Step 3 – Target Market Analysis. It’s impossible to have an action plan without knowing your target. Suppose someone handed you a bow and arrows while telling you to go ahead and hit the bulls-eye. You accept what appears to be a highly sophisticated compound bow with a set of precision arrows, but there is no target. The person who gave you the bow continues, “go ahead, just knock the arrow and hit the target.” No target in sight, how will you ever succeed? This little metaphor happens in business more frequently than you may believe. It might sound something like this, “here is your marketing budget. ‘everyone’ is our market. Now go ahead and get us some brand awareness, good leads and grow the business”.
Even companies like Pepsi and McDonald’s define a target market that is not ‘everyone’.
It is imperative to identify your target market so you can utilize your resources efficiently and effectively. Markets may be defined in terms of geography, industry, business or consumer, sex, age, income, etc. The target market could be coalesced through this type of hierarchy:
- Potential market – everyone who may have a need for your offering
- Available market – the subset of the Potential Market who might have a need or may have sufficient means to make the purchase
- Qualified available market – this is where you start to identify the characteristics of those who you will resonate with your value proposition and have the means to buy.
- Target market – this is the final subset where you define the specific characteristics of your ideal prospective customers.
Choosing a target market is also referred to as ‘segmenting’ the market. Your decisions should be based on a combination of feedback from internal stakeholders who have direct dialogue with the target audience and market research. It is a big mistake to omit input from either.
Target market analysis should be completed with an open mind and should be reviewed on a regular basis. The final result should be communicated throughout the company. This decision (choosing a target market) will drive the marketing strategy, positioning, messaging and marketing activity.
One last note; it is important to consider where or if this market congregates. There must be an efficient way to reach your target audience with your message. For, if a majority of the target market does not congregate virtually or physically, it will be very expensive and most inefficient to get your message in front of them. In the b2b world, industry associations are a good example of a target audience. If you’ve chosen well, a majority will face problems that you are able to solve with your offering. Additionally, they may get together at an industry trade show, read a trade journal and regularly visit the association and related web sites where you can reach them efficiently with targeted messages.