Getting a product-market-fit is key for every business thinking of how to increase sales and profit.
In this article, we will explain the types of target markets you may find, give you real-life examples of market segments, and guide you through a step-by-step explanation of how to find the right target market for your online business.
But first, let’s answer the most obvious questions: what is a target market, and why does it matter to you as a business owner?
Target market definition
Target market is the business term used to describe a group of people likely to buy a product or service. This group shares demographics, age range, purchasing power, consumer behavior, or other metrics that a business owner believes its ideal customer must possess.
As you may have guessed, there is no clear-cut indicator of your target market as a business owner. It is ultimately determined by how well you define your market by narrowing down the most critical indicators.
Why you should know your target market
Many businesses make the mistake of not having a well-defined target market and just assume anyone would like their products. As a result, such businesses even spend enormous money on marketing without seeing much difference in conversion rate and sales growth.
The problem is not with the marketing team or with the advertising agency. Often, this sort of problem arises because of a lack of well-defined customer segments and target markets. Marketing campaigns should have a tone, visuals, and offers that people with similar characteristics are interested in.
For example, if CoCa-Cola launches a campaign about it being a family drink when market research shows that younger people are more likely to buy its product, the advert may be well-executed, but it would ultimately fail to connect with the core user base of its product, which is its target market. The same is true for all businesses and online retailers.
A step-by-step guide to finding your target market
Going by the target market definition given earlier, it’s now time to learn the best practices on how you can find your target market. It doesn’t matter whether you run an eCommerce store or a physical store with marketing goals. A clear target market will help your business realize its business goals.
#1. Competitive analysis: Know your competition
You may wonder what your competition has to do with finding your target market. Well, since yours is not the only business selling the goods or offering the services you have, it makes a lot of sense to assume your competitions are also targeting the same market as you.
It will even be better if they have done extensive research and provide you with exactly who their users are.
Common mistake business owners make is to assume that because their competitor has done a fine job of solving customer pain points, they wouldn’t have a chance against such competition. However, the reality is that not everyone would like a product or brand.
So, how do you carry out a competitive analysis? The most straightforward approach is to search online for the services or products your business offers and make a list of those websites that pop up. Using sites like Alternative and Product Hunt allows you to track websites providing the same services as you.
#2. Consumer survey: Know your customer
One of the most underrated activities to help your business grow drastically is getting customer feedback. The same is true for finding your target market. Therefore, it is essential to carry out random surveys and interviews with potential users to know your customer’s qualities.
A consumer survey will consist of questions that seek to know the target demographic group, spending habits, likes and dislikes, and consumer behaviors of the respondent. It can be carried out using online survey forms such as Survey Monkeys and Google Forms and shared on social media, in ads, or displayed on your website.
A standard consumer survey’s objective is to find out important data about who the consumer is, why they buy the product, how much they are willing to spend, their biases and how to solve their pain points. It should be noted that some customers will respond well to surveys and while others will prefer interviews. This is why you, as a business owner, should try to get both groups of respondents.
#3. Create customer profile
The next step is to create customer profiles based on the findings of your customer survey. A consumer profile describes your customers based on a set of behaviors, interests, and details about them. Usually, a great customer profile is defined some of the following:
- Your customer’s lifestyle: do they like going out or staying it? Are they married or single?
- Location: the physical location of your consumer matters as this affects the kind of goods and services they find relevant. For instance, people in suburban areas in the United States are more likely to patronize a local auto shop than those in Europe and metropolitan cities in America.
- Age group: people of different age groups tend to have different tastes. TikTok and Snapchat appeal to Gen-Z users, while much older age groups use Facebook.
- Buying patterns: It is informative to know how often your ideal customer purchases what you sell. For example, do they treat it as an essential product to their daily life or as a luxury for special occasions?
Other critical indicators to watch out for are income distribution, interests, and purchasing preference. There are many other categories of information which can be valuable depending on your industry, product(s), along with a variety of other factors. With this information, you are closer to having well-defined customer profiles your business may serve.
#4. Analyze your product offering
You now have an idea of your ideal customer and what they like. The next step is to analyze what your business offers them and if it fits into what your customers want.
Sometimes it is impossible to separate yourself from your business, and any criticism against your product may seem like a personal attack. But the truth is, not everyone will like what you have to offer, and it won’t be perfect every time. This is why you have to do a deep dive into your product offering. What are your differentiators?
To do this, having a business model canvas may come in handy. It will help you answer important questions like “why should they buy from me and not from the other person?” It is usually the case that when you as a business owner know the advantages and disadvantages of your product, rolling out target marketing strategies will prove more effective.
#5. Narrow the market segment
As you’ve realized now, there’s no one-size-fits-all categorization of what your customer needs and even who they are. But, at the minimum, you will have created three customer profiles based on age groups, lifestyle, income, demographic information, and purchasing preferences.
Your business should now have different target market segmentation with this targeting strategy. This segmentation targeting and positioning are essential for businesses entering into new markets.
Automotive companies, for instance, create different kinds of cars for their customers in other regions of the world. Car owners in the United States, China, Brazil, and Nigeria, for instance, have their driver seat to the right, while those in the United Kingdom, Japan, Australia, and South Africa have theirs to the left. In the automotive industry, markets like the United States, China, and Japan also buy more cars than less developed countries in Africa and the Caribbean.
This means that a car maker company would have a segmentation targeting and positioning for its customers in rich countries and developing countries separately.
#6. Target marketing campaigns
The last thing to do is run target marketing campaigns based on the tons of research you’ve done. We assume that the whole point of finding your target market is to tell them about your business, grow your conversion rate, and increase online business revenue. If this is true for you, primarily if you operate an eCommerce, it is necessary to run ads campaigns.
Setting up an excellent eCommerce marketing campaign for your business will only be as effective as how clearly you state your marketing goals along the lines of your customer profiles. For example, your target marketing goals may include introducing a new product to existing customers, increasing web traffic, and acquiring new customers by improving brand awareness.
These three goals target different market segments and solve various business objectives but ultimately help you find your target market and sell directly to them.
Finding your target market is an important part of the marketing strategy that businesses shouldn’t skip, especially in their early stage.
Try out the tips shared in this article and it will be easier for other aspects of your business to run smoothly.