The Target Market identification and validation
No one business can “be everything to everyone”. During its first growth stage, from its inception to revenue of a million dollars, accurately identifying and validating your target market is critical. Target market identification can be narrowed down by hundreds of criteria; age, income, location, industry, occupation, etc. Focus is also important during that first growth stage. Concentrate on serving those who will benefit the most from your current service or product.
In researching a target market, two factors have to be understood: what are their Pains and Gains?
“Pains describe anything that annoys your customer, before, during, and after trying to get a job done or simply prevents them from getting a job done. Pains also describe risks, which are potential bad outcomes related to getting a job done badly or not at all. From Value Proposition Design, Strategyzer series
“Gains describe the outcomes and benefits your customers want. Some gains are required, expected, or desired by customers, and some would surprise them. Gains include functional, utility, social gains, positive emotions, and cost savings.” From Value Proposition Design, Strategyzer Series.
Make sure that you identify your target market as narrowly as possible and write down “who they are and why they are.”
Everything that one does to grow a business requires someone else to act in order for it to be successful. If that action is not taken, then the business will fail.
Every decision that is made in the growth process, be it a new marketing format or the addition of a new target market segment, requires acceptance by someone. Initially, the acceptance by others exists only in the mind of the business owner.
At this point there are two options;
- Follow through on your idea and proceed, full speed ahead, by ordering inventory and starting an aggressive marketing campaign.
- The second option is to validate the need or acceptance of your product, service, or marketing campaign. The Field of Dreams concept, “If you build they will come” seldom works out in the real world.
Before you invest time and dollars in an idea that in your mind is a “can’t miss”, visit with your target market and validate your idea.
Validation is one of the scariest things a small business owner can do. It requires reaching out to people you don’t know and convincing them that they should answer a few questions, and perhaps try a new product or service and provide feedback. There are several ways of doing this, but the identification of your target market is the first step. When that is complete then:
- Make a cold call on your target market and ask them to participate in your validation process. Explain why they were selected and offer something in return for their time. (Make sure your validation process is ready and easy to explain and implement.)
- Hire a firm to conduct focus groups on your behalf. Yes, you can also do this yourself, with a little research and support.
In either case, there is going to be some upfront cost, both in the way of time and money. This relatively small expenditure is one of the best initial investments a small company can make. The validation process is not a one-time affair. You should always validate your business even when you make a small change in any area.
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