Who could or should buy this? That’s one of the biggest decisions a business makes when contemplating something new — a new product, a new branch, a new business. In other words, for which what target market is this designed?
Approach it by asking these questions:
* How do I describe those who are most likely to need/want what I have?
* Who needs or wants what I have?
* Who can pay for it?
* Are there enough of them to make it worth my time?
Target market is a term that describes a group of suspects and prospects who meet the criteria contained in the questions above, and have something in common. When referring to individual consumers, that thing in common could be demographics, like “men between the ages of 30 – 50.” Or, it could be psychographics, like “enjoy spending time with others;” or socio-economic level, like “earns between $70,000 and $90,000 annually;” or geography, as in “Iives in telephone area code 940”
The process works for B2B marketing as well. A target markets can be defined as “Manufactures with 300 -500 employees, who are eager for growth, and have headquarters in the state of Florida,” for example.
Regardless of the general class of prospects – consumers or B2B — there are two principles that impact the quality of these decisions:
1. The more precisely you define your target market, the easier it is to market to it.
2. There are layers of suitability for your definition of target markets.
Let’s look at each.
1. The more precisely you define your target market, the easier it is to market to it.
Let’s say that you are a mechanic with an auto repair shop. You could say your market is “Anyone who owns a car that needs repair or maintenance.”
You could break that down into more precise, narrower market segments. For example, you could define your market as “owners of Ford products,” That describes a market which is smaller and more precise than the first description.
Even better would be to narrow that down even more, say something like “Anyone owning a Ford pick-up truck needing repair or maintenance.” And, to narrow it even further, you could narrow it down to “anyone owning a Ford pick-up truck which was manufactured in the last 10 years, needing repair or maintenance.”
Let’s keep going: You could then use the type of repairs as one of the criteria to narrow your market. For example, you could say “Anyone owning a Ford pickup truck which was manufactured in the last 10 years, needing mechanical (as opposed to body) repairs or maintenance.” Or, to narrow it even further, you could say, “Anyone owning a Ford pickup truck which was manufacturer in the last 10 years, needing transmission repairs or maintenance.”
Each time you narrow the definition of your market segment, you sharpen your market focus and make it much easier and more effective to reach them. Here’s why:
1.Narrowly defining your target market allows you to distinguish yourself from your competitors.
For example, if you fix just any car or truck, you have put yourself in the same class as your competitors. You are just one of many. But, by specializing in a narrow segment, you stand out to the folks in that segment. Since you are seen as a specialist, you appear to offer more value to the market. Why take your Ford pickup into just anyone, for example, when you can take it to a specialist?
2. Narrowly defining your target market allows you to leverage your marketing efforts and thereby be more effective and efficient.
For example, there are probably websites devoted to Ford pickup owners. Since you are a specialist in something that interests them, you have synergy. You can leverage your investment to a greater return. A few dollars spent in advertising on those websites will get a greater return. You could probably buy a list of Ford pickup owners in your area. There may be companies who use nothing but Ford pick-ups. There may be a magazine for them. There could be a Ford Pickup owners club. Money spent in advertising to a broad market is often diluted and ineffective. Money spent advertising to a narrow market is more effective.
3. Narrowly defining your target market allows you to become more important to your market by expanding your product or service offerings.
Once you have a customer, you simply ask “What else would this person want or need?” Let the answer to that question lead you to complimentary products or services. You could, for example, offer a line of decals and add-ons to customize the looks of a pickup truck.
The limitation is the size of the market. There must be enough of them to make it worthwhile,. So, every time you narrow the definition of your market, you ask the question, “Is there enough of them to make this market viable?”
So, for example, if there are 20 owners of 10-year old Ford pickups with transmission problems, you probably are not going to be able to make a living. If there are 2,000 you will.
But wait. It is a little more nuanced than that. Let’s revisit our second point:
2. There are layers of suitability for your definition of target markets.
For this, let’s use an illustration
of a dart board. You know that the
bullseye at the center of the dart board is the ideal landing area for your
darts. You score more points when you
hit the bullseye.
But, if you are one or two layers out from the bullseye, you still score some points. Think of the dart target as representing your efforts to define your target markets. You have created a narrow definition of the target market. That’s like defining the bullseye. As long as every marketing effort lands in the bullseye, you’ll be fine. But not all will. So let’s create a couple of rings out from the bullseye. We do that by loosening up our definition.
So, for the ring closet to the bullseye, let’s say, “Owners of any Ford Pickup truck with transmission problems.” You’ve loosened up the “10-yers old” criteria and opened up the ring a bit.
Let’s do one more layer. “Owners of Ford Pickups or Large SUVs….” That’s a larger ring and contains more people.
So now, we have three rings in our target.
The bullseye = “Anyone owning a Ford pickup truck which was manufactured in the last 10 years, needing transmission repairs or maintenance.”
The first ring = “Anyone owning a Ford pickup truck needing transmission repairs or maintenance.”
The second ring = “Anyone owning a Ford pickup truck or large SUV, needing transmission repairs or maintenance.”
Now, you have developed a workable, practical definition of your target market. This will guide your marketing decisions and enable you to be more effective.
One more step.
You’ll find it useful to describe the space outside the dartboard, where your darts score no points. In other words, how would you describe those who you will not serve? Taking a few minutes to think about it and put it into words will save you lots of time in the future.
This work of thinking deeply about your target markets and reducing those thoughts on paper will be one of the most powerful and fundamental thinking projects, preparing the infrastructure for building an effective sales system.
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