For any business looking to generate enough leads to keep things running smoothly, knowing your target market is essential. Without having a clear picture of who is going to buy your product or service, you're unable to market to them effectively, as well as establish your place in the market as a whole.
Whether you're just launching your business, expanding into a new territory, or just looking to fuel your business growth, taking the time to better understand your target market is essential. Here's everything you need to know to do just that.
Defining Your Target Market
No product or service is suitable for every type of person. Therefore, trying to target everyone is simply a waste of time and money. While it may seem like a bad idea to narrow your target audience, the reality is that without doing so your marketing approach is less likely to engage your prospects.
Given that, as is demonstrated by the chart below, attracting new leads is still the top priority for businesses, knowing your market is essential. By developing a clear image of who you need to be targeting, you can also allocate your resources much more efficiently and see a better ROI.
It's very important to keep in mind that this is far from a one-time process; your target market may change as your business develops and grows, or you may launch new products or enter a new market. Therefore you need to be reviewing the people or companies you're targeting on a consistent basis, in order to ensure you remain on the right track.
How to Define Your Target Market
When it comes to the ways in which you can identify your target market, there are several factors to consider. Most importantly, these include:
Look at Your Current Customers
Take the time to carry out a thorough analysis of your current customers. What makes them buy from you? What similarities do they have? Establish who your best customers are; i.e. those that make frequent or high-value purchases, and look for similarities between them so that you're able to look for more prospects like them.
Don't just assume that you already have a full understanding of who you're serving; you might find that you're selling to a market you didn't even notice, giving you an opportunity to increase your marketing in that region or sector, and grow your revenue as a result.
Look at Your Competitors’ Customers
Carry out research into your rivals, and see who they're targeting, and the types of consumers or companies that are actually buying from them. This is particularly helpful if you're a newly-launched company and therefore don't have much previous sales data to analyse. It can also help you spot niches in the market that are currently underserved, providing you with new potential opportunities.
Look at What Your Product Offers
In order to help establish who would be most interested in your product or service, it can be very useful to think about the features and benefits it offers. Whether it's cost-savings, respect from contemporaries, or gains in efficiency, write out a list of all of these and then figure out the types of people or businesses that would benefit the most from them. This will give you a good place to start your targeted marketing from.
3 Questions to Help Identify Your Target Market
When you're in the process of establishing your target market, these three questions can be very useful in making things clearer.
Are You Being Over-Optimistic?
Overestimating your target market can be disastrous because it gives rise to unrealistic expectations and sales forecasts. If you're unsure whether a particular segment is likely to be interested in buying your product or service, consider carrying out market research such as focus groups to help get a better idea.
Is The Market Too Small?
Whilst having a clear niche is good, it's also important to make sure that you'll have enough of a reach to actually be able to turn a profit. Bear in mind that while you may have a sudden rush to buy your product after its launch, you'll need to have a wide enough target market sample to keep attracting new leads further down the line.
Are You Basing Your Predictions on Previous Experience?
Of course, it's always good to take prior experience into account, but you shouldn't rely on that alone. Even if you're entering a similar market, you'll still need to ensure that you carry out a thorough analysis of exactly who will need your products.
Target Market Analysis
A target market analysis involves looking at the data surrounding your customers and the market as a whole in order to ascertain the specific people or companies you should be marketing to.
How to Analyse Your Target Market
In order to give you a full overview of your target market, your analysis needs to consist of the who, what, when, where, why, and how questions. This means considering the following points:
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Who - Who exactly are your customers? Look at demographics such as gender, age, job, education, and location.
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What - What would be the motivation for the target audience to buy? Consider factors such as their lifestyle, hobbies, values, ethics, and interests. Think about how your product or service solves a pain point or issue that they have.
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When - How soon are they likely to need your product or service, and complete a purchase? As well as a particular timeframe, for example, a month or a year, you should also consider how often they are likely to buy.
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Where - Where are they based, and what specific information about that region is relevant to your business? For example, its population, how wealthy it is, and what the climate is like can all have an impact on your marketing decisions.
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Why - For this part, you should aim to determine why a customer would purchase from you instead of a rival business. For this, you'll need to perform a competitor analysis.
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How - This is based on customers behaviour, including things like their lifestyle choices and buying trends.
If you’re in the B2B sector, some of these factors will clearly not apply. In that case, you’ll need to take into account firmographics such as turnover, location, industry, company size and pain points.
How to Write a T.M Analysis
In order to carry out a successful analysis of your target market, you should go through the following three very important steps:
Step One: Compiling the Data
The first crucial step is to collate all of the data you'll need to gain a clear and thorough understanding of who you should be targeting. You'll want to use various different sources for this.
Alongside your own internal data such as sales data and customer services data, you'll likely need to use third-party sources such as government websites, annual reports, company sites, B2B intelligence providers, social media and press releases.
It can also be very useful to conduct market research through interviews and focus groups, either internally or through an independent agency.
Step Two: Formatting Your Target Market Report
When it becomes time to start putting your target market analysis report together, you should divide it into several parts to make the process much easier. These include:
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Title Page - Make it engaging, but clear enough so that whoever's reading it is able to immediately establish exactly what it's about.
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Introduction - This should let the reader know the basic outline of what the report will contain, as well as the specific reason for the analysis being carried out. For example, if you're considering entering a new market.
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Body - Your analysis should be made up in short paragraphs in order to make it easier and quicker to read. Formatting it with headings and different sections will also ensure it doesn't become overwhelming and risk losing the reader's attention. These sections should include topics such as a description of your target market, summary of the research performed, information about competitors, and any trends or changes in the market that you've predicted.
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Sources - Make sure to include details about the sources you used during the report, in case any facts or figures you used to need to be verified.
It's a very good idea to present your findings visually wherever possible; this makes it easier for the reader to make sense of the data. Graphs, charts and images should, therefore, be factored in to make the report overall more visually appealing.
Step Three: Putting it into Effect
In order to get the most out of your target market analysis, you should include predictions and forecasts for the future; not just simply provide a summary of the market as it currently stands. This will allow you to react accordingly in a timely manner.
After you've completed the report it needs to be shared with the relevant people in your organisation, or externally if it's part of a business plan for gaining funding, for example. It's then time to draw on all of the insights and conclusions that you developed through the analysis, and put them into practice to help drive your business forward.
Market Analysis Tools and Techniques
Here are some ideas for ways that you can generate data in order to use for your target market analysis:
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Social media - Set up paid social media campaigns, for example, Facebook ads, and then use the metrics provided to learn more about those interacting with your brand.
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Market research - Run an online marketing survey, conduct interviews and focus groups and pay attention to reviews - both your own and those of your competitors.
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Track competitors - Monitor what your rivals are doing, in terms of pricing, market share, marketing activities and social media mentions. Not only will this help give you an idea of how the market as a whole is performing, but also identify potential weaknesses for you to exploit.
There is now a wide range of tools readily available for efficient market analysis. Some of the most popular examples include:
Google Analytics
As one of the best-known market research analysis tools, Google Analytics can help you to gain a much better understanding of who is engaging with your company. You can look at things such as the locations of those interacting with your website, how many visitors end up going ahead with a purchase, and which keywords and phrases are most likely to bring your audience to your site.
Hootsuite
Hootsuite offers a number of features to help with managing your social media. One of the most useful in target market analysis is the social monitoring tool, which enables you to keep track of what people are saying both about your company and products and the industry as a whole.
Sprout Social
This is one of the most useful digital marketing research tools, giving you the opportunity to monitor each of your campaigns on social media from one place. You can also find analytics for each of the channels you're using, meaning you can quickly and easily establish which channels are performing better than others, and how wide your current reach is.
Target Market Segmentation
Target market segmentation is important because it allows you to recognise different groups within your target audience. These groups are likely to have different needs and preferences, so your marketing and sales approach should be tailored to each segment. For example, you might want to target them with ads for different products or use a more or less conversational style when emailing them.
How to Segment the Market
The most often-used ways to segment a market are by demographic, geographic, psychographic and behavioural factors. Once you've segmented your audience based on these factors you should take into consideration the following questions in order to qualify them:
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Is the segment large enough to justify using resources up targeting it?
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How hard will it be to reach this segment?
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How stable is the segment, and is it likely to grow in the future?
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Do you offer something that fully meets the needs of those in the segment?
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Is the segment already well served by your competitors?
After answering all of these questions, you should have a much better idea of which particular segments it will be worth targeting.
B2B Market Research
Having a clear understanding of your target audience is equally important for the B2B sector. This is where global market research comes in. By conducting research into your market you'll be able to develop a much greater understanding of your customers and their needs and preferences, and therefore tailor your sales approach and marketing efforts towards your prospect companies.
It can also help you to find new potential opportunities, develop new products or alter existing ones to better suit the needs of your audience.
Source: Marketo
Target Market Research Strategies
If you're wondering how to develop a strategic plan for your target market research, it needn't be an extremely complicated process. The first step, and probably the most vital, is determining exactly what your goals are for the market research. Outline what you need to find out, what questions you need to be answered, and why this is important for your business.
You then need to use both primary and secondary research in order to gain a well-rounded view of the market. These are defined as follows:
Primary Research
Primary research is information received directly from your customers. For example, you can carry out interviews, surveys, and focus groups in order to gain firsthand insight into what prospects in your industry want and need. It's also useful when setting up your buyer personas, as well as segmenting your whole target audience.
When conducting this kind of research, sample questions might include things like:
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How is your organisation structured?
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Who makes purchasing decisions?
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What challenges are you currently facing?
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What's the biggest consideration when weighing up a purchase?
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Where do you go to get information before making a purchasing decision?
Secondary Research
Secondary research, on the other hand, consists of all of the data that you have on a company, and the market in general. This might include things like public records, annual reports, market statistics, and financial records, as well as your own internal sales data.
This kind of research is extremely useful when it comes to monitoring your competitors and seeing how they stack up compared to your business, as well as spotting possible gaps in the market.
Market Research vs Marketing Research
It's probably a good idea to point out here the difference between market research and marketing research. Although they are sometimes used interchangeably, it's important to note the distinction.
Market research involves narrowing down your audience to a particular target and then learning more about them through in-depth research.
Marketing research, on the other hand, involves looking at a much wider range of customers. A simpler way to think of it is that the role of marketing research companies is to look into how a company is targeting its customers, instead of just who they're targeting.
Market Research Tools
There are now an abundance of online market research tools to make the process more efficient and cost-effective, even for smaller businesses. This is particularly important given recent research has found that small businesses waste 120 days each year on admin.
Five of the most popular market research tools are:
Social Mention
This is one of the best marketing research tools as it allows you to find out what's trending on social media in real-time. It collects content written by users from over 80 social media platforms and puts it into one feed.
Google Keywords
This handy tool enables you to view the amount of times a keyword has been searched, how competitive the keywords are and how they are connected to one another.
Tableau
This tool provides you with a dashboard where you're able to visualise market research data. You can integrate it with your own files to process your data.
Google Trends
Similar to Social Mention, Google Trends also uses its own search engine data to provide an extremely useful overview of search activity and social media interaction, alongside up-to-the-minute news from your market.
Questback
This is a paid-for service which carries out thorough market research for you and then feeds back the information quickly and in an easy-to-understand manner.
Market Research Industry
If you're looking to save time and potentially money when conducting market research, there are a number of options available to make your life a little easier.
The market research business today consists of an abundance of market research companies who will carry out things like focus groups and interviews on your behalf, and there are also third-party data providers that provide company data. This information includes in-depth insights such as financial records and credit scores, as well as data for marketing campaigns and due diligence checks.
Top 3 Market Research Companies
Here are the three highest rated market research firms, according to the American Marketing Association:
1. Nielsen
Probably the best-known market research agency on the planet, Nielsen provides a wide range of insights into what consumers are watching and buying. Founded in 1923, the company generated over $6 billion in 2016.
2. Kantar
Kantar provides insights and live trend data, with a special focus on how consumers interact with the media. The company currently has 30,000 research-only staff on its payroll.
3. QuintilesIMS
The firm came about through a merger between healthcare technology company IMS Health and research company Quintiles and is now one of the biggest research companies in the industry. With headquarters in the US, the firm generated global revenue of $3.301B during 2016.
Importance of Market Research for New Businesses
If you're in the process of setting up a new business, the importance of market research should definitely not be underestimated. In fact, it could ultimately mean the difference between a successful launch and failure.
By carrying out research beforehand you can ensure that there is actually a substantial target audience for your product and that there aren't too many other businesses providing the same thing you're offering. It can also help you during the product development phase; once you have a clear picture of exactly what consumers want, you can tailor your offerings to suit their needs and challenges.
Every newly-launched company needs an extremely effective marketing campaign in order to get the word out about their product. This can be especially hard today given the amount of noise across all digital channels; consumers are more likely to be distracted and therefore target marketing strategies are a must.
Making your messaging and content stand out is essential; CMO notes that targeted ads are twice as effective as non targeted ones. By conducting solid market research you'll be more informed about what branding and content is most likely to engage your audience effectively.
Third-Party Data Providers
When you're looking for information on your target market, using a third-party business intelligence provider can often be an extremely useful resource. Companies like ZoomInfo, Data.com and Global Database can all offer a wide range of data on all industries, allowing you to form a clear overview of how your competitors are currently performing and even which strategies they're using.
The data provided is usually collected from a vast array of sources, saving you time and money by not having to do all of this manually in-house. For example, Global Database uses diverse sources such as Companies House, telephone interviews, annual reports, government agencies, web crawling technology and more.
Using these services, you can easily find the right businesses in your niche that you want to monitor. Global Database offers numerous filter options to allow you to narrow the thousands of records listed based on specific criteria such as a number of employees, industry, revenue, location, years in operation and more. You can also search directly by company name or keyword to find the particular companies you're after.
Company Data Provided
Using a service like Global Database allows you to gain immediate access to varied and in-depth company information, including vital data such as:
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Detailed financial records
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Credit scores and suggested limits
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Technology insights, like the type of technology a company is using
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Employees details including name, job titles, seniority, nationality and age
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Direct contact details for thousands of executives
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Group structure
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Corporate ownership
Benefits of Using a B2B Database
Alongside getting instant access to a wide range of data that would otherwise be very time-consuming to collect, using a data provider to learn more about your target market offers other advantages.
Global Database, for example, carries out continued checks and verifications on all records to ensure accuracy at all times. This includes verifying every email address on a 30-day basis, giving rise to one of the best email deliverability rates in the industry.
By getting access to this company data you can also carry out a number of other operations aside from market research. Due diligence checks and employee headhunting are two examples, and they're also perfectly positioned to help fuel your CRM and create a highly-targeted email and cold calling campaigns.
Final Thoughts
For any business regardless of size or industry, having a deep understanding of your target market is an essential component to success. While it may seem tempting to skip parts of the process to save time, you risk giving your competitors the edge by doing so.
With so many customer research tools now available to make your research more time and cost-effective, there's really no excuse. Third-party data providers like Global Database are a great place to start when researching a particular market, allowing you to define your target market effectively and ultimately make better, more informed business decisions.
