One of the most important aspects of starting a new business is performing due diligence on market research and identifying your target market. The information that this process provides is invaluable, especially as you use it to generate a marketing plan and make your business profitable.
However, you don’t want to go into the process completely blind. Chances are, as your business has taken shape, so did the image of your target market. You are probably aware of the type of person you’re trying to reach. Man, woman, young, old, employed, retired—the variables that can define your target audience are innumerable.
You may think that a generic idea of your target market is more than enough to build your business around, but in reality, it’s important to get as narrow as possible when defining your target, as there’s a plethora of information available to help your research. This includes not only information about your potential customers, but also how your potential competitors are working to reach those customers as well.
Whether you decide to perform the research yourself or through a third party, here are some of the more nuanced elements to the process.
1. Start With Your Business Plan
You may have it memorized by now, but pull out your business plan, and carefully review the goals you’ve outlined as well as the products or services you offer. During your outline, ask yourself:
- Who will benefit the most from our products or services?
- Will selling to this group help us achieve our goals?
The answers to these questions should help you get started on building a customer profile. Remember, while you may have a preconceived notion of who your customer is, at the end of the day, your customer is the person who will benefit the most from your products.
2. Define Your Geographic Area
A major piece of your target audience’s profile is where they live. If you’re selling your product or service from a physical location—or in a rigidly defined area—it will greatly affect who your target audience is. If your business is more global, operating via a website, through webinars or multiple office locations, then your target audience’s footprint will be larger.
- How can I sell this? (i.e. online, one-on-one, sales pitch, etc.)
- How portable is my product or service?
3. Identify Your Unique Selling Proposition (USP)
There’s a very good chance that the product or service you offer is already offered by another company, and that’s okay. What you can do, however, is develop a strategy and synopsis of what sets you apart from your competitors. That, in a nutshell, is what’s known as a unique selling proposition.
Your USP also has implications for your target audience. For example, if your business’ most unique aspect is a certain level of technology, then your product is probably well-suited for a younger demographic.
- What do we do that no one else does?
- What do we do better than anyone else?
- Why should a customer buy from our business and not a competitor?
4. Start to Build a Demographic Profile
What sets one customer group apart from another is its demographic makeup. Some of the most important data points to identify are:
- Household income
- Marital status
- Family status (with number of children, if any)
The descriptors above are probably the most important, but there are a few others that might be helpful to track as well, including:
- Buying habits
If your target customer is a business, there’s more specific information you’ll want to know, including:
- Size of business (i.e. number of employees)
- Annual sales
- Key competitors
- Geographic location
- Number of years in business
Each of these data points informs you about your target clients and helps you build a profile that will inform the type of media you should use to get your message out there.
5. Determine What Media to Use
Once you know who you’re reaching, you can start to figure out the best ways to reach them. Different media works for different groups based on a whole range of factors, many of them determined by certain demographic combinations. In general, printed media typically works for an older, more affluent audience, while online media reaches a younger demographic.
- What types of media does my target customer consume?
- What is the most effective way to reach this audience?
- Would using a social network be appropriate?
This last question is especially important depending on the size of your marketing budget. For example, social media is a relatively cheaper and more cost-effective way to reach customers, but once again, it may only work for certain groups. As mentioned earlier, your marketing strategy will depend on the type of people you need to reach.
Know Your Research Options
Determining how you will find all of the aforementioned information will depend on your budget. There are typically two ways: primary research and secondary research.
Chances are you’ve already done your secondary research, which includes taking a look at available publications and statistics from government agencies and other groups. You might also subscribe to trade publications in your field that can provide this information as well. There is nothing wrong with relying on secondary research as long as it is a trusted source. If you belong to a trade organization, spend some time on their website looking for case studies or research results. This information should be available to members free of charge or for a nominal fee.
Primary research is more expensive because it’s a completely new analysis of your market. It involves conducting all new studies with target consumers to determine the best fit. It relies on conducting interviews with individual customers for their view of your business, your business’ offerings, the market and other facets of your business environment as needed. Since you or someone you hire is doing this, conducting primary research can be expensive as well as time-consuming, so consider how important it is for you to have this research done. If you’ve conducted your secondary research and find it lacking, primary research may yield more useful results.
Determining your target market and reaching it effectively are two of the greatest ways to help make your business a success. Follow the steps outlined above and continuously ask questions to be sure you’re getting the best information from the work you’re doing. Once you have your research ironed out, see our articles on local marketing and online advertising for more tips.