It’s a pretty straightforward idea: To grow your business, you must understand your target market. Sometimes, however, in their haste to launch a new business or jump-start an existing one, entrepreneurs miscalculate and make ill-founded judgments and assumptions about that market.
Alina Dizik, a contributor to Entrepreneur, suggests asking yourself several questions in order to more objectively assess who your target market is.
Questions to Ask Yourself Before Determining Your Target Market
Who’s going to pay for my product or service?
You’re in business to solve a problem plaguing prospective customers. Your assessment must therefore start with a clear understanding of who’s willing to pay for your solution.
“Not only do [your potential customers] need to have the problem, but they need to be aware they have the problem,” says Greg Habstritt, founder of SimpleWealth.com. Habsstritt suggests using Google’s keyword tool to find out if (and how many) people are searching for words related to your business idea.
Who has bought from me in the past?
Knowing the types of customers who have already purchased your product or service will help you refine “both your target marketing and your pricing strategy,” Dizik notes.
Am I overestimating the appeal of my product?
It’s one thing to guess how many prospective customers will pay for your offering. A more quantifiable approach is actually reaching out to potential customers and finding out what they think. This can be achieved by conducting surveys, organizing small focus groups or doing “man-on-the-street” interviews with walk-in customers.
What does my network think?
You can also bounce ideas off people in your social networks, who will probably be happy to offer you opinions and feedback.
Are my assumptions based on personal knowledge and experience?
Let’s say you’re an avid rock-climber. You launch a company offering travel packages to El Capitan in Yosemite National Park, because you think you know your customers. The risk is, you might be completely off-base. “Don’t assume that you can think like your target market,” Habstritt says. “You have to ask them and talk to them to really understand them.”
How do I sell my product or service?
Developing an effective retailing strategy will help pinpoint your target market. Do you plan to sell through a storefront, a website or both? If you go the online business route only, you may encounter a younger demographic than you would with a store.
What did my competitors do to get started?
As part of your overall assessment, you should be familiar with competitors in your potential market. Evaluate the competition’s marketing strategy, but “don’t simply copy the marketing approach of your biggest competitors once you define your target consumers,” Dizik says. Unless you can differentiate your business from others in the same market, what hope is there of success?
Will I be able to expand my target market?
As your business grows, you’ll have another decision to make. Should you continue to target a domestic consumer base or is it time to approach the global market?
Don’t rush into a new business venture without answering these questions. If you fail to target the right customers, valuable time and money will be lost on people who just don’t care.
Do you have intimate knowledge of your target market?
