
  • By completing your business marketing plan correctly, you’ll set yourself up for financial success.
Tips and Advice:
  • You may want to see who your competitors are and see who they are targeting. Can you do something that they are and do it better? Make it a challenge.
  • If your not the competitive type, then try and offer something unique and rewarding for your customers, word of mouth spreads a long way! you may start to find that over time your competitors are rushing to find something unique too to beat you- either way fight, fight, fight!
  • Money from customers for your products and services is like investment money, don’t spend it uselessly advance your business with capital you earn. Make it better, smarter and more cost effective.
  • Aim to be the best business you can be.
 Businesses that can help you with your business plan, marketing plan and other marketing solutions-
To Advertise here, email aaronp1@live.com.au
(Note: Only business and marketing businesses can advertise here)

References

Sources

  • Books
  • Business Strategy. (2011). Campbell. D, Edgar. D & Stonehouse. G. Palgrave Macmillan Publishers: Edition 3.
  • Journals
  • Bahadir, S. C., and Kapil, R. T. (2002). Measuring marketing productivity: linking marketing to financial returns. Marketing Science Institute Conference Summary, 02-119.
  • Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, (17(1), 99-120.
  • Zahay, D., Griffin, A. (2010). Marketing strategy selection, marketing metrics, and firm performance. Journal of Business and Industrial Marketing, 25(2), 84-93.


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One Response to Marketing 101: Choosing your target market

  1. Pingback: How to find your target market? Make your first 50 sales - New Business Plans

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