Understanding your target market thoroughly is the single most critical thing a business owner could do to help their brand on the road to success. Most often than not, small business owners think that they know who their target market but in most cases the net is wide that they struggle to achieve success.
Importance of the target market.
Every business needs customers. Knowing where these customers are founds, is the precursor to any marketing activity. But if you do not spend enough time and effort identifying your primary target market with laser like precision then all subsequent time and effort put into your marketing activities may be leaky and end up having an opportunity cost.
Often, small business owners wonder why they are not having sales as much as they expected or their product/service deserves. Most business owners and entrepreneurs sincerely believe that they have the best product or service and they should rightly so. But the sales do not match this perceived greatness. The usual suspect in such a situation is marketing and so they start pouring more time and effort and more importantly money into additional marketing.
A familiar story
Suppose you are passionate about fashion and have always had a keen sense of fashion and style since you were a kid. You also have an entrepreneurial streak and have always wanted to start your own business. You decide to take your knowledge, experience and insight into fashion and put that into a clothing label. You have awesome ideas for the kind of designs and apparel that you would create. You start sketching ideas and have a fairly good base for the initial product line.
You tend to look at the target market as someone who shares your world view. Someone who is elegant and has a taste. So you decide that you will market to 18-25 females living in New York, as a start, and then perhaps expand nationwide. Excellent! Next, you decide the critical aspect of sourcing your raw materials and perhaps even manufacturers. You start scouring around and eventually managed to find a manufacturer who would make your outfits.
You register your clothing company, get some nice branding created, get a bank loan and a beautiful website launched and then start your marketing activities. You decide to use Pinterest as your primary social media channel, closely followed by Facebook. You invest in getting these social media channels created and then start investing in building up the audience on these channels. You hire a social media company to help you manage and engage with your audience and to build brand awareness.
By now, your budget has almost come to an end but you are not worried because orders should start rolling in and you can then start rotating the cash flow and things will be great!
Then the wait begins. Days go by and you see no sales. You do get your odd sale and you get excited but nothing to write home about. Weeks pass by and you start worrying. In a panic, you decide to invest more in marketing and social media. You use your personal credit cards to fund more marketing activities, this time with Google Adwords and sponsored stories on Facebook. Two credit cards later, the sales you get are so low, it just does not make sense continuing this venture and you decide to call it quits. You decide to go back to a day job and spend the rest of eternity as a failure paying off the debt.
This may sound like an overly dramatic story. You may think I am simply trying to scare you. However, this is a true story of one of my clients, Heather, who gave me permission to write about it on our website. When Heather decided to give up, she came across a video that I had created on how to build a luxury brand, where I talked about the fundamentals of service. She reached out to me telling her story and asked for advice and help. Long story short, I ended up helping her understand her brand and the strategy to make it all work.
The process of understanding
As soon as I started analyzing Heather’s business case and model, I realized the weak point. Heather had not done any target market research. She simply looked at herself as the target market and made some assumptions. Looking at the demographics, there are over 200,000 females in New York City alone between the ages of 18 and 25 (US Census 2000). That sounds like a fantastic market!
She spent a lot of money on vague campaigns that targeted “women” in New York. In fact, this vagueness of the target market understanding nearly KILLED her business even before it began it’s life!
But you need to further break down your demographic to really get to the root of who it is that you actually need to market to. What about the affordability of this segment? Do you want to be a premium brand or an affordable or even cheap one? What is the average price of your apparel? Pricing your clothing line could be a chicken and egg situation. You need to know who your exact target market is before you price your items. But to get to the core of your market segment, you need to know your pricing so you can segregate by household income and then break that down by earning of 18-25 year olds and then work out their spending habits, their affordability and why they should buy from you.
One possible solution is to decide the range you want to be selling your items at. A range determines the kind of customers you will be getting. If building a premium or even a luxury brand is your aim, then you need to start with prices that are at or slightly below the premium prices that brands in that arena are charging. This requires you to conduct some competitive analysis and research. The range also determines the kind of people who will become your customers. It is generally accepted fact that the lower a brand’s customers are on the income ladder, the more customer service issues that business would have.
Once you establish the kind of brand you want yours to be and the possible range of pricing, you can then use that to segregate your demographic. If you are aiming for a slightly premium range then your target market should be earning a decent income. This would then enable you to work out the possible jobs and industries that they would be working in. For instance, if you decide to price your an embroidered sleeveless top around the $70 mark (a similar item would be selling for around the same amount at Zara), then you can safely assume that your ideal customer should be in an office/sales/executive type of role making around the $30,000 per year or more mark.
This really narrows down the market size and gives you a more focused approach. Now, you will start thinking about a 22 year old, successful female office assistant who loves fashion and would be willing to spend a little to look nice. You can then break this down further to filter out single females versus those married or in relationships since that would have an effect on their buying habits.
Identifying your ideal customer
Please note this is by no means an accurate analysis. I am merely using these numbers and stats in a very loose manner to illustrate how you may be able to arrive at and nail down your ideal and primary market segment. Once you know who your ideal customer is, you can then focus your time, effort and money to target them surgically.
You start by asking questions that would help you understand this segment more thoroughly. A few examples are:
- Where do these women hangout online?
- What kind of magazines (both online and offline) do they read?
- Which social media channel are they active on?
- Where do they travel for holidays?
- What kind of gifts do they buy for their friends and family?
- What kind of TV programs do they watch
- What makes them happy?
- And so on…
By profiling your ideal customer and getting into their minds and shoes, you will then be able to create and craft your website content, social media messages and advertising to match their world view. Create a persona of your ideal customer. Give her a name. Give her a back story. Give her likes and dislikes. You do this and the results of your marketing will be spectacular even with small investments.
Although the example I gave above is for a clothing or fashion label, the same process and principles can be applied to any industry or business. The important thing to remember is
NEVER START MARKETING WITH OUT IDENTIFYING AND UNDERSTANDING YOUR TARGET MARKET!