Understanding your target market and the behavior patterns of your potential consumers is one of the most important and underrated aspects of planning and running a business. In fact, having a deep understanding of the needs and behaviors of your target consumers is one of the core fundamentals for almost any business. And coincidentally, not identifying your target market properly is one of the biggest advertising mistakes and marketing errors that you can make because it will cause all your marketing efforts to be seen by the wrong people who will be very difficult to convert into customers. In fact, understanding your target market is not just a marketing issue. How can you create a great product for someone if you don’t understand who they are, what their needs are, and how much they are willing to pay, and are able to afford. Understanding your target market as deeply as possible is the key to the success of your business overall. In this article, let’s focus on how this effects your marketing efforts.
Easier to Target Your Potential Customers
Understanding your consumer makes it easier and cheaper to reach them in large volume with targeted advertising and outreach. Knowing your target consumer also makes it simpler to create a product that better fits their needs, and is used by those customers in a manner that is convenient to them (important for product adoption and customer retention). Knowing your target customer also helps you to better understand your market size which enables you to make more accurate financial estimates because you will have a deeper understanding of your total addressable market. As you can see, there is an almost unending number of benefits to having a deep understanding of your target market.
Addressable Market vs. Overall Market
The addressable market is the part of the total market which you can target with your product. It is important to understand the difference between the entire market and the addressable market. If, for example, you are opening a fine dining restaurant, the overall market may be all the people in your city, but your addressable market is much narrower. It is only those people who like to eat certain kind of food, and are in a demographic which can also afford to eat out instead of dining at home. Your addressable market is probably more constrained by geography as well as people who will not travel too often out of their way for food. They may do it rarely, but not too often. So understanding your addressable market helps you make less mistakes when calculating the size of your market.
For example, the United States shoe market is in the billions of dollars per year. But if you made a shoe like a slipper for men, then your addressable market is some portion of all men.
It might be tempting to say that the addressable market is all men. But that is not true. Many men hate wearing slippers, and it is very difficult to force kids to wear slippers. Older men tend to wear slippers at home more commonly, but they shop least often and many elderly people live in poverty and can get items like slippers for free, or at huge discounts. The deeper you understand who behaves and spends in what particular way, the better you will be able to estimate who you can sell to. Additionally, how will you possibly market to all men? They are in every walk of life and you cannot possibly reach many of them with your advertising.
Targeting Does Not Mean Limiting
A common mistake made by first-time entrepreneurs is thinking that targeting a certain niche demographic limits the total opportunity of the business. There are two reasons why this is a misleading line of thought.
1) Choosing a target market helps you focus your advertising efforts, and optimize your product to make that certain group very pleased with your product. It still means that you will take anyone as a customer if they want to be your customer. You are not rejecting customers. Instead, by focusing on a particular demographic, you are helping your business get the most out of a certain demographic of people who may be the best fit for your product.
2) If you start small with a sharper focus on a certain demographic, it does not mean that one day you cannot grow bigger. When your business is ready, you can add more demographics to target as you expand.
Marketing To Your Target Market
Once you identify who your target consumer is, you need to begin marketing to them and reaching them. We have an article on this topic too. The article is called marketing strategies for different business types.
Once You Are Ready To Promote Your Business To Your Target Market
Once you identify your target market and are ready to advertise to them, you will need a website for your online marketing. Take a look at our step by step tutorial for how to set up your website in one day so that you can be up and running quickly and begin to promote your business.
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Author: Alex Genadinik