5 Steps To Identify Your Target Market

It’s a business fundamental: you can’t be all things to all people and sell vanilla ice cream. We have talked about developing your competence and creating a differentiation for your organization.  Simply said, your competence is what you do better than anyone else in the markets you compete.

The 5 things to identify your market are:

1. Be specific: Target to a finite group of organizations. It is more effective to create a marketing plan that targets 300 companies than 3000.
2. Look at current customers: When trying to identify your target markets you likely already have some customers who value your competence if you are delivering any level of differentiation.
3. Keep it to 2 or 3: It can take years to fully penetrate just one target market. If you have too many target markets, you will not be effective with the one that values your competence the most.
4. Prioritize: Most companies struggle with prioritizing target markets and want to sell to as many target markets as possible. As a result they end up diluting their sales and marketing efforts and minimizing their impact.  Increase your sales by focusing your resources on a primary and secondary target market that values your competence the most.  Ask yourself, “If we had just one dollar to spend on our target markets, how would we spend it?”
5. Focus: From our experience, we see most organizations take business from outside their target markets early on in the execution of their strategy. But this decreases as their strategy starts working and they increase sales in their target markets. Typically, business from outside of your target market will end up being at a lower margin and operationally inefficient because you are not set up to service them.

Determining your organization’s competence and identifying your target markets are the most important strategic business decisions you will make.  I would encourage you and your team to take the first step to increasing sales and profitability by developing your competence and identifying your target markets.  You can download a competence hierarchy template at www.smadvisors.com. After you have made your first attempt, keep working at it until you feel you have defined a competence that your organization can provide better than anyone else in the markets you compete.  Then develop the action plans to implement it.