In the first step of business idea creation process you think about ideas that you know and you have the ability to accomplish. Those ideas are ideas which accomplishment will be funny as your hobby, you are passionate about them, and there is the existence of the need or problem that the idea will solve. When you select an idea that fulfill those conditions, the third step will be thinking about your target market for selected idea.
At this level of development of your business, it will be useful to think about the target market for that business idea.
What is the target market?
The basic idea of a target market included in your business idea is that a product cannot be for everyone in the general market. If you deliver a specific product or service you should know what your target market is.
Target market is one small segment of the market where your business idea will need to put the whole focus. It is a term that an entrepreneur will hear a lot. It is the group of people that will be a central part of all your marketing efforts.
We can say that the target market is basically the type of persons that will want or need your product or services. But, defining it is the first step of establishing a niche market. Entrepreneurs must know that this niche market is not in interest for big companies. And because of that you must check your new business idea with the selected your targeted or ideas customers.
How to identify your target market?
Identifying your targeted customers is vital for testing the new business ideas, and later for customization of your marketing and advertising campaigns. The goal is to be able to generate as much revenue as possible for your products or services.
The process of identifying a target market is called market segmentation. In order to identify it, you must make market segmentation. You can make market segmentation when you divide your market on small parts that have same or similar characteristics as:
- Aging (for example, they will be persons within 20 to 50 years old)
- Sex (for example, they will be females)
- Geographic (for example, they are living in specific areas in specific town)
- Revenue (for example, target market will be segment of the market that have revenue more than 60.000 $)
For example, If you sell toys, your ideal, or targeted customers will be mainly people with children.
It is better to use a combination of this market characteristics. For example, your target market will be [Specific town], males and females that are between 20 to 50 years old and that have revenue above 60.000$. With the statement like this you can add problem or need that will be satisfied with your business idea.
This statement will help you later when you start preparing different marketing elements and sales forecast for your business. Your sales forecast must start with your target market and selected market segment as a number. If you calculate the desire of the customer to solve the problem, leads, and competitors, you can easily forecast the sales quantity.
This is a very important question for all entrepreneurs, especially when they are at the dreaming stage. In such a way the whole entrepreneurial energy and force will be focused to that specific target market. Later, marketing activities will be focused to that specific target market. This is the basis for applying 80/20 rule for increasing the entrepreneurial effectivity and efficiency and business as a whole.