Who is the target audience for a small business?

Ways to identify & More

If you own a small business, you definitely need to be sure of your target audience. Having a rough idea is not enough to successfully perform in today’s merciless business milieu. With a thorough knowledge of your target audience, you could expand your business accordingly and give a tough competition without missing out on chances to maximise sales.

In this article, we’ll be highlighting the definition of a target market, how to differentiate it from a demographic, and ways to identify target markets.

How do you define a target market?

A target market or audience refers to a specific group of people you have resolved to market your products to. It could either be a large market or a niche one. This concept may not be very simple to understand if you decide to offer a product with a broad appeal or if you develop a diversified customer base for your services.

Target Market vs a Demographic

Both these terms are closely related, thus often conflated, but they are not interchangeable. The target audience is broader than demographics. As for a majority of businesses, their products or services attract a wide range of people. Target markets tend to be influenced by factors like purchasing cycles, the shelf life of a product, and other aspects that may not be driven by individuals who might want to purchase what you’re offering.

Usually, marketers opt for the long-term profit potential of a target audience into deliberation when forming new models and marketing strategies. Simply put, they need to concentrate on the bigger picture.

Demographics refer to subsets of a target audience that share certain attributes. For example, many YouTube advertisers mainly target the coveted and volatile 18-35 age demographic. That does not strictly mean that those who fall outside this age demographic are not the advertiser’s target market. It just means they belong to another demographic.

Target markets can be simply understood as an assemblage of demographics that may be interested in buying your product or avail of your service.

Ways to identify a target market for your small business

Now that you’ve got some idea about what the target audience refers to, the next step is to learn how to identify your business’s target audience.

1. Choose specific demographics that need to be targeted

Find out what kind of people need your product or service the most, and how likely they are to buy it. Think about factors like age, geographical location, gender, education level, class, marital status, ethnicity, occupation, etc.

2. Pay attention to psychographics

Psychographic division helps classify a market according to social class, lifestyle choices, shared hobbies, interests, and opinions of potential customers. It makes it easy to identify groups who are most likely to purchase your product and attract individuals who meet your desired profile.

3. If you have a present customer base, begin with it

You can start by thoroughly analysing the people who already purchase from you. It is one of the first steps to identifying a target audience. If it seems like your current customer base is very much diverse, the chances are really good that they will share a minimum of one or two common attributes.

If they don’t share common characteristics, then a shared interest could be a potential common thread. Once you start determining similarities between your current customer base, you can begin using this data to fit your regular customers into a specific target market.

It is important to note that when you are researching your target audience, you need to start broad and narrow down your approach as you progress. For example, you might begin by determining teenagers as a potential demographic for your product, but then dig deeper and find out teenagers belonging to a certain class group, studying in private schools are your most loyal customers. Narrowing down like this makes it simpler to alter your messaging to attract particular individuals or groups, even If your customer base is relatively broader.

4. Demographic Grey areas

The inability to recognise that not each individual fits into clear demographic boxes is a very common mistake made by small business owners. For example, you decide to use race and ethnicity as a starting point when researching your current customer base. But race isn’t binary (White and Coloured), and not everyone who isn’t white can be categorised into one.

You will need to acknowledge different races and ethnicities and be as inclusionary as possible when looking at potentially sensitive demographics. The language and imagery you use in your advertising are essential, as you may risk alienating members of a specific community, i.e., prospective customers.

5. Markets and Niches

If you want your business to thrive, you need to rely on a circular process to define your target audience and gather information about your customers. The first step is to identify your potential customers based on your knowledge and observations about your market, including your target audience, competitive brands, and industry.

The next step is to carry out research to gather more information about your market, like your target audience’s purchasing habits, what other competitor brands are selling, and the current industry trends.

After gathering all the necessary information, again consider how you choose to define your target audience and the product and services you’ll be providing. Carry out changes to your target market based on the new information in order to popularise your business idea. You shouldn’t end with research once your business is successful.

Keep learning about your market and make adjustments to your business strategies according to current trends. It is a never-ending process and the heart of prosperously running a business. Small business owners need to observe market conditions and modify their business plans to stay successful.

Wrapping Up

One of the important things to note when starting with target audience research is that you may need to shell out some money for things like promotions, advertisements, market research, etc. But no need to worry about this expenditure because, in the end, target marketing will help you bring back a huge return on investment.

Begin with the tools you already own, like your current customer base and digital analytics, instead of directly hiring outside help. Use social media, email marketing, vlogs, etc., to reach out to your present customers and potential ones. Send out customer surveys and also make sure you know your customers offline too. Whenever you get a chance to have a face-to-face interaction with a potential customer, make the most of that opportunity and try to learn more about your target audience.

Also Read:

1) 9 Reasons Why You Should Use a Staff Management Platform for Your Business
2) Optimisation of Staff Management and Employee Interests in a Small Business
3) Top Software Ideas for Startups & SMEs for 2021
4) Why Choose OkStaff for Managing the Payroll of your Small Business?

FAQs

Q. Why is it important to identify the target audience for a small business?

Ans. Target marketing involves breaking down your entire market into different sets, often based on income, age, gender, relationship status, education level, geographic location, etc. It helps you specifically aim for individuals whose needs and requirements most strongly match the service or product you offer. Many marketers apply this strategy mainly to allure new customers. It can also be used for other marketing aims, such as increasing loyalty among the current customer base and marketing a new product.

Q. How do small business owners determine their target audience?

Ans. Identifying your target audience is quite an expensive task. As we are talking about small businesses, it is important to note that they have different budget considerations than finely established businesses. This is what makes this task taxing. However, it is essential to note that even if, at first, you need to invest a certain amount to get things started, you will receive great returns once your marketing strategy becomes a success.

It doesn’t matter what the size of your business, never form assumptions about your target audience. Your intuitions may sometimes work as you know your audience better than anyone else; still, it is no alternative for good, classic research. Keep aside your hunches and premonitions as it will help you tackle confirmation bias, thereby, avoid scrambled data.

Q. How to define your target audience?

Ans. Defining your target audience means identifying certain attributes of the individuals or groups who you think are most likely to avail of your services. These attributes are sometimes known as a demographic profile. Listed below are some of the common characteristics used to categorise customers;

• Age
• Income level
• Gender
• Relationship status
• Education level
• Economic background
• Cultural or ethnic group
• Vocation
• Buying habits
• Family status
• Political inclination
• Geographic location
• Hobbies and interests

Q. What are the benefits of identifying the target audience for a small business?

Ans. Identifying the target audience helps small businesses advertise more efficiently and reach out to more people who will end up buying their product.·         Directly reaching groups that will be interested in buying your product will lead to more money in your pocket.