How to Identify Your Target Market… for Small Business Owners
I started watching a Series called “StartUp” and I must say that it is quite interesting.
According to IMDB, the StartUp series is about “a desperate banker, a Haitian-American gang lord, and a Cuban-American hacker that are forced to work together to unwittingly create their version of the American dream — organized crime 2.0”.
The series follows the emergence of GenCoin, a very brilliant but unfortunately controversial tech idea centered on digital currency and there’s this crooked FBI agent who will go to any lengths to take them down.
Here’s my favourite quote from Ronie (Edi Gathegi), gang lord-turned-Tech-Entrepreneur.
“You’ve got supply, and you have the demand,
You have the problem and you’ve got the solution, you have the currency of the future”
It’s not exactly words on marble but then it caused me to reflect and just generally look at why a lot of Startups fail these days.
Side Note: Collapsed.co is a great resource to learn from failed startups. Half of the lessons here were curated from some of those startups.
Let’s face it, not every product is meant for every body and you have to be intentional about the market you are operating in for your product to thrive.
Even the big businesses who seem like they are targeting everyone still have small niches within their product so they can be efficient as a large company. To be able to compete effectively as a growing business, you need to identify a specific/target market.
With a clearly defined target market, it is way easier to determine the right places and methods to market your company. Here are some way/tips to help you when trying to define your target market:
What are your Current Customers Saying?
Your business may not be all so new, as you might have started out this business at some level; for example through the support of family and friends or some other non-personal customer base. Either way, you need to find out what they think about your current services and why they have chosen you over your competitors.
Get feedback, take stock and act on the insights you receive so that you can know what your current customers, like about your service.
In all of these, look out for common characteristics and interests and analyse the channels that bring in the most business compared to the acquisition cost.
There is a probability that other people would like these reasons and then benefit from your product/service.
Take a Look at Your Competition
There was a time, Startups were keen to be referred to as the Uber-of-whatever niche they were in and Washio happened to be one of them.
Washio started out as an on-demand laundry service promising home pickup and delivery with a 24-hour turnaround on dirty clothes. They wanted to be the Uber for laundry, and charged $5.99 on delivery and $2.15 per pound of clothes, plus fees for additional services.
As amazing as this service sounds, Washio got washed out after 3 years of operations as the economics of the business were not right and their competition was really fierce at the time.
Now what are some takeaways from the Washio story — to survive as a startup, you need to ask these important questions:
- Who are my competitors targeting?
- Who/Where are their current customers?
- What problems are we trying to solve?
- Will my unique selling point solve the problem?
Once you can answer these questions, you should be able to find a niche market that your competitors are overlooking and then go on to implementing a better experience with your product.
Analyse Your Product
Some of us know the Dropbox story; the idea for the cloud storage service was born when the founder, Drew Houston was on a four-hour bus ride from Boston to New York. He planned to work but forgot his USB memory stick, leaving him with a laptop and no files he could work with. The frustration led Drew to start building technology that could sync files over the Internet and four months later he was pitching his idea to Paul Graham of Y Combinator.
You need to be sure that you are solving an actual problem and not just one that you “think” is a problem.
The biggest problems are in emerging countries, solve them and you become a billionaire…
- Author unknown.
Now the idea of making billions might be stretching it a little but but then it’s not too far from the truth. You need to identify a problem and then find a solution that solves it.
Be Specific about your Demographics
Now you have identified that here is truly a need for your product or service, now you have to define those who are most likely to buy it.
Depending on your type of business, these are some factors that must be considered:
- Age
- Location
- Gender
- Income level
- Education level
- Marital or family status
- Occupation
- Ethnic background
The USA is composed of a lot more groups than it used to have in the past, but the key to succeeding as a business lies in these little details.
If the recent Facebook crisis has taught us anything, it’s that politicians use demographics to cement their votes across various regions, and this can be a good tactic to adopt in business.
Analyse the Psychographics of your Intended Market
You need to get more personal, like you’re going into the mind of your customers to be able to understand which of your features will fit their lifestyle.
Just like demographics, delving into psychographics will would help to understand how your customers think. Here are some of the characteristics you need to know:
- Personality
- Attitudes
- Values
- Interests/hobbies
- Lifestyles
- Behavior
You also need to ask these questions and answer from a customer’s point of view;
- How will the product be used?
- What features are to stand out so that it can appeal to customers?
- Where does the ideal customer get information? (This would help in advertising).
Armed with this information, you can then create user personas that work for your product and then a user story board for your customer life cycle.
If you’ve been having issues with customer exit, take a look at this article to learn how to minimize churn in your product life cycle.
