In the first step of business idea creation process we thinking about ideas that we know how to accomplished, ideas with which accomplishment will be funny as our hobby, ideas for which we will have passion for accomplishment and there will exist need or problem that business idea can solve. When we choose idea that fulfill that conditions, third step will be thinking about target market.
In this level of development of business it will be useful to think about target market for that business idea.
What is target market? The idea of a target market is that a product will not always sell to everyone. If you deliver a specific item or service you should know what your target market is. Target market presents one segment of the market where our business idea will be focused. Target market is a term that a entrepreneurs will hear a lot in business. The target market is the group of people who you will aim all your marketing efforts at for some business idea. We may in some simples way to say that the target market is basically the type of person or persons that will want or need your product or services. But, defining your target market is the first step for establishing a niche market. Entrepreneurs must to know that this niche market is not in interest for big companies. And because of that they you must to check your new business idea with the chosen target market.
Identifying your target market is vital for checking the new business ideas, and later to customizing the marketing and advertising campaigns, to generate maximum revenue. The process of identifying a target market is called market segmentation. For the purpose to identify target market entrepreneurs must to make market segmentation dividing market on small parts that have same or similar characteristics as:
- Aging (for example, the target market will be peoples within 20 to 50 years old)
- Sex (for example, the target market will be females)
- Geographic (for example, target market will be area in some specific town)
- Revenue (for example, target market will be segment of the market that have revenue greater than 60.000 $)
- …
For example, If you sell kids toys, your target market is mainly people with children or people with children in their lives as grandmothers and grandfathers.
It is better to use combination of this market characteristics. For example, our target market will be [Specific town], males and females that are between 20 to 50 years old and that have revenue above 60.000$. With statement like this we can may to add problem or need that will be satisfied with that business idea. This statement will help us when we prepare marketing elements and sales forecast for the purpose of business plan. Every sales forecast must to start from target market and chosen segment of the market as a number. Here we will add need or desire for solving the problems that this business idea can to solve, leads, competitors and in this way we can come to some forecast number of pieces or in dollars about selling.
Target market and market segmentation is very important question for every business and every entrepreneurs especially in the level of dreaming as startup business. In this way the whole energy and force of the entrepreneurs will be directed to that target market. Later, marketing activities will be directed to that target market. This is the basic for applying 80/20 rule for increasing effectivity and efficiency of the entrepreneurs and the business in whole.
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