Defining Your Target Markets

Written on October 18, 2009 – 9:33 am | by Corte Swearingen

Defining your main target market is the key to understanding how your business can deliver the greatest value to your customers and prospects. You will serve your customers much better if you can group them together by specific needs and wants.

One way to proceed is to first look at defining your main target market. After this is done, you may need to define additional secondary or specialized markets.

Definition of Markets & Niches

Target Market: A target market is your main subset of prospects and customers. They have similar wants and needs. The overall size of your main target market is not important, but your ability to understand their desires is critical.

Secondary Market: A secondary market is a group of buyers with similar needs that are distinct from your main target market. As an example, an industrial roofing company may have commercial roof replacement as their primary market and residential roof replacement as a secondary market. While residential work may not be their main revenue source, it is still profitable enough to be considered a secondary market.

Niche Market: A niche market is a group of potential customers that have a definable need that no one else is providing. As an example, a cleaning service might uncover a niche opportunity in cleaning blinds. A graphic designer may decide there is a niche opportunity in creating just ebook covers.

To begin defining your markets, create a spreadsheet containing past customer data. Populate it with company name, products purchase, industry type and total dollars spent.

Look for common patterns as you go through your data, look for common customer patterns that will allow you to start creating definable data on your main target market as well as any secondary markets or niche areas.

You may find that some companies tend to take quite long in the buying process while other customers tend to purchase impulse-type items. Let the data help you decide how to group together your prospects and customers into definable markets.

Keep working to uncover any definable patterns within the data. There is no “right” way to approach the process and it will differ for every company.

The Competition

Another good way to help define your primary and any secondary target markets is to check out your competitor’s website and brochures to see what customer groups they may be targeting. This can also help define niche market segments that would most benefit from your company’s offerings.

In order to determine market potential, ask the following questions.

1. Does my product help this customer group solve a common problem or issue?

2. Am I able to differentiate my products and services from the competition in order to provide unique value to this group?

3. Will this customer group be willing to pay full price for my products/services?

As your business grows and you add products and services to your portfolio, you will most likely define additional secondary and niche markets. As long as they are focused around a similar set of customers with similar needs, add them to your overall list of target markets.

An Example of Defining Markets

Here’s how a commercial roofing company might define their target and niche markets.

Primary Target Market: Industrial & Commercial Buildings

Secondary Target Markets: Residential Repair, Real Estate Managers

Niche Markets: Hospitals, Elementary Schools

Defining your primary, secondary and niche markets allows you to really understand the needs of your various customers. Once you understand these needs, you’ll be in a position to develop compelling and relevant solutions for them. This is the most efficient way to grow your small business.

Corte Swearingen has written extensively on uncovering target and niche markets. He is the developer of the Small Business Marketing Website - a site developed for teaching small business owners grow their sales through the power of strategic marketing.

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