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To serve your customers best, you have to know who they are. Of course, not everyone who buys your products or services fits the same profile, but as a company you should have a target market and audience in mind. Not only does it help you streamline your product offerings, it also allows you to give those customers the best possible experience. Here’s how to identify your target market and make the most of that knowledge.
What is a target market?
Another way to describe your your target market is to think of it as your core customer base. These are the people you think are the most suited to your products and services, so it’s essential that you understand them and consider how to analyze target market data.
Learning how to find target customers is different from making assumptions about them. It’s about trying to figure out the market’s needs and motivations. Demographics such as age, gender, education level, occupation, and family situation can help you determine what your customers need and what they’re willing to spend.
Beyond this, you should also consider who your customers are as people. What do they value? What are their lifestyles? What do they enjoy doing with their spare time? The answers to these questions can help you understand not just how to identify customers, but how to connect with them on a depper level.
How to identify your target market
Learning how to identify your target market isn’t as simple as guessing who your customers are or hoping for a certain demographic. It requires an in-depth review of your products and services, the marketplace, your potential (or current) customers, and more.
Here are some tactics to discover how to identify target customers in your market.
1. Analyze your offerings
Ask yourself which problems your products and services solve, and, in turn, to whom they appeal. That’s the most important step in identifying your target market. For example, if you operate a landscaping business, your services would be attractive to homeowners with lawns and, more specifically, to people who are too busy to care for their yard and can afford to pay someone else to do it.
So your target market would include higher-income adults with demanding jobs and/or children, who don’t have time for lawn care but still want it to look good.
2. Conduct market research
Analyzing your target market goes beyond understanding your customers; you also have to understand the marketplace. Analytics tools like Quantcast, Alexa, and Google Trends give you a comprehensive view of the landscape by identifying and assessing competitors, helping you find new customers and enabling you to determine ways to improve.
Check out the U.S. Small Business Association’s SizeUp tool, which (as the name implies) helps you size up the competition in your market by providing data such as other nearby businesses that offer similar services and local consumer spending in that category. The U.S. Census Bureau’s site, though a bit unwieldy, can serve as another helpful resource to find local demographic information, such as education level, income, and household size.
Don’t forget that some of the most helpful data on how to find target customers for your product can come from both existing and prospective customers. Tools like surveys, focus groups, and in-person discussions can help you understand what your target market needs, why it is (or isn’t) shopping with you, and what you can do to make your offerings more appealing. You can also look at data from your POS or CRM to glean insights about your customers.
3. Create customer profiles and market segments
Market segmentation is the process of organizing a group based on various categories, like demographics and psychographics.
As discussed earlier, demographics describe the more surface-level, baseline characteristics, such as age, gender, education level, ethnic background, and marital and family status. Psychographics, on the other hand, offer a deeper look into who people really are, such as behaviors, values, personalities, and lifestyles.
It’s important to consider both demographics and psychographics when mastering how to identify your target market.
4. Assess the competition
Conduct a competitive analysis by using a competitor analysis template to get a comprehensive view of the competitive landscape. What are the businesses that offer comparable products and services? How much do they charge? What are they doing differently?
Unless you believe you have a significant advantage, avoid going after the same customer, especially in a small market where your competitors’ businesses are well established.
Using your target market analysis
Once you’ve figured out how to identify your target market, put that data to work. Here are some ways to use the information to grow and improve your business.
- Niche markets: Did you identify an underserved population? Instead of going after the same customers as your competitors, explore untapped markets.
- Expansion opportunities: While assessing your local market, you might identify underserved areas. This is valuable information if you’re considering franchising or adding a new location.
- Pricing strategy: As you assess your competition, you might have found that you’re either pricing yourself out of the market or not charging enough. Use comparative data to determine a fair price.
- Curation: There is such a thing as offering too many options, and customers don’t like it. If you offer many of the same items as your competitors (and they aren’t big sellers anyway), pare down your inventory to focus on top-selling and exclusive items.
- Marketing: Your target market should be the foundation of your marketing strategy. Use what you know to determine which channels you should use to communicate with your customers and which messages work with them. Whenever you think about implementing something new, whether it’s a social platform or a promotional campaign, check your analysis to see whether it resonates.
- Product Development: Once you’ve zeroed-in on how to identify your target market, the most important thing is to make sure you’re providing your customers with the best product they can find. If you outperform your competition, your target customers will support you for years to come.
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