It is true that to hit a target with eye closed is hard.
So to really identify your target market is very important for your products or services. Without your target market’s goal is like joining a train randomly.
You know you are going somewhere, but you don’t know the place you are going to. You only hope it’s somewhere beneficial if you don’t book your destination.
“Perhaps we’ll never know how far the path can go, how much a human being can truly achieve until we realize that the ultimate reward is not a gold medal but the path itself” George Leonard
Don’t stop reading, we are getting closer.
So in this short post today, you are going to discover the best ways (formulas) to identify your target market.
We used the term formulas because there are many different products, but you can apply them to your product or services’ type. It is a roadmap and I believe you will understand them and apply them correctly to your industry.
The Big Market
Let’s continue on the concept – the target market. Companies like China Mobile Limited, Verizon, AT&T etc target big market. For example, here is China Mobile’s operating data:
You may say, “what do you mean by the market”. Believe me, a lot of people have difficulty with that concept. when I say “market” I don’t mean marketing.
The target market is sort of collection of people who will buy your product. I know that most of you already know about that but don’t worry, we are heading somewhere.
So, when there are people who you sold to last year, let me say, there were 500,000,000 cell phones sold, that’s the market for cell phones ( i.e the industry as a whole). That is the total market for that particular product.
The Small Market
Now, the market can also be very small, and again we often use the restaurant as an example because people can understand them. This is another one from The Japan Times LIFE:
And a market for a restaurant might be what the total sales, or revenues of all the restaurants in my particular area. That could be the available market that I am selling into, and obviously, it’s my goal to get some percentage of that market that I will sell to. It is the people I am going after.
So answering the following question, “who will buy your product? Who will specifically buy your product? That is very important. So you don’t have to say, “after all, I am selling to many women under the age of 60”. It’s absurd, there are too many people; you have to segment them.
You can also read, “the target market segmentation” but who is going to buy your product? one of the best formulas is on this question “Who has the most pain or gain?”
Now the best ways to identify your target market:
#1: Pain is more important if you can really solve the pain that someone has. For example, something is very expensive and you can make it a lot cheaper that’s a serious pain. The gain, on the other hand, tend to mean, how can I improve say, my company?
So if you buy my software product you will be able to double your profit. That’s the example of the gain as a post to you being able to lose fewer customers of that pain. Or your network won’t have many security bridges, that’s pain.
#2: Target – If you want to answer the previous question, you also want to look at who is the most likely first target? Do you want to answer the question which is, how big is the market? Meaning, what is the size of the market in terms of the number of customers? What is the size of it in terms of the number of revenues or sales?
#3: Defining The Characteristics of The Buyers – Okay, now, when we figure out the total market and then going to figure out our piece of that particular market. We need to really define the characteristics of these buyers.
You can’t just again, say male or female under the age of whatever, or students who attend college. It is not good enough, you have to pick a group that is similar to one another. Students in colleges are just too broad.
Let me give you an example of a target market to break it down. Students in the top quartile of grade, who are in engineering programs, at the top private universities in the west coast.
That’s a very definable market. You can figure out the engineering schools, you can figure out students who are getting better grades. You may list out their names to target them; west coast is pretty obvious as in US universities. You can use any country for this analogy.
Again you are segmenting your market, and the key to success is to quote on the market. Meaning, to have a significant percent of the sales in that market. Let’s assume, for example, in this particular market, I am selling pocket protectors.
It is good for engineering students. Pocket protectors are containers designed to hold writing instruments, such as slide rules, pens preventing them from staining wearer’s shirt pocket like leaky pen etc. Great!
So it will be a lot better, frankly, if I own 40% of this top quartile of students in the west coast in the US universities. Then if I owned 1% of all of the private universities in the world, and I just insignificantly drop from that 1%, I can’t make a profit.
There are too many other companies that are going to dominate that market, who are going to basically dictate to me what to do. So it’s much better to start with the definable market that is frankly smaller and then grows that market.
Conclusion: like as I said before, this is a roadmap to how you can identify your target market. So you should know the group of people you are targeting, their demographics, psychographics, geographic and what have you.
And again if you are a manufacturer you already know your target market before you even manufacture anything. Or you sell products, as long as you understand the product you sell, what it can do for me as a writer, you are good to go!
So which other methods you think that can help somebody correctly segment their market?