Now that you have created your business plan (week 1), determined the legal structure of your business (week 2), and started searching for funding (week 3), it is time to start researching your target market.
It's great that you have a product or a service that you think everyone will want, but realistically, not everyone will buy it. Don't get me wrong, that would be nice, but it is very rare when a product or service comes along that everyone and their dog wants to purchase causing a demand so high that a company isn't able to keep up with it.
A target market is a specific consumer group that a company aims its products and services towards. If you are selling a new kind of water that not only replenishes your electrolytes, but also provides you with protein, then you need to think about who would need and want your type of water. For the average person who is just looking for good water to drink, they may not need the added benefits of protein in a water. However, a runner, or someone who exercises on a regular basis who burns calories and sweats quite often, may appreciate a water that not only replaces their electrolytes, but also gives them protein that could help them build muscle.
When you are researching your target market, you want to find your specific customer. From gender to age to where they shop most often, you want to know as much about your potential customer as possible.
Last Christmas, Target offered a new line of high end clothes that were made by some top designers. I remember looking at a dress for my niece and the price tag was $79! I immediately put the dress back and kept moving. A few weeks later, I noticed that the entire clothing line was on sale for 30% off. Two weeks later, 40%. Two weeks after that, the line was marked down to 70%. It was obvious that this high-end clothing line was not selling well at Target and apparently, Target had not paid attention to their target market. The average customer at Target will not pay over $30 for a clothing item, so what made Target think that a dress marked at $79 was going to sell?
The best way to define your target market is to make a list of who would benefit from your product or service. Begin to narrow it down by age, gender, income, and where they may live. Now, you may not have all of this information, but just try to brainstorm (or fantasize) about who you want to sell your services and products to.
Once you have narrowed your target market down, it's now time to do your research to see where your target market is located. A couple of things you need to look into are: whether or not the market is already saturated with your type of product or service and if they are needed, what your competition is doing and what their profits are, and how can you reach your target market.
You can find all of this information out by looking at the latest U.S. Census, researching how your competitors are doing, and checking out business information at your local chamber of commerce.
All in all, make sure you do your research before you launch. There's nothing worse then failing before you even get started!
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