Identifying Potential Buyers: What Is Your Target Market?

Entrepreneurs and small business owners tend to focus developing and selling their product or service.  But, to generate sales, there is another important consideration.

What is your target market?

What does that mean?

The target market (or target audience) is the group of potential buyers of your product or service who are most likely to be interested and make a purchase. If you can identify your target audience as part of a business plan, you will focus your energy, time and financial resources in a more productive way.

Overall, these are the people who need or want what you are offering. Sit back and visualize your ideal customers. Who are they? A target market is generally defined by several criteria.

First of all, will you be selling to other businesses (i.e., business-to-business or B2B) or to individual consumers (i.e., business-to-consumer or B2C)? While many businesses sell to both, most focus on one or the other – at least to start.

For a non-business market, consider the demographics. These are facts, such as those collected by the U.S.census. Not all of these may be relevant for your business, but some are. For example:

• Geography/location
• Gender
• Age
• Income
• Credit worthiness
• Education
• Presence of children
• Age of children

For a business market, the equivalent would be firmographics.  For example:

• Geography/location
• Number of employees
• Annual sales
• SIC code

A second category for B2C consists of psychographics, which are specific needs or interests related to your product:

• Avid readers
• Antiques lover
• Animal advocate
• Organic farmer
• Coffee drinker

For some of you, there is an additional layer of targeting between you and the end-user of your product. For example, if you are a writer, the first hurdle is to target an agent or publisher. One of the things this middle-man will be looking for is whether or not you understand your target audience. If you demonstrate that you do, you have just improved your likelihood for success.

Once you can visualize your target audience, you can begin to focus marketing efforts in a cost-effective way.  We will discuss that further next week.

In the end, your target audience needs to be “just right” in size:  small enough to understand, but large enough to generate sufficient sales on which to build a business.

What is your target market?

Until we meet again,
The Entrepreneur’s Friend