Defining your target market is the best first step to take if you are looking to open a new business or if you want to build up an existing business. Yet entrepreneurs and small business owners often short circuit this key step, jumping right into a business they are passionate about. It's great to be passionate about your business, but if you want to make money you also need to know that others are passionate about what you love, too. And the best way to do that is with target market research.
Here are three mistakes I often see entrepreneurs and solo professionals make that hurts their financial success.
- Not understanding what a target market is. Here are a few definitions to help you.
- A specific group of customers that you want to capture.
- A group of people who share a common interest in a particular subject or activity.
Target markets can be defined very broadly, and this is a mistake that almost all new business owners make. If I hear someone say “women are my target market” I know that person doesn't understand the concept of defining a target market for their business. Which brings me to the second mistake.
2. Confusing the term “target market” with “niche marketing.” A niche is a subset of a target market. Let's keep using the example above. “Women” is a bad market – the only thing all women share in common is their gender. To make your business more manageable and your marketing effective, you have to create a smaller target market and then find your niche within that target market. So, if you are, for example, a wedding planner then your target market might be “women who are getting married.” I would encourage you to narrow that down, too, but that's topic for another day. Instead, let's look at the possible niches within “women who are getting married.” You might specialize in “women who are getting married and want a destination wedding.” Or, you might specialize in “women who are getting married who are looking for a diamond tiara.” Or, you might want to work with “women who are getting married in a garden setting.” In other words, your niche is a subset of the broader target market. I'm certainly not the first to say “the riches are in the niches” – the more you can specialize and niche your business, the better off you'll be financially. And that leads me to the third mistake.
3. Not knowing the special language your niche market uses. Let's say that you want to sell supplies to women who like to make scrapbooks. To market to these women in a way that they will know, like, and trust you (and thus buy from you) you will need to know the scrapbooker's language, their specialized terms. So if you don't know what LO, embellies, Cricut, or bling means you have some homework to do before you go further. Here are some ways to find out about the special language your niche of the target market uses.
- Check out on-line forums on the topic
- Read bloggers who write about it
- Immerse yourself in the topic.
Think carefully about who you want to serve, find a niche to specialize in, and learn their special language. You will avoid three costly mistakes, make more money, and show that you understand target marketing.