Trying to appeal to everyone is a significant error for any business. Every product is engineered with a particular purpose, and its target audience will be limited; only some people want custom Air Jordans, bacon-flavored soda, or organic soap made from peanut butter. Knowing who to target is crucial because it allows you to allocate your advertising spend more efficiently and drive more conversions with organic marketing.
The goal of a target market analysis is to gain an understanding of the desires, core values, and preferences of your target audience. This knowledge can help you determine which advertising platforms to use, what products and services to offer, and relevant messaging and visuals to invite prospects to take action. As per the Zendesk Customer Experience Trends Report 2022, 68 percent of customers anticipate personalized experiences. Therefore, understanding your customer base is essential to delivering these expectations.
- Analyze which markets offer the most and most negligible value.
- Create representations of your target customers.
- Identify areas in need of a solution or improvement.
- Evaluate the potential success of an offering.
- Refine your business approach.
How to Identify Your Target Market?
The initial step to finding your ideal customer is assessing the total available market (TAM) — the maximum potential size for your product or service. Review data from social media and web analytics platforms to gain a general understanding of your target audience. This information includes where your customers are, age group, gender, preferences, and more. Additionally, leveraging data from the U.S. Census Bureau can help supplement this information.
Gathering both demographic and psychographic data is key to understanding your target market. To do this, you need to collect two types of information.
- Quantitative insights: Data, figures, and statistics related to the particular market.
- Qualitative insights: Voice of Customer (VoC) data, customer sentiment analysis, preferences, motivations for purchase, attitudes, and other psychographic characteristics.
Gather information from both primary and secondary sources. Primary sources involve getting insights directly from customers through surveys, interviews, or focus groups. Secondary data is any data collected by a different entity, like a government agency or research firm.
How to collect primary data?
- Interview current and prospective customers.
- Distribute a broad market analysis survey.
- Conduct a product test.
- Investigate your competitors.
If your business already has customers, you can make use of the data collected from their past transactions, including:
- Gathering feedback through surveys at the time of purchase, online, or at events.
- Analyzing past orders and communications with customers.
- Gaining insights from reviews and customer testimonials.
- Collecting data from customer appreciation events to assess opinions about product samples.
Utilize your secondary data to supplement your primary data and verify your hypotheses. Remember that secondary data is a crucial tool for successful ad targeting. As an outside source has compiled the information, it might need to be more representative of your intended demographic, so select only the most pertinent details.
Where to find secondary data
- Quantcast offers free, precise audience analysis for over 100 million websites and mobile apps.
- Answer The Public offers a keyword analysis tool to help identify the frequently asked questions by your target audience on the internet.
- Google Trends reveals the primary locations of your target audience.
- The U.S. Census Bureau offers current general demographic information.
The Big Four consulting firms, including McKinsey, Deloitte, Accenture, and EY, regularly release industry briefs and customer surveys to provide insights into the current market trends.
Create customer profiles and market segments
A customer profile is a concise overview of your target customers – their issues, hobbies, purchasing habits, and demographic information. Demographic data can be used to determine the best marketing channels for your company (each social media platform typically has unique audience demographics), where to distribute your products, how much to charge for them, and the ideal language to use when speaking to your customers.
Below are some key demographic information points to consider:
- Education level.
- Relationship status.
Psychographic information can show what items and brands customers prefer and prioritize. For instance, an individual who travels often and follows a vegetarian diet out of concern for animal welfare would likely appreciate convenient, plant-based snacks that market themselves as cruelty-free.
Gather data related to:
- lifestyle preferences.
Look at the competition
Identify your main competitors, investigate their marketing and sales plans, and assess your brand’s relative benefits and drawbacks. Examining your adversaries could aid you in recognizing sector tendencies and generating aspirations for future progress.
By understanding your competitors’ strengths, you can determine where to focus your positioning in the market. For instance, if you sell handmade cosmetics and your biggest competitor holds an 80% market share targeting women in their mid-twenties, you could focus on teenagers or older women instead. Additionally, you can improve your customer experience by recognizing weaknesses relative to competitors.
Conduct your primary research
Rather than using existing research, primary research involves obtaining new data from current and potential customers to acquire specific information tailored to your business.
Primary research is more beneficial as it can respond to a specific inquiry instead of depending on pre-existing data gathered for another purpose. When speaking with customers, pose open-ended, comprehensive questions that can assist in verifying hypotheses and unearthing additional information outside the limits of your original research question.
- What issue is the customer attempting to resolve?
- How have they been dealing with this problem up until now?
- What products or services do they rely on?
- Are there other alternatives they are considering?
- What are the difficulties or irritations that they experience?
- How would they prefer to access your offerings?
- Which method of communication do they favor? Where do they go to make a buying decision?
- What or who influences them when making their purchase?
Set objectives for the interview. What are the queries that you really want to get answered? Formulating questions and organizing conversations to accomplish your goals will be easier if you have clear objectives.
Social media polls can provide you with rapid feedback on the preference of your audiences between two items (e.g., product A or B). Make sure to phrase your prompt in a way that encourages further discussion beyond merely selecting one option. Additionally, consider conducting an email or web survey for more detailed data.
Speak to individuals in your target audience. Pose a combination of broad inquiries that allow you to delve into their needs and product-specific questions to gain insights into user habits. Adhere to an organized interview structure: while the questions should be predetermined, you can also investigate related topics based on the direction of the conversation.
Gather feedback from a target audience of customers who fit your ideal customer profile. Conduct focus groups either virtually or face-to-face. Make sure the participants are composed of both current and potential customers. This will provide you with more meaningful insights than surveys alone. Pose open-ended questions that don’t lead respondents to specific answers. Instead of “Would you recommend product A to your friends?” ask, “What did you like or dislike about product A?”.
This will help you gain a better understanding of consumer preferences.
Look at your business in a fresh light
Take your feedback to gain a new perspective and insight into your business. Acknowledge any negative remarks and use them to improve. With the data collected – notes, audio/video recordings, and personal impressions – you can better understand how people view what you have created. Only launch a product if it receives positive reviews.
You may find that your initial idea wasn’t the best one, but that’s okay! Use the feedback to come up with something better.
Most of the collected data will be qualitative instead of quantitative. To analyze this, it is essential to revisit the objectives set before conducting the interviews and sort the gathered information based on the main questions.
- Do you have sufficient potential buyers to launch your business? Is there enough interest in your offering?
- Will the people you are targeting benefit from what you offer?
- Are they financially able to purchase your product or service often, if at all?
- Can you effectively communicate with your audience and make them aware of your presence? How easy will it be for you to reach them?
Answering these questions can give you a clearer idea of whether selling online is right for you or if it would be better to adjust your marketing strategies and product offerings to attract a different clientele.
Q: What is the importance of market analysis before launching a business?
A: Market analysis is essential before launching a business because it helps to identify potential customers, understand their needs and preferences, and assess the competitive landscape to tailor a product or service to meet those needs. It also allows businesses to identify key marketing channels and target the right people with their message.
Q: What techniques should be used to conduct a market analysis?
A: To conduct a market analysis, businesses can use techniques such as surveys and interviews, focus groups, and data collected from public sources such as government statistics or industry reports. Companies should also consider looking at customer reviews and feedback, conducting market research studies, and analyzing competitors.
Q: How can a market analysis help refine a business’s marketing strategy?
A: By conducting a market analysis, businesses can identify their target audience and understand the preferences of this group to create an effective marketing strategy. The data collected from the research can help inform decisions such as which social media platforms to use, what type of content to produce, and how best to reach potential customers. Additionally, a market analysis can help businesses determine where they need to focus their efforts to maximize the effectiveness of their marketing campaigns.
Q: What questions should be asked when analyzing customer feedback?
A: When analyzing customer feedback, businesses should ask questions such as: Do you have sufficient potential buyers to launch your business? Is there enough interest in your offering? Will the people you are targeting benefit from what you offer? Are they financially able to purchase your product or service often, if at all? Can you effectively communicate with your audience and make them aware of your presence? How easy will it be for you to reach them? Answering these questions can give businesses insights into their target audience and help refine their marketing strategies accordingly.
Before launching a business, it is essential to conduct a market analysis to ensure that the product or service you are providing meets the needs of a large enough potential customer base. Furthermore, this will help refine your marketing strategy and determine where best to focus your efforts on social media platforms and online marketplaces, if necessary.