Don’t Miss or Misinterpret Your Target Customers
Harlem Business Alliance Presents: Kevin Howell
The concept, “Target Market” is a buzz phrase used by many marketers and business owners. Not surprisingly, there are still significant misconceptions about its importance and relevance to a successful marketing plan. This article should serve as a guide for small businesses in-and-outside of Harlem as they develop a greater appreciation of their target markets.
What is the target market?
The target market is a group of customers that have the ability and are likely to purchase your company’s goods and services on a recurring basis (the young women pictured above in Harlem). I deliberately added “recurring basis”, as it is difficult for a business to succeed without a strong recurring customer base. Sporadic and inconsistent purchases from customers do not usually lead to sustainable businesses.
Why businesses must understand the target market in its marketing plan?
Marketing to a wide and unsegmented customer base is a sure way for small businesses to waste valuable resources (financial resources and manpower) without any significant increase in sales. A deficient marketing plan is one that does not adequately communicate information about a company’s target customers and does not account for the critical relationship between a chosen target market and the 4P’s of marketing (price, product, place, promotion).
A clearly defined target market analysis will help a company to:
- Develop the best product/services features and functionalities that fit the demand of its target customers
- Create an optimal marketing and promotion campaign
- Extract maximum price from customers
- Distribute products in the most appropriate venues
How big is the target market? How can a company develop a better appreciation for the target market?
Pinning down the target market can be time consuming. Products and services that are most successful in the marketplace are those that satisfy the needs of a target group of customers. I want to introduce a five-step approach for determining the size of the target market:
1. Determine your products and services. It would be an impossible feat to finalize a target market analysis without clearly defining a company’s products and services and their unique features and functionalities.
2. Obtain answers for the following two questions:
i. Which markets will most likely purchase the company’s products and services?
To answer question (i) –who is most likely to buy- one should contemplate the following questions:
- Does gender and age have a role to play in the target market analysis?
- What is the income level and spending power of the target market?
- Does location impact the company’s ability to market its products?
- Where are the potential customers located?
- How do these customers typically make their purchases?
ii. How do the potential markets view these products and services?
Question (ii) is focused on whether the customer has interest in patronizing the company and should trigger these questions:
- Can the customer access similar services from another company (competitor)?
- Does the customer consider the product/service a basic or luxury purchase?
- What social group are these potential customers apart of and how impactful are these social relationships on their spending patterns? – It should be noted that the ability to buy a product or service does not imply that a customer will make a purchase.
- Does the branding of company’s product or service reflect the morale and expectations of the target customers?
3. Determine the size of the target market. • A target market should be sizeable enough to ensure that a Company can generate financial success. A business owner should determine the number of potential customers in their market and project the revenues to be earned.
4. Revisit product and pricing. Based on the information obtained from the actual market sizing exercise, a company may decide to tweak the existing products, packaging or price to ensure that they reflect the needs of the customers in the target market research.
5. Finalize the target market. Sometimes it is not an optimal strategy for businesses to adjust the price of their products/services; rather it may make more sense to (i) revise the target market or (ii) conclude that the market is not substantial and quit before further investment.
In conclusion, developing the right products, at the right price and, for the right customer is a circular process and thorough understanding of the interactions of the process should not be taken for granted. A good target market strategy considers the balance between the company’s perception of its products and services and the customer’s willingness to pay for these products and services, which is tied to their confidence that the products and services meet or exceed their expectations.
By Kevin Howell, Managing Director of Anchor Strategy Group. Contact us at www.anchorsllc.com or email@example.com
Photo by Borroughs Lamar at HW Lounge Nectar event for Harlem World Magazine.
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