Every business should start with a great idea, backed by an excellent business plan that comprises all the elements associated with running a successful venture. This will include sections on your operations, finances, sales strategies and products/services – but one central thread that will appear in every segment is your target market.
When planning for your business, it’s easy to focus on what works internally – such as considering strategies that other companies use or simply those fitting into your budget. However, if you really want to excel, you need to align your strategies to the needs of your target audience, since their needs can affect every function of your business.
There are many reasons why your target market is so integral, and understanding your audience well will put you in the right position to help determine which strategies will work best without any guesswork. In our blog we examine the role of your target market and explore the reasons why they matter so much to your plan and overall business success.
In this blog, we have examined the role of your target market and the reasons why it matters so much when planning for your business.
- Define your value proposition
- Refine sales and marketing strategies
- Determine your pricing model
- Understand barriers
- Streamline your operations
- Attract investment
Define your value proposition
The first instance that your target market will come into play is when you create your value proposition. This section focuses on why your business is needed in the world, which will usually boil down to how you will help customers and encourage them to buy from you.
Businesses with a unique value proposition tend to fare well by introducing something new to the market. To find the right idea, you need to identify new ways of adding value to people’s lives through your products or services. Understanding your target market in-depth will enable you to determine the pains in their lives that you can address through your offering.
By aligning your value proposition closely to your target market, you will find the perfect position for your business to fill those gaps. This should provide you with a ready-made customer base comprised of people or businesses who genuinely need your products or services, which allows you to build your reputation and secure sales.
Refine sales and marketing strategies
Another essential part of any business plan is your sales and marketing strategies. You will likely revisit these strategies over time as you grow revenue and profit.
If you want your sales and marketing tactics to be effective, you need to ensure they match the preferences and needs of the customers you are targeting. Once again, this means inherently understanding your market.
Examples of understanding your market and how to approach them through sales and marketing includes knowing the platforms they use (such as social media, TV, websites etc.) and the key messages to use to attract them. By understanding this, you will be able to refine your strategies to stand a better chance of securing a purchase, helping you to optimise results for your efforts and lowering your acquisition costs. With effective marketing and sales, you can then focus on growing your profit and customer base.
Determine your pricing model
When launching a new product or service, you need to ensure that you are selling your products and services at an appropriate price that covers your costs while remaining competitive for customers and allowing you to generate profits.
When creating your pricing model, there are many factors to consider, such as the expenses you must incur to provide your products and services and what other businesses are charging for similar items. However, your target market should also play a part, including their budget and what they may be willing to pay. You can then make sure that the prices you charge are within their affordability while offering them value for their money.
Acknowledging the affordability of your target market will help you refine your financial model so that you can ensure your costs allow you to still provide a competitive price in the market without harming profitability.
Understand barriers
Another advantage of knowing your target market in depth is that it helps you to recognise any barriers to the market you may need to overcome. If you are aware of the preferences and behaviours of your potential customers, you will be conscious of what might prevent them from purchasing.
Examples of market barriers could include brand loyalty (if there is already a big name dominating that industry), price (if larger companies offer the same products cheaper due to economies of scale), visibility (getting seen in the industry on the right channels) or even geographical barriers (if your customers are far away from your business base).
Once you pinpoint these barriers, you will be able to put in place appropriate steps that to help you overcome them, with your customers’ needs in mind. This makes it easier to launch your products and services onto the market and increase your chances of long-term success.
Streamline your operations
While it may seem obvious that your target market will shape your sales and marketing strategies, you might not be aware that it should also streamline your other operational plans.
Once you’ve gained expertise in your market, you will be in a position to judge demand and requirements for your operations. This will enable you to tailor your business functions, so they best serve customers.
For example, if your target market prioritises sustainability, which dictates their purchasing choices, you will need to implement this into your operations. This could mean working with eco-friendly suppliers or reducing energy consumption with intelligent processes. It might also mean ensuring all workers involved in your production process are paid the living wage and that nobody comes into harm at any stage.
Another example might be ensuring you have a robust customer services function, present on the platforms your customers might want to reach you on (such as telephone, email, website and social media), at hours that suit them. This enables you to handle queries without risking a bad reputation from people who can’t get through to you.
By aligning your operations to your target market, alongside the other factors you need to consider, you should be able to adequately cope with demand and prevent any operational issues impacting your sales, fuelling your long-term success and growth.
Attract investment
Finally, one of the advantages for a business that can prove its understanding of the target market and integrate it into planning is that you are far more likely to attract investment.
Knowing your target market well means two things. Firstly, there is a market for your business, which generated the demand you need to succeed. Secondly, it shows that you have the ability to adjust your operations and strategies so that they effectively capture customers, enabling you to secure sales and increase revenue. These are both traits that investors will want to see when trying to gauge the potential for an investment.
With a sensible plan that places your customer at the heart of your business, investors will be more convinced of your venture’s chances of success and growth. This will flow into a greater return on their investment and convince them to support you, enabling you to obtain the funding to reach your goals.
Conclusion
It is an obvious statement to say that a business is nothing without its customers, but it’s also very accurate. However, you need to consider your audience before you even start selling to them to truly succeed – which means really focusing on their needs throughout the planning stage.
By incorporating your target market into your business plan, you will create the conditions you need to succeed: products and services that address customer pain points at appropriate prices, marketing and sales strategies that effectively drive results and reduce barriers that threaten your progress. Together, they increase the likelihood of longevity and profit for your company.
Indicating your understanding of your target market is just one critical part of your business plan. We can help you cover it off, and all the other essential parts, with our business planning support.