What is a target market? Investopedia says: “A target market refers to a group of potential customers to whom a company wants to sell its products and services… A target market is one part of the total market for a good or service.” In other words, the target market is the niche group (or groups) that your business is aiming to reach. As part of the company’s business plan, retailers should define their target market.
A trap that many business people fall into is thinking: ‘Everyone is a potential target for my product/business. My products appeal to everyone. I don’t want to limit my opportunities.’ This thinking can be tempting when we’re constantly hearing about the buying power of diverse groups such as millennials, retiring baby boomers, Gen Z, etc. However, this is a recipe for failure. Remember the quote at the start of this article: “In trying to please all, he had pleased none.”
While it may seem counterintuitive, a retail business that confines its target market is better positioned to compete and grow. According to an Inc. article, “…having a well-defined target market is more important than ever. No one can afford to target everyone. Small businesses can effectively compete with large companies by targeting a niche market.”
Knowing Your Products
To get started, evaluate your products and note the benefits they provide. “Once you have your benefits listed, make a list of people who have a need that your benefit fulfills,” the Inc. article continues. If your products (and any supplemental services) serve too many different types of people, or you have a minor product selection that serves a customer that no other product in your store serves, consider consolidating your product selection. Doing this provides focus for you and your employees, and simplifies the shopping experience for your customers.
Small businesses can effectively compete with large companies by targeting a niche market
Knowing Your Customers
Next, study your current customers. “Once you understand the defining characteristics of your existing customer base, you can go after more people who fit the same mold,” says Hootsuite.
For those retailers that are primarily brick and mortar, creating a survey for customers to take can provide much needed information. Ask questions that support your marketing efforts and operations to identify:
- Where customers learn about your store
- Where customers are coming from (have you ever been asked at checkout for your zip code?)
- What is their demographic makeup (age, gender, income, behavior, lifestyle, values, hobbies, interests, education level, marital or family status, and occupation)
- Are customers are finding what they are looking for (and if not why)
- Are customers having a positive experience (store cleanliness, customer service, etc.)
Another way to explore for information is to partner with a marketing agency to create focus groups and conduct interviews.
For online retailers, analytics programs such as Google Analytics, and popup surveys can gather much of the same information.
Defining your target customer is not an exact science; there will be variance and you may have more than one. Of course, all customers are welcomed, and no one should be turned away. However, establishing your target market and the consumers who make up that group allows a small business to act smarter. Inc. says, “Target marketing allows you to focus your marketing dollars and brand message on a specific market that is more likely to buy from you than other markets. This is a much more affordable, efficient, and effective way to reach potential clients and generate business.”
When you clearly understand your customers, you know their needs and what’s important to them. This understanding enables you to relate to, and ultimately reach, those customers. Hubspot says, “This helps you refine your position in the market and connect on a deeper level with your customer. Having a target market or target customer is all about relevancy and relating to the person on the other side of the cash register.”
It’s at this point that your business can craft messages that will appeal to your target market. This enables you to get the most out of your limited marketing resources and time. This level of understanding can also provide you with guidance for your pricing strategy, and offer you new ideas on how to expand and develop your business. For example, if you have defined your target customer as parents in the 45-54 age range, you want to create an advertisement that appeals to them. Your advertising and signage might include people who appear to be around this age and include children in their teens. Creating an advertisement which includes scenes that they can relate to is an indication to your customer that you understand them.
Target marketing is just one of the many ways that you can better run your business. Shape your message, develop your product mix, and determine your pricing strategy with the target customer in mind. When you, as a small business retailer, are focused on your target market, you’re better positioned to thrill your customers and compete with even the biggest retailers.
|Back to Top