Like every startup idea, the target audience also differs from a look-alike business model strategy. Let’s assume you have a startup(A) that provides IT and security services. There’s another startup(B) that focuses on software development. Both startup ideas look the same at first glance yet both have a different audience and market approach.
The startup A can approach bigger companies only where these companies believe their data is everything. On the other hand, Startup-B can focus small vendors and businesses too. So in a simple sentence, Know your market before you dive in.
Target market: A group of people that’s interested in buying your product/services.
KNOW YOUR TARGET MARKET AND WHAT TO EXPECT?
In this article, you’ll be made familiar with the tools that will be needed to know your audience better.
One of the things that separate start-ups from big companies is that as a start-up your resources are very limited. Especially considering the marketing money and time you have in hand to prove your worth.
Because of this reason if you think that everybody is your customer, then sorry but you’ll start to dry out your marketing funds in no time.
So for that very reason, we need to pick a focus point instead of designing a product for everybody. Remember Facebook was created as an innovative social media platform to connect Harvard students. So first establish what market segment do you want to go after especially at the beginning phase of your start-up.
Before we dive in I want you to first create in your head an ideal customer with whom you want to work and think of him as your friend.
Because when you’re starting a start-up (and I can’t emphasize enough on this point) you must have a belief system associated with it. In other words, there should be a moral backing to your motives, something that drives the urge in you to keep making the lives of your customer more pleasurable.
And that’s only possible when your start-up idea is targeted towards a specific audience who’s facing some “real problems” that you are passionate to solve with your start-up.
Now that we’ve got the why part out of the way let’s get to the how part.
Let’s start FOR REAL:
Now I know that most of the time there is no one specific domain that you can fit your customers in. You may think that your product is for everyone that there are multiple target markets. But believe me, there have been many pieces of research on this and most of the time our product isn’t for everybody.
So I would encourage you to start with more specific zones to target first and then as your start-up grows so can your target market. Let’s see how we can segment our target market.
Defining your target market:
Target market can be segmented into four categories:
- Demographic Segmentation:
In the demographics section, we characterize our customers based on their age, gender, income, marital status, etc. Because of course if you are a gaming company who’s launching an action game than targeting mid-age moms would not be the smartest marketing strategy.
In this case, you would want to focus more on people of an age group of say starting from 12 and up to 44. Furthermore, you can classify that group based on their profession. As again, it would be worthless to target people from the Mining or Mechanical profession.
It is also true that some people are from the above-mentioned professions and yet they play video games, but that group of your audience is extremely small. You may want to avoid it. So I hope you get the picture.
- Geographic Segmentation:
In geographic segmentation, we decide what areas to focus our market on, this may also include decisions such as whether we are an online business or a local business.
Suppose you’ve got some space in the city and you decided to open a cafe then you don’t need to spend too much on advertising to out of reach customers. A simple trick at the local marketing campaigns would be good enough.
If you have an online business, your Geographical market differs significantly from a local coffee shop chain. You need to target a larger ocean of audience correctly and logically to get the most out of it. Let’s say you are providing IT services at a cheap price, your target audience will be a huge ocean of Whales and Small fishes.
Every time you want to catch a whale, you’ll need to hook an appropriate bait (right amount and quality). If you wanna catch a small fish, a small but effective bait would do the trick.
- Psychographic Segmentation:
Now that we’ve decided two major aspects of market segmentation we just can’t solely rely on these parameters.
We can further filter our customers based on their psychological remarks such as their lifestyle, what are their interests, how do different groups of people think, etc. here is no guarantee that all men between the ages of 12 and 44 would be tempted to play video games or people residing near your cafe will visit your cafe at least once.
So let’s say you’ve done some research and you figured that your cafe is located near a college. And since college students prefer to hang out in cafes you presumed that you’ll be good to go, but are we done here? Would any business model attract the students? The answer is NO! because we’re just assuming based on the psychological nature of a generic group of people.
There are other cafes’ located near that college and if you want to beat the market, you need to create a creative environment. You may want to spend some more on offers and combos to create a customer base for the long run.
So to ensure that we’re on the right track with the psychological segmentation what marketing strategists generally do is that they would perform something called a behavioral segmentation.
- Behavioral Segmentation:
This process is slightly different from our previous methods of segmentation in a manner that in this we first gather some data of the consumers based on their shopping history. OR we can see how different people are responding to already existing products/services in the market that are similar to our product/service.
This is a much more relying method and gives us confidence in making our strategy.
One of the ways through which many companies perform behavioral segmentation is by recommending products to them based on their purchase history. OR if it’s a service providing company such as you-tube than recommending videos based on their costumer’s viewing history and we all know how well those you-tube recommendations work.
Let’s take an example, suppose you have a start-up in which you want to help people in attaining overall better health. Let’s say you choose to do it through a mobile app by helping them keep track of their nutritional intake.
For an exercise based on the above example just make a list of the characteristics of your ideal customer and define who should be your target market?
Spoiler… even though it seems that here everyone could be a target audience since everyone is looking for better health, right!! but remember our customers won’t be the ones who just wish for better health. instead, it would be the people who are soo obsessed with their health/shape that they are willing to go the extra mile to keep track of every calorie they consume.
So once we’ve completed market segmentation, what do we do next?
The very next step will be “need analysis”. It is the process of identifying the needs of your target audience. And I’ll talk about need analysis in my future post, so don’t forget to read that one as well.
Until then keep powering through.