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How to determine your target market

Defining your target market is essential for every start up. Rather than crossing your fingers and hoping for the best, having a clear idea of your target market allows you to be more effective when marketing your business.

Why define your target market

Without a target market, all marketing is guesswork. Taking a scattergun approach to marketing is ineffective. It burns through marketing budgets with little to show in return. Target the right customers on the other hand – the ones most likely to buy from you – and you’ll get more bang from your marketing.

Defining a target market is especially important for start ups. The two biggest reasons that start ups fail are directly linked to not having a defined target market. According to research by CB Insights, most start ups fail (42%) because there was simply no market for their offering. That means nearly half of start ups launch a product or service that no-one wants or needs. If they’d developed their target market and tested their idea before launching they could have avoided a costly mistake.

The second biggest reason start ups fail is that they run out of cash. Nearly one third (29%) of start ups run out of money, with inefficient marketing spend a major factor. Targeting relevant customers maximises your marketing budget and allows you to spend money more carefully.

What is a target market

It’s best to start with what a target market isn’t. A target market isn’t everyone. Instead, it’s a defined subset within what’s known as the total addressable market, which is everyone who could possibly buy your product or service. For example, everyone with a pet dog could – in theory – be in the market for a new dog grooming and walking service. This is the total addressable market.

The target market is different. Instead of trying to market the service to all dog owners, a start up could define its target market as a subset, such as busy office workers who leave their pet at home all day. The dog walking business might then decide to market a dog creche service to local businesses to attract office workers.

The target market is a specific group of customers who are most likely to buy from you. They share similar characteristics, such as age, location, income or behaviour. They also tend to have the same problem that your business is able to solve.

Just because you’re targeting a specific group of people, businesses or organisations doesn’t preclude you from selling to customers outside the target market. If other customers want to buy from you, that’s a bonus. It’s just that you won’t be focusing your marketing activity on winning these bonus customers.

How to define your target market

A target market is defined by similar characteristics such as demographics and behaviours. You can start broad with gender, education level, mortgage holders, and then increasingly refine them. The trick is to be as specific as possible. Define as much as you can about target customers, such as where they shop, what brands they like, what newspapers they read or websites they visit, and what life events – such as getting married or retiring – are they experiencing.

For example, you may end up with a target market of 20-30-year-old dog owners working in professional occupations and who earn between £25,000 and £50,000 each year, and who live in flats or small houses based in north London.

1. Start with existing customers

Existing customers are a rich source of information. Start with existing customers and use a combination of surveys, focus groups and data to discover their characteristics.

  • Customer surveys – a great way to build up a profile of customers is to invite them to complete an online survey. Consider offering incentives such as being included in a prize draw. Use surveys to capture both demographic and behavioural information. Keep surveys from being too intrusive. A survey request post-purchase is more effective than asking a customer to complete it when simply visiting your website. There are plenty of free survey tools to try, including Zoho Survey, SurveyMonkey, TypeForm and Google Forms.
  • Focus groups – interviewing a group of customers is a great way to get a deeper understanding about a market. While surveys will give you quantitative data, such as the average age of customers, focus groups can get beneath the skin of what customers think, how they feel about your business, and wider data such as values, frustrations and goals. It’s best to work with an expert in arranging and facilitating focus groups to ensure you have the right mix of customers and the focus group is structured to get usable information from it.
  • Desk research – your business is likely to be sitting on a wealth of data about your customers. Interrogate your database to collate information such as average age, location, spend, length of time between transaction, number of repeat purchases and so on. Use this data to cluster customers into groups based on criteria such as most valuable or types of customer most likely to buy specific products.
  • Online analytics – examine data from your website and social media channels. Using free tools such as Google Analytics can unearth information about people visiting your website. Use it to identify customer location, what people look at on your website, time of day and keywords used in Google to find your website.

If your customers are mainly other businesses, you’ll need to collect different B2B data such as business size, products and services sold, locations, trade publications used and data such as turnover.

2. Examine competitors

Examine competitor marketing activity to build a picture of target customers, such as where they advertise and what their message is. Identify magazine and newspaper advertising, as well as online display advertising on blogs. Examine their social media channels and see who follows them and who they follow.

By understanding who your competitors are targeting, you can decide if you can target the same group more effectively or aim for a different target market that has been overlooked by competitors.

3. Build a picture of non-customers

If your business doesn’t have many customers or hasn’t yet launched, you’ll need to use a wider range of sources to determine your target market. Use clues from researching existing competitors to start defining the target market, then use a combination of desk research, focus groups and market surveys to refine your target market.

  • Desk research – use freely available sources to create a picture of your potential target market and the numbers of potential customers. Statistical resources such as the Office for National Statistics (ONS) and are filled with information provided by different government departments such as household spending, income levels and geographic information. Alternatively, sources such as YouGov allow you to enter a brand or business and get a snapshot what customers like about them, as well as access to survey results.
  • Demographic data – use surveys to ask potential customers demographic information. This is information such as income, gender, occupation and education level. This will help you understand any absolutes about customers you should be targeting, such as age bracket, where they live and how much they spend on similar services or products.
  • Behavioural data – armed with demographic data from desk research and surveys, use this to invite potential customers to focus groups that fit with the demographic data. For example, you might run a focus group in Manchester with 12 potential customers aged 20-30 who have purchased a new home within the past 12 months and who earn between £30,000 and £40,000, and who shop with a rival business. These focus groups can capture attitudes to products and services, interests and hobbies, and lifestyle such as cautious or adventurous. Find out what motivates them to make purchases and what are they looking for from a business such as yours.

4. Create customer personas and market segments

A key stage is to bring your customer to life based on the market research you’ve completed. Use the data to build a persona of your target customer. This should ideally be a single A4 page and include a photo that represents your typical customer. Include a summary that describes them, along with data such as income, location, age and life stage such as retired. List the brands they like and where they shop, as well as media they consume such as TV or radio.

Look at where their data over indexes against national averages. For example, your target customer might take more holidays or read more newspapers than average. This can be used to identify where to advertise and what to say in marketing. It’s also worth listing their goals and their frustrations in relation to the industry your business operates in.

5. Assess the target market against your product or service

List all the features of the product or service you are marketing. For each feature, list how it is a benefit to your target market. If you can’t determine a benefit, consider changing your offering to better suit the needs of your target market.

With your target market defined, you can now more effectively plan what to say about your product that will appeal to the target market, such as tackling their problems or helping them achieve their goals. You’ll also be able to more accurately advertise in the right place where your target market is likely to see and respond to your marketing.


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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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