Identifying the Right Market for Your Business

Every small business owner needs to define and understand his or her target market, or the niche in which their product or service will fit. Ideally, you would love for your business to be beneficial and available to everyone in the world, but this is not likely to be the case. Especially if you hope to eventually compete with large corporations in the same industry, you need to begin by securing a foothold with one specific demographic and grow your business from there.

Targeting one specific market does not mean that you are excluding any other section of the population, but rather you are focusing on the group of people who are most likely to benefit from– and therefore purchase– the product or service you provide. Instead of throwing away money by advertising to the general population (the majority of whom will not become customers), you can target your efforts towards a smaller group, making your marketing more effective, efficient and affordable.

Finding the Balance

Defining your target audience is all about balance. You do not want to get so specific that there are too few people who fit the definition. But at the same time, you need to ensure that your efforts do not become too generalized and therefore wasting time, effort and money on people who are not likely to create business.

Ideally, you would want to find a niche which is currently being overlooked and would benefit from a certain product or service. This is known as a market gap, and some entrepreneurs specialize in identifying these gaps and building businesses specifically to fill them. While this may not always be a possibility for your current business, you want to identify a certain type of customer that would need your service and make yourself available to them.

Defining Your Market

The easiest way to identify the ideal niche for your business is by looking at your current customer base. Look for common characteristics among them and try to identify why your service is specifically beneficial to this type of customer. Begin with general definitions and characteristics such as age, gender, location, income level and other easily definable demographics. Does your web design firm serve mostly women in North Florida in their 30s?

This would be where you could begin your definition, then move on to more distinct features such as interests, values, lifestyle and other specific characteristics which may relate to your business. Maybe your customers are mostly single, business-minded women who are particularly interested in travel photography. These deeper specifications can be difficult to identify on the surface, and that is one why so many companies use surveys that can help them get to know their customers.

Depending on your industry or the type of service/product you have, you may use a phone survey, mobile survey app, email survey or some other form that can help you understand your customers. In addition to helping you understand the kind of target audience you should advertise towards, these surveys will also help you understand the needs of your current customer base so you can improve your product or tailor it more to fit their specific needs.