Getting your product built or your service ready for market is just the beginning. The next hurdle is to identify who will buy what you’ve created. One of the most important aspects of launching a new business is identifying your target market. Understanding the needs, wants, wishes, desires, and emotions of your customers and prospects so you can win them, keep them and sell them more. This information is invaluable, particularly as you develop your go-to-market plan and make your business profitable.
As your idea and product has developed, so has the image of your target market. It might be a bit generic at first, but it’s important to get as narrow as possible when defining your target. This includes not only your potential customers, but also how your potential competitors are working to reach those customers as well. Here are a few tips to help define your target market:
1. Identify the smallest market that will buy your product or service
The idea of targeting a small market doesn’t seem rewarding at first. After all, you’ve been telling investors, mentors, friends how large the total addressable market is. However, it is vital that you find a group of people who think what you have to sell is unique and will fulfill one of their needs. Successful startups frequently start with a very small market, but they go deep. Apple started with a computer Steve Wozniak made to impress his friends at the Homebrew Computer Club. There weren’t a lot of them, but they were really interested. Facebook started out just for Harvard University students. Again, not a lot of potential users, but they really wanted it. When starting out, successful startups usually don’t have the resources to reach broadly, so being selective to reach a very interested market enables you to think smarter and work with people who value your business.
2. Why your product?
Now that you’ve narrowed your target market down to who will benefit from what you have to offer, the next step is identify why your product or service is important. Your unique selling proposition. This will challenge you to think in the same way your customers will. More importantly, it will help you develop a strategy and summary of what sets you apart from your competitors.
- What do we do that no one else does?
- ·What do we do better than anyone else?
- Why should a customer buy from us and not our competitor?
Knowing who will compete with you for customers is essential to assessing your opportunities and odds for success. By understanding your competitors’ value propositions, you can begin to evaluate the top competitive threats and determine the availability of the market, or your next course of action.
Determine who your key competitors are and identify their customers. Then see how their value propositions compare in terms of: cost, service and technology. At this point your differentiated competitive value proposition will begin to emerge
Admittedly, the above is a bit of grunt work. But, if you want your startup to succeed, the information that will be gathered will help best position you and your team as you go to market giving your customers what they want and differentiating your company from the competition.