target market

6 steps to defining your target market

Whether you sell clothes or car parts, you need to understand who your target market is if you want to maximise your sales. Who are you selling to? How are you communicating with those people? This is how you can identify your target customer:

1. Understand the problems that you solve

Firstly you need to understand what the problems are that you solve. This is where your USPs come into place. Do you offer free delivery on large items so customers don’t have to lug your product home? Are you open late at night? Once you have an idea of what these are in your business, you can then begin working out who is most likely to suffer from these problems.

2. Create an image of the customer

Next, list all the different types of customers that suffer from the problems that you solve. Then you can start to build up a pictures of these customers and group them together. They can be grouped by:

  • Location
  • Age
  • Sex
  • Market sector

Then ask yourself other types of relevant questions about these people – are they married? What are their hobbies? Define them in as many relevant ways as you can.

3. Who will gain from the value in your offer?

Ask yourself:

  • Who will these problems be the most troublesome to?
  • Who will have the most to lose by not dealing with these issues?

Your case becomes compelling if you can show that the cost of NOT sorting out the problems is greater than the cost of dealing with them. Also take into account aspects like stress and reputation risks when implementing you solution, as well as a bottom line cost. All of these factors combined make up the value in your offering.

4. Think about your market

These days, technology is wonderful at delivering personalised products and services, cutting out many of the distribution challenges that previously existed. This means that it is more effective to be a big fish in a small pond rather than the other way around. It is easier to gain referrals and build your reputation.

So now you can start to segment your market. Do you want to work:

  • With particular types of people – high net worth people, men, women, people with specific hobbies, etc.?
  • In certain geographical areas?
  • Around tight market sectors?

5. Look at your company internally

Does your company have a particular area of expertise? For example, do you have a lot of experience in particular markets, such as food and beverage? Do you have unique knowledge of a specific location? Are you better at getting on with certain types of people? If you can identify any of these factors, this could help you create quite an attractive offering.

6. What else is available?

Once you have decided the answers to some of these questions, you should then look at the market to see what else is available. But you need to answer this: Why am I uniquely placed to solve the problem?

It may be that for some marketplaces there is no answer. But in certain sectors or locations there may be a compelling response to that question. If you can’t answer the question, you either have the wrong target market or the wrong offering. If this is the case, more work needs to be done before you start targeting your potential customers.

Download our free Customers Whitepaper

“How to Win More Customers”

This free e-book has four articles covering how to increase sales and identify your USPs.

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