June 6, 2015
The better you understand your customers, the faster your business will grow. Yet, new companies often struggle to determine their initial target market, by either shrinking it to the size of zero profits or broadening it to an unreachable scale. By asking the following 6 questions you should be able to determine the ultimate target market for your venture.
1. Who will buy my products or services?
Understanding which problems your potential clients are trying to solve is the key to launching a profitable product. Analyze current consumer trends and demands with the Google Keywords Tool to see how many people search phrases related to your business and how high the competition is. The trick here is to make sure your potential buyers not only have a problem, but they are also aware of this problem and looking for ways to solve it.
2. Am I making assumptions based on personal knowledge and experience?
Oftentimes, your personal experience and skills force you to make assumptions about your target market without doing any research and hearing their voices. For instance, if you are a cooking guru launching a new cooking app, you may automatically assume you know your customers. “Having worked in HVAC industry for years, before starting my own business, I thought I perfectly knew who is my potential clientele is – large to medium sized offices,” says Brandi Andrews from National Air Warehouse. “However, it later turned out we have overlooked a huge segment of the market – small agencies and startups, focusing on creating the perfect high-tech offices for their teams”.
3. How did my competitors get started?
Analyze your competitors' marketing strategies to define the exact market that they're targeting. Use the data to gain even more advantage by diversifying their strategy with your personal touch and targeting those market segments they might have missed out. The key to success is to offer bigger and better services than the other guys do, rather than merely doing the exact same thing and hoping it will work out in your case too.
4. How will I find my customers?
When you have a rough idea of who will purchase your products, the time comes to think about how you can attract and retain your customers. If you are selling goods online, you will need to learn about their online behavior and purchasing patterns. Learn what people actually search for within your niche, by doing a comprehensive keyword research and identifying where you can meet your customers halfway – niche forums, communities, groups on social media etc. Understanding how and where to locate your ideal customer early on can help you establish a game plan once you start crafting a full-scale marketing strategy.
5. What is my revenue model?
Most startups fail because they fail to develop an actionable revenue model. Without a specific plan for earning revenue it's easy to overestimate the size and importance of the customer base. For instance, if you are creating an ed-tech app, consider offering a freemium pricing model, so that individual educators could become the early adopters and promote its implementation at the institutional level.
6. Is there space to expand my targeted market?
Be prepared to re-define your market and to start expanding over time. Think in advance if there is more room for growth and how you can make it – for instance, start selling internationally; opening a physical store or on the contrary setting up online sales. Keep an eye on advancing technologies as they create more possibilities as well. You can develop iPhone apps…as well as Apple Watch apps that are slowly becoming the new trend.
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