What is your target market

Many people that start a small business without a business plan have not truly identified their market, in fact most will rely on their family and friends to make those initial purchases without even researching if they are even interested in that particular product or service.

Just because you love to buy shoes does not mean that your circle of friends the same age wishes to spend their hard earned income on the same, they may be saving for bigger things.

Prior to starting our property management business, we identified out market, we realised that with only the two of us we had limited time therefore identified that we wanted to build a quality rent roll and not chase quantity which we would not have been able to manage well.

Therefore identifying our target market was important as not everyone with a rental property would fall into our category. Signing a $400 per week property instead of two $200 per week was going to be smarter for our business model starting out. Making a market too broad could damage our brand early on which one may not recover from, especially in Adelaide.

To help you understand a little about target markets I have listed four common areas below:

Geographic: Location, whether it will be city or rural or even a suburb. For our property business it was coastal, we identified the coastal region from Henley Beach to Seacliff as out initial target area because not only was this where we lived but rental properties (from our research) identified they had a higher weekly rate. Another example would be you wanted to open a business selling tractors you would most likely identify a rural city or town whereby tractors were required.

Demographic: What age are you targeting, teenagers or retirees, are they female or male, do they have a family or are you aiming to the singles no income. If we had started our business aiming, it as those who had just started working or university students we would not have lasted very long. In fact one of our starting demographics were builder/developers as many would look to rent the new properties out immediately and sell with a tenant as they had identified themselves a market for investors. We also had developed properties ourselves and therefore had an established network to approach.

Psychographic: further develops upon the demographics you have identified; it looks at lifestyle choices that can influence buying decisions. These can include a person’s social status or lifestyle interests, how do they like to spend their income what are these choices made on, to keep up with their friends or to build wealth. It is also who you will be marketing your product or services to whether by traditional marketing strategies or by networking.

Finally another common target market to research is behavioral, what are your potential customer’s needs or wants and their triggers for making a purchase. Understanding a customers buying habits for example we soon established that high end property owners were looking for smaller agencies and personalized service. They wanted to be able to talk to the owner not an employee, therefore our branding held our name, we did not hide behind a made-up company name.

If you are creating a business online it is even more important to identify your target market as you are generally not having any personalized contact with your customers. You may think buying followers that then show you have a 10k following will help sell your product or service, it won’t as perhaps only 2 or those followers are interested in what you have to sell. I always say 100 followers and 75 buyers is better then 1,000 followers and 1 buyer.

I hope this small overview of target markets has given you food for thought when it comes to planning your business.