Researching a target market for your business is the process of gathering and analyzing information about the specific group of consumers that you are trying to sell to.
This includes identifying the characteristics, needs, and purchasing habits of your ideal customers, as well as understanding the size and growth potential of your market.
Researching your target market helps you to understand and connect with your customers more effectively, and inform your business decisions such as product or service offerings, pricing strategy, marketing efforts, and overall business direction.
It is an essential step in the process of starting a new business, as it helps you to identify and target the right customers and ensure the success of your business. If you ask me, it should actually be one of the process you do before even considering your business name.
In this article I will take you through the process and steps involved when conducting a proper target market research for your new business.
Table of Contents
First thing’s first. Let’s get our facts right.
What is a Target Market?
Simply put, a target market is a specific group of consumers or potential clients that a business is trying to sell to.
Think of your target market as the group of people who are most likely to buy the products or services your business is offering.
When doing a target market analysis you will better understand certain factors, such as demographics, interests, and purchasing habits of these potential customers.
Identifying and targeting a specific target market is an important aspect of a business’s marketing strategy, as it allows the business to focus its resources and efforts on reaching those consumers who are most likely to be interested in its offerings,
Furthermore, at the early stage of your business, understanding the needs and preferences of the target market will help you to create products or services that are more likely to be successful.
Identifying the Characteristics of your Ideal Customer
By understanding the specific characteristics of your ideal customer, you can tailor your marketing efforts and product or service offerings to meet their needs and preferences more effectively.
This can include identifying demographics such as age, gender, income level, education level, and geographic location, as well as interests and other factors that may influence their purchasing decisions.
For example, if your target audience is young, urban professionals, you may want to focus your marketing efforts on social media platforms and online channels that are popular with that demographic. If your target audience is interested in sustainability, you may want to highlight the eco-friendly features of your products or services in your marketing efforts.
By understanding the characteristics of your ideal customer, you can create more targeted and effective marketing campaigns, and increase the chances of success for your business.
You can conduct customer surveys and focus groups that will provide you with some valuable insights into the needs, wants, and purchasing habits of your target audience.
By collecting feedback directly from customers, you can gain a better understanding of their preferences and use that information to inform your business decisions.
Determine the Size and Growth Potential of your Market
Understanding the size and potential for growth in your market is an important factor in determining the feasibility of your business.
The size of your market refers to the number of potential customers who are interested in your product or service, and the demand for it. The growth potential, on the other hand, refers to the potential for the market to expand or increase in size over time.
Here are a few simple ways to research the size and growth potential of your market:
1. Look at industry data and market research reports:
Industry data and market research reports can provide valuable insights into the size and growth potential of your market. These reports often include information about market trends, customer demographics, and competitive landscape.
You can find various Market research reports online, at a price, but also for free. Here’s a good list or sources.
2. Talk to industry experts:
Industry experts can provide valuable insights into the size and growth potential of your market. This can include talking to industry professionals, such as business owners, consultants, or analysts.
Networking and talking to industry experts can be a valuable source of market intelligence and advice.
This can include attending industry events, joining professional associations, and reaching out to experts and thought leaders in your field.
By building relationships and learning from others in your industry, you can gain valuable insights and advice that can help your business succeed.
3. Analyze competitors:
Analyzing your competitors can provide insights into the size and growth potential of your market. This can include looking at the size and success of your competitors, as well as their product or service offerings, pricing, and marketing strategies.
Start by identifying the businesses that are competing with you for customers in your market. This can include direct competitors who offer similar products or services, as well as indirect competitors who offer products or services that meet the same need or solve the same problem as yours.
Once you have identified your competitors, gather as much information as you can about them. This can include their product or service offerings, pricing, marketing strategies, target audience, and any other relevant information. Look for information on their website, social media accounts, and online reviews, as well as industry data and market research reports.
By researching the size and growth potential of your market, you can better understand the demand for your product or services and assess the potential that your business is successful.
This will help you to determine the feasibility of your business and make informed decisions about your business strategy.
Understand the Needs, Wants, and Purchasing Habits of your Target Audience
In order to effectively target and market to your target audience, it is important to understand their purchasing habits.
This involves gathering and analyzing information about their specific needs, preferences, and behaviors in relation to your product or service. Here are some ways you can gather this information:
Survey potential customers:
One way to gather information about your target audience’s needs, wants, and purchasing habits is to survey potential customers.
This can be done through online surveys, in-person interviews, or focus groups.
Surveying potential customers can provide valuable insights into their preferences, needs, and purchasing habits, as well as any challenges or obstacles they may have when considering your product or service.
Analyze data and market research reports:
There are many sources of market research data, including industry associations, government agencies, market research firms, and online databases.
It is important to carefully analyze this data to identify trends and opportunities in your market, and use it to inform your business decisions.
Study the competition:
Once again, analyzing and studying your competitors can provide valuable insights into your target audience’s needs, wants, and purchasing habits.
Dig deep into your competitor’s product or service offerings, pricing, marketing strategies, and target audience. By studying the competition, you can also identify opportunities to differentiate your business and gain a competitive advantage in the market.
By understanding the needs, wants, and purchasing habits of your target audience, you can:
- Tailor your product or service offering to better meet the specific needs of your target audience.
- Set a pricing strategy that meets their budget and value expectations.
- Market your products or services in a way that resonates with their interests and preferences.
At the end of the day, understanding and meeting the needs of your target audience, will give you a better chance of success for your business.
Defining your target market geographically
Identifying the geographic location of your target market can help you to tailor your marketing efforts and determine the best locations for your business.
This can be based on factors such as the location of your target audience, the location of your competitors, and the availability of resources such as suppliers and employees.
Analyzing market research data and reports:
Market research data and reports can provide valuable insights into the size, growth potential, and characteristics of your market, as well as the needs, wants, and purchasing habits of your target audience.
There are many sources of market research data, including industry associations, government agencies, market research firms, and online databases.
It is important to carefully analyze this data to identify trends and opportunities in your market, and use it to inform your business decisions.
Here are some tips to consider to effectively analyze your market research data.
Determine your research goals:
Before you begin analyzing the data, it is important to determine your research goals. What information are you trying to gather, and how will you use it to inform your business decisions?
This will help you to focus your analysis and ensure that you are gathering relevant data.
Gather and organize the data:
Collect all of the relevant data from the sources you have identified, and organize it in a way that makes it easy to analyze.
This can include sorting the data into categories or creating spreadsheets or charts.
Analyze the data:
Once you have gathered and organized the data, it is time to start analyzing it.
This can involve looking for trends and patterns in the data, comparing different data sets, and identifying relationships between different variables.
Use the tools and techniques that are most appropriate for the type of data you are analyzing, such as statistical analysis or qualitative analysis.
Interpret the results:
Once you have analyzed the data, it is time to interpret the results.
What does the data tell you about your target market and industry? What trends and patterns have you identified, and what do they mean for your business?
Use the results to inform your business decisions:
Finally use the insights you have gained from your data analysis to make data-driven business decisions.
This can include adjusting your product or service offerings, pricing strategy, marketing efforts, or overall business direction based on the trends and patterns you have identified.
Use Online Tools and Resources to gather Market Intelligence
Online tools and resources can be a valuable source of market intelligence, as they provide access to a wide range of data and information about your target market and industry.
Some examples of online tools and resources for gathering market intelligence include:
Online market research platforms: These platforms provide access to a wide range of data and research reports about specific markets and industries. Many of these platforms offer subscriptions or pay-per-use access to their data and reports.
Social media: Social media platforms such as Twitter, Facebook, and LinkedIn can be a valuable source of market intelligence, as they provide insights into consumer behavior, preferences, and trends.
Industry blogs and websites: Many industries have their own blogs and websites that provide news, updates, and analysis about the industry. Reading these can help you to stay up-to-date with developments in your market and gather insights about your target audience.
Online forums and discussion groups: Online forums and discussion groups provide a platform for people to share their thoughts, experiences, and insights. Reading and participating in these forums can help you to gather insights and stay up-to-date with developments in your market.
By using online tools and resources to gather market intelligence, you can stay informed about your target market and industry, and use that information to inform your business decisions.
Studying the competition
As already mentioned in previous sections above, understanding your competitors is an important aspect of market research. This includes analyzing their products or services, pricing, marketing strategies, and target audience.
By studying the competition, you can identify opportunities to differentiate your business and gain a competitive advantage in the market.
Let’s go through some of the steps you need to include in your competitor research.
Who are Your Competitors?
Start by identifying who your real competitors are. Don’t only look at the direct competitors, that is, those who offer similar products or services as yours. Try and understand also who your indirect competitors are.
Indirect competitors are businesses that offer products or services that meet the same need or solve the same problem as yours, but are not in the same industry or product category as your business.
For example, if you are a furniture retailer, your direct competitors would be other furniture retailers, but your indirect competitors might include home decor stores, home improvement stores, or online marketplaces that also sell furniture.
Indirect competitors can be a significant source of competition for your business, as they may be able to offer similar solutions to your target customers.
So, it is important to consider your indirect competitors when developing your business strategy, as they can impact the demand for your product or service and the competitive landscape of your market.
Analyze Your Competitors
Once you have made a list of your main direct and indirect competitors, it’s time to gather all relevant information about them and analyze it.
This should include, amongst other things;
- an itemized list of the products or services they are offering,
- their pricing points,
- their marketing strategies,
- who their target audience is.
You can find most of this information from their websites, social media accounts, and anywhere else where their brand or company information is mentioned, including industry data reports, Financial Reports, and market research reports.
What are their strengths and weaknesses?
Look for opportunities to differentiate your business and gain a competitive advantage, and consider how you can address any weaknesses or challenges that your competitors may have.
What is their market share?
Determine the market share of your competitors by analyzing the percentage of total sales or customers that they have in your market. This will give you an idea of their size and influence in the market.
Keep an Eye on Your Competitors
Keep track of your competitors’ activity and changes to their product or service offerings, pricing, and marketing strategies.
This will help you to stay informed about their movements in the market and adapt your own strategies accordingly.
Create a Buyer Persona
A buyer persona is a fictional representation, but with a detailed profile, of your ideal customer, based on your research into your target market.
It includes information about the customer’s demographics, needs, wants, and purchasing habits, as well as their goals and challenges.
Creating a buyer persona helps you to better understand and connect with your target audience, and inform your business decisions.
Once you have conducted the market research, I explained above and gathered enough data about your target market, you should have information about your ideal customer’s age, gender, income, education level, location and so on.
With this information in hand you can follow these steps to create a buyer persona:
- Identify their goals and challenges: What are your customers trying to achieve, and what challenges are they facing?
- Determine their values and attitudes: What are your customers’ values and attitudes towards your product or service?
- Develop an ideal client description: Use the information you have gathered to create a detailed description of your buyer persona. Be sure to give your persona a name and include details such as their job title, company size, and primary goals. Keep in mind that you can have more than one buyer persona.
Now that you have a buyer persona, or two, use them as a reference when creating marketing campaigns and designing your product or service. This will help ensure that you are targeting the right audience and addressing their needs.
Test Marketing and Customer Feedback
Test marketing can be a valuable way to gather insights and identify any issues or improvements that need to be made before launching the product or service more widely.
Test marketing is the process of introducing a new product or service to a small group of target customers in order to gather feedback and assess its potential for success in the market.
This will also give you the customer feedback and information you need for refining various aspects of your business strategy. Through customer feedback, you can identify areas for improvement and make adjustments to your product or service offerings, pricing strategy, and marketing efforts.
Conclusion
Through market research such as surveying potential customers, analyzing industry data, studying competition, and looking at market research reports, you can better understand the potential demand for your product or service.
This is essential for determining the feasibility of your business. Evaluating the potential demand for your product or service will help you to gauge the likelihood of success in your market before investing too much money and effort into your new business.
