Everybody says you must know your customer, but it’s hard to come up with a brief, clear description when a lender or an advertising guru asks you to “describe your target market.” What’s the value of some abstract definition of your customers? Why make the effort to create one?
Payoffs From Defining Your Target Market
– Reasonable sales forecast, so you can budget the amount of money you need
– Reasonable view of the potential size of your business, so you are not kidding yourself
– Makes borrowing money feasible; no lender lends until you define your market
– More sales, because your product (and your inventory of companion products) is designed to fit the needs of your target customers
– More sales, because your pricing is designed to fit your target customers
– More sales per advertising dollar, because you select media that reach your target, and your message is directed squarely at what is important to them
– More sales per promotional dollar, because your promotions address their particular needs at the right time
– More repeat customers, because your return and service policies meet expectations
How to Define Your Target Market
Start by describing the personal situation of your perfect customer: he or she is (describe the person) and he or she wants to meet this need: (the one your product meets).
Then generalize this description to include measurable “attributes”. This enables you to research the size of this target market. Some attributes might be age, income, occupation, family size, gender, location, type of residence, etc. Some might be attitudes rather than demographics. You might even want to include purchase or ownership of something, such as boat or a horse or a motorcycle.
For example, my target market might be adults aged 50 to 70 with income over $75,000 within 5 miles of my location who love to dance. Maybe the real sweet spot is male and single as well.
You may have more than one segment in your target market. If so, be able to describe the attributes of each segment.
Once you have the attributes of your target market, you can use databases to find out how many people fit your target market description. See the next article for how to do it. By the way, you can use databases to identify your competitors too!
Can you describe your target market with measurable attributes?
Tom Gray helps owners save and grow their companies. He is a management consultant focused on small business and telecom, a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, and a Certified SCORE Mentor. He can be reached at 630-512-0406 or firstname.lastname@example.org. See www.tom-gray.com