The demand for your goods or services depends on the essential needs of the people, their daily needs or their desire for greater well-being. Of course, not all people have the same needs, desires, and luxuries; in fact, from a manufacturer’s point of view, customers are categorized by their different needs. In order for a business to be maximally productive and efficient, it is best to identify these groups, fully understand their needs and perspectives, and anticipate their behavior so that planning can be done accordingly. Target market is a specific group of people and in fact a defined part of the customers in the target market, to whom the desired service or product can be provided. Defining the target market is important because it facilitates marketing and decision-making through the various processes of strategy selection and planning. This allows the marketing and sales department to adequately study customers and their behavior and find the best way to increase productivity, reduce costs and better manage resources.
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How to determine the target market?
In today’s world, targeting the whole range of customers can hardly be considered a practical solution in various industries! Given the high competition and constant resource constraints, it does not make sense to target the entire existing market and all customers. The target market covers a limited range of the whole market; thus, it simplifies targeting, planning and sales for smaller companies. In this way, even small companies will be able to compete with large companies. This is the way most innovative businesses, startups, etc. utilize.
Steps to follow when determining the target market
Market segmentation: The first step in determining the target market is to segment the serviceable market based on population, geography, behavioral patterns, culture, etc.
Defining a unique sale offer: The most important advantage of any business, especially start-ups, is having a unique sale offer which serves as the winning card of these businesses and a tool to attract customers.
Customer database analysis: After development, every business must analyze and evaluate its customer database in order to determine its target market.
Competitors’ customer database analysis: The next step is to analyze and evaluate the competitors’ customer database. In this way, it is possible to understand what part of the customers are targeted by the competitors and to whom they offer their products or services. Significant results can be achieved by comparing the competitors’ customer database. The easiest way to use the information is to copy and imitate competing companies and select a similar group for oneself.
Minimum acceptable product supply: The minimum acceptable product is a product with the least possible features that can meet the demands, needs and expectations of the customer. Launching this product is an important step in testing estimates and analyses of customer behavior and process profitability. The minimum acceptable product is usually offered to a limited number of customers and their feedback is reviewed.
Some examples of target market
To better understand the target market, it is better to examine the target market of some important and famous companies to see how the most successful companies define their target market and to whom they sell their products. Of course, it should be borne in mind that the strategy of each company may be different depending on the industry and field in which it operates, history, brand, age, financial support, etc.
Facebook: Facebook’s target market was created during the company’s development. The first target group of Facebook was American university students. As the number of users expanded and features increased, so did its target market, and eventually, after becoming a global social network, its target market encompassed a wide range of people around the world. Facebook is now the largest social network in the world with users in 157 countries, with an average age of 25 to 34 years.
Snapchat: More than 170 million people use this messaging application, and the majority of them are under the age of 25. This means that a large number of Snapchat users are high school and university students; as a result, efforts have been made to optimize the environment and facilities of this application for this group.
McDonald’s: McDonald’s is one of the companies that targets a wide range of customers. From students to staff, professionals, etc. McDonald’s target market is people aged 8 to 45. A large portion of customers are teens and middle-aged friendly groups that are generally not very strict.
Target market analysis
To accurately determine the target market, customers must be examined from 5 dimensions.
- Assumed customers: The first question to be answered is who is going to use the products or services? For example, are the majority of customers children and adolescents or middle-aged or elderly people? What about gender? Is it possible to make a specific prediction of the acceptance of the product or service among women or men? And finally, is it possible to identify a specific pattern of financial status and employment of customers?
- Product Type: The next issue to consider is the type of product and services that customers will pay for. The ability to anticipate their expectations about product performance and meet their needs is of more importance.
- Time to use the product or service:When do the assumed customer group need the service and product? Will they need the product on a daily basis, or may the time interval between a customer return be several years?
- Geography: The location of services and products is another issue that affects the determination of the target market. For example, providing horticultural and pruning services in tropical and waterlogged areas can hardly be justified.
- Motivation: What is the customer motivation to use the services and products? Does the product or service that is offered meet the basic and essential needs of the customer, or do the customers intend to use the product or service only for the greater well-being and adding luxury to their lives?
After answering such questions, one can isolate and focus on the part of the market that has the highest returns and potential. Of course, the target market must also meet these conditions:
Size and breadth: The target market must be large and wide enough to be able to supply the number customers for the time being and in the future.
Growth: The target market must be a growing one. A market that is getting smaller day by day and its activity and dynamism are decreasing is not a good place to invest. Therefore, before final selection of the target market, its statistics and performance should always be examined.
Intensity of competition: A market in which competition is very high does not leave much room for new businesses to enter. Of course, the presence of several competitors in the market can be useful.