As an entrepreneur, you haven’t got the time or money to pursue all customers in your market simultaneously. You need to pick a target market to go after. How should you do this?
Academic research and practitioner expertise suggests that you focus on five factors as you pick a target market.
How To Pick A Target Market
1. The intensity of the target market’s pain. As a general rule, it is easier to sell to people who describe having a pain rather than having a desire. That’s what I meant in by my column about selling pain killers not vitamins.
But not all pains are the same. There’s a slight headache and then there’s a migraine. The greater the pain a target market feels, the greater the odds that you can convince customers to buy a solution, and the faster that sales will occur.
2. The value of your solution as a pain killer for the target market. The better your solution fits the target market’s pain, the greater your chances of success. If your solution is a partial fix, your chances are less than if it is a complete remedy.
Here’s a good example of a founder doing this right. The company is called Passage. They provide a mobile box office and point of sale for seasonal businesses, specialty events and popup companies.
They have focused on these kinds of businesses first because their product is ideal for things like haunted houses, summer theater, wine and beer festivals, semi-pro sports, and so on. Passage offers a “made for me” experience, adding category-specific branding and features that make its purchasing system a better fit for customers than the plain vanilla alternatives offered by competitors. For instance, they sell to a lot of haunted houses because those venues will sell tickets if their purchasing systems show scary designs rather than a plain vanilla Eventbrite page.
Passage provides much quicker payment to event organizers — two business days — which appeals to small businesses that need their money very quickly.
Passage’s mobile box office is very easy to use, with a simple and quick set up and strong customer service. That’s valuable to company owners who haven’t got a strong background in technology.
3. Is your solution better than the competition’s for that target market? Rarely does one company offer a better solution than its competitors for all target markets. Consider Ferrari. They make a great car, but I have yet to see someone who knows a good place to install a car seat in one. Volvo is a much better choice for the family car market, despite the panache of the Italian sports car.
4. Can you make the sale? Here’s where reality is different than a business school class. If a target market is a perfect fit for you, but you can’t make the sale, it’s useless. So you need to consider whether you can reach the customers and whether they will buy from you right now. Entrepreneurs need to be realistic and go after target markets they can get before they run out of cash.
5. Is the market valuable? You also need to think about the value of the market. Is it large enough to be worth spending time getting to know or is it so small that you can’t recoup your cost of customizing to it? Is it shrinking so fast that it will be gone shortly? Could you make a profit selling to those customers or would your margins be razor thin? Ideally, the markets you target should be large, growing and offer you high margin customers.
Targets Photo via Shutterstock
from Brent Lecompte Blog http://brentlecompte.blogspot.com/2016/05/how-entrepreneurs-pick-target-market.html