Everyone is not your customer
Example of Target Market: For upon |Target market. It’s a term that you’ll hear in your ‘Introduction to Business class and it gets bandied around endlessly in marketing circles. But what does it actually mean? How do you identify it? And then what do you do with that information?
When you’re starting a business or launching something new, your first question has to be: who is this going to interest? Defining the precise area of the market you’re targeting is crucial – from setting the competition parameters to understanding the best way to reach potential customers with limited resources. Example of Target Market.
It’s only when you understand who is likely to buy your product or service, and why they’ll buy it, that you can chisel your proposition until it’s uniquely appealing to this pre-defined group. Once you have this, you have an ‘unfair’ advantage over everyone else, and the market is yours to take. Example of Target Market.
So let’s jump into how you can go about carving out a specific target market to find your niche, and go where there’s demand, but no strong incumbent competition.
Defining the term ‘target market’
Let’s start by defining what we mean. The TAM SAM SOM system is an excellent place to begin.
- Total Available Market: the entirety of consumers who might purchase your brand in an ideal world.
- Serviceable Available Market: Anyone who may want to buy your product that you can physically, and geographically reach, e.g. everyone in the UK Example of Target Market.
- Serviceable Obtainable Market: the portion of people within your geographic reach who you can capture, e.g. everyone in the UK who is dissatisfied with existing propositions, receptive to your messaging, and open to switching brands. Example of Target Market.
While it’s a simple concept, what’s more complicated (and thus often ignored or undercooked) is actually identifying your target market. It can be difficult to tap into what matters within the hubbub of the outside world and work out where your place within it lies. But it’s absolutely necessary. Example of Target Market.
Firstly, it sets the parameters in which you’re competing. If you know who you’re trying to reach, you can look at which brands are also trying to gain their loyalty, directly alerting you to your competition.
Introduction to Business
It helps you to focus. Almost every company is restrained by resources in some way – not enough time, money, or people – and so trying to compete on all fronts is a losers’ game, forcing you to spread your limited supplies too thinly. Defined parameters mean shooting precious resources in the same, consistent direction, where you have the highest chance of succeeding. This helps you to break through, resonate and build momentum. Example of Target Market.
Target markets are multi-layered. You can identify broad swathes of the population who might be interested in investing in your brand, or you can drill down into tightly defined niches based on demographics, location, behaviors, interests, and need states. Example of Target Market.
Going after a specific niche by no means limits your appeal, rather it crafts you a foothold. As James Joyce once wrote, “In the particular is contained the universal.”
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Once you’ve established yourself as a must-have product or service for this small, specific group of people, you will have a firm base from which to grow into mainstream markets. That’s why you must also continue to question and re-question your market boundaries to watch for shifts – this allows for intense refinement of your product or service. Example of Target Market.
How to find your niche
The best idea is to go where currently, no one’s going, but there is latent demand. Look for underserved markets where clear clusters of consumers are frustrated with what’s currently on offer. Example of Target Market.
A tell-tale sign will be areas where consumers are already trying to fill the gap themselves with makeshift solutions. It’s an indicator of extremely high need, but no official provider of a solution. For example, Amazon saw a demand for second-hand books. Graze saw people taking homemade bags of trail mix to snack on at their desks. Mumsnet noted the endless anecdotal advice people sought from friends and family at toddler groups and coffee mornings. They built their solutions around these needs. Example of Target Market.
See what’s taking off in the world of blogs, or look at complaints in the review sections of existing brands or products. Check out search queries and see if there are a few good answers. You’ll start to notice common themes; connect them with the type of person who has these gaps in their lives, or qualms with the current system. Your group, united by a common problem or need, will be either universally frustrated or universally engaged. Therefore they are also universally targetable, and likely to be receptive to the messaging you’ll craft with them in mind. Example of Target Market.
Narrower and narrower
Narrowing down to your SOM can feel overwhelming. You can’t know exactly who will want to spend their money with you, or why, and 42% of startups fail due to a lack of market demand, so relying on instinct is rarely a good strategy.
Using customer intelligence is a lifeline in this scenario, so get to grips with research and consumer surveys. This will allow you to hone in on the people who are going to make up your specific target market.
Start by asking consumer groups opened-ended questions about their biggest frustrations in different markets or scenarios. If you cast your mind back to the unthinkable time before we could catch a cab from the palm of our hand, Uber might have once asked, “what frustrates you about taking taxis?” Inevitably, the answers would have come back pointing to late arrivals, high price points, uncertainty over tipping, and more besides. Example of Target Market.
What Target Market
It would then have been up to Uber to decide how to best solve these frustrations, and for which defined groups. Uber chose iPhone owners in San Francisco to start with, then broadening out to affluent professionals in urban areas. This was their target market, and from there, they moved out further to anyone with a smartphone. They’re now eyeing up an IPO that will value them north of $100 billion. Example of Target Market.
Finding your SOM is a brilliant first step for a new business, or anyone launching something previously unheard of. By giving careful consideration to a modest, specific target market you can nurture these people into strong brand advocates, who will form the necessary foundations for you to grow bigger and more diverse in your offering. Example of Target Market.
Grow to be a big fish in a small pond and you’ll be well placed to make that final drive toward conquering the ocean.
The article was originally published here.
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