July 19

0 comments

How To Analyze Your Target Market And Discover Your Best Customers

By Hanson Cheng

July 19, 2021


Now that you’ve analyzed your competitors, it’s time to launch your shiny new product or service, right?

Wrong.

Before introducing your superduper product or service to new markets, you must determine your target market. Who EXACTLY would be interested to buy what you are selling? 

That’s where target market analysis comes in.

In this article, I’m going to show you how to analyze your target audience. Knowing your target market will make crafting your marketing and sales campaigns easier. 

Let’s dig in, shall we?

What Is Target Market Analysis?

Target market analysis is a systematic and in-depth study of your business’s potential customers—their demographics, aspirations, struggles, and all other characteristics that set them apart from other people and make them the best fit for your product or service.

This leads us to a related question...

What is a target audience?

A target market aka target audience is a clearly defined group of people who are likely to buy your products or services. 

Knowing your target market helps you not to use the ‘spray and pray’ marketing strategy. You won’t just market to anyone you bump on and hope for the best. 

Your marketing will be hyper-focused because you know who you are selling to.

4 Benefits Of Target Market Analysis

Why should you bother about target market analysis?

There are many reasons but I will give you the four supreme ones:

1. Target market analysis helps you sharpen your marketing communications.

Assessing who your business serves helps your marketing message and positioning. Your messaging becomes aligned and more precise. Such messages laser-sharp are more likely to elicit a positive response from people.

2. Target audience analysis ensures your pitches resonate with potential customers.

Prospects identify with hyper-specific marketing campaigns. Because these personalized messages hit home in prospects' hearts and minds. People are more likely to respond to them and buy your product or service.

3. Target market analysis saves your brand money.

No business, no matter how big, has an unlimited marketing budget. Businesses that understand their target market don’t throw cash around. They are deliberate in their budget allocations. They only allocate scarce resources to their target audience, saving you money in the process.

4. Target audience analysis improves customer management.

After you identify your target market and their needs, it’s easier to give them what they want. You manage all customer interactions better. This delights your customers. And happy customers buy more and stay with your brand longer.

Here are other benefits of having a clear target market.

Source: Point Visible

How To Define And Analyze Your Target Audience In 6 Simple Steps

Now that you know the benefits of understanding your target consumers, let’s dive into specific steps you must take to identify and assess your target market.

1. Conduct market research.

To find and understand customers interested in what you sell, conduct market research.

Because I’ve already covered market research in Chapter 3, I’ll give you a few reminders.

  • Market research is fundamental to business success so you must spend significant time on it.
  • In your research, you must get very specific about the target market you want to serve.
  • Find out who your competitors are targeting so you can identify related groups they are neglecting and serve them.
  • Which alternative offers can you make to your target market to cover the gap missed by the competition?
  • Identify who exactly your customers are and pinpoint the problems they are grappling with.
  • Pin down your ideal customer’s biggest pain points your product or service must solve.
  • Research the psychological triggers that push your target customers to buy products similar to yours.
  • Get to know where the bulk of your ideal buyers gather online and offline. (Yes, with more and more people getting vaccinated, the post-Covid business landscape will include face-to-face gatherings.)

In short, target market analysis gives your marketing a bullseye to aim at.

2. Analyze your product or service.

You created your product or service with someone in mind, right?

To understand your target market, go back to the time where you were dreaming about launching your business venture. Businesses don’t spring out of the blue. There’s a burning passion and motivation that inspired you to create a product or service. Think deeply about what sparked your business dream. 

Ask yourself the following questions:

  • Which specific group of people were you desperate to help?
  • Whose problems did you want to solve from the onset?
  • Who would find your product appealing?

Asking these questions will narrow down the market segments you might serve. 

You can go a step further.

Do a practical exercise that’ll help you zero in on your target. List all the benefits of your product or service. For each benefit, identify a group of potential customers who can profit the most from it.

3. Dissect your current customers.

Your existing customers can give you clues about your target market and who you should focus on in your marketing campaigns.

But we are not talking about any customer here. 

To pinpoint your target market, scour your customer base to unearth your best customers. This leads us to the question: best in terms of what?

Good question.

Your best customers:

  • Move through the stages of the buyer journey fast so you don’t waste marketing resources.
  • Buy from you repeatedly which gives you a steady stream of income.
  • Gladly pay your prices with little or no haggling.
  • Stick with your brand for a long time, which boosts your lifetime customer value (LCV).
  • Give suggestions on how you can improve your product or service.
  • Love bragging about your brand on social media i.e. they are brand ambassadors.
  • Buy your higher-priced offers more than the cheaper offerings.

To get maximum value from these customers, conduct a target market audit with them.

Use the tactics I spoke about in the market research chapter: surveys, interviews, questionnaires, and focus groups. We won’t hap on them.

But what do you ask them?

  • How and where did you hear about our company? You get to know the traffic source and the best content asset you can use to reach the target market.
  • What do you love most about our product or service? This helps you identify the product benefits that appeal to your target market so you push them more.
  • What are your favorite social media channels? Knowing their favorite channel tells you where to get more prospects with similar characteristics and the channels your brand must focus on.
  • What made you buy our product or service? This reveals your product’s star features/benefits you can highlight in your sales and marketing copy.
  • Which websites do you go to for information? Knowing your target market’s favorite online watering holes will help you know where to fish for your ideal customers.
  • Did you learn about it via a free or paid channel? This info will show you where you should channel most of your lead generation financial resources. Also, you will get hints on how to improve the lagging channel.

Once you understand the anatomy of your best customers, compile a meticulous customer or buyer persona for your business and use it to look for more prospects with similar qualities. 

Because you’ve done all the hard work up front, you will get more conversions and sales.

4. Dig into demographics and psychographics

Another way to understand your would-be customers is to evaluate their demographic info. In case you are wondering, demographics are basic characteristics of a person as described by the population stats.

These characteristics include:

  • Age
  • Gender
  • Race
  • Marital status
  • Number of children
  • Occupation
  • Annual income level
  • Education level
  • Religion
  • Homeowners

Such facts are crucial in getting to know your target demographic. You can get this data from the U.S. Census Bureau site. While demographic information goes a long way in helping you understand your target audience, there’s something better: psychographics.

Demographics tell you who a person is and what they are or do. On the flip side, psychographics reveals the why of a person. What drives their behavior? These psychological characteristics go deeper than demographic attributes.

Psychographic factors cover:

  • Beliefs
  • Values
  • Interests
  • Attitudes
  • Lifestyle
  • Personality type
  • Social class

In marketing, psychographic factors are critical. They help you appreciate your target market at a deeper level. While cursory surface-level facts are helpful in marketing, deep emotional matters and values are more valuable in helping you sway consumer behavior.

Demographics and psychographics are a formidable team.

Source: CB Insights

The two aspects complement each other perfectly. Use them to gain valuable insights into your target customers and enhance the chances of your business success.

5. Create market segments and customer profiles.

Once you dial in your ideal market demographics and psychographics, you are ready for the next step.

Grouping them according to their needs.

A business that uses a blanket marketing approach doesn’t close any sales. It pays to narrow your targeting by subdividing your target market into smaller groups according to their shared traits. This makes your offers more targeted. So you generate more revenue for your business. 

There are five types of market segmentation:

  • Demographic Segmentation: categorizing customers using their external traits.
  • Psychographic Segmentation: grouping customers using their internal traits.
  • Behavioral Segmentation: dividing customers according to their behavior patterns.
  • Geographic Segmentation: dividing your market according to buyers’ geographic location.
  • Firmographic Segmentation: grouping companies according to certain attributes they share.

Source: G2.com

Since we’ve already covered demographics and psychographics, let's unpack the remaining three segmentation types.

Behavioral Segmentation

Behavioral segmentation looks at customers’ purchase behavior.

It covers the following:

Benefits Sought

Which prime product benefits do they desire the most? You can then focus on highlighting these in upcoming campaigns to hike conversions.

User Status

Who uses the product frequently, occasionally, or doesn’t use it at all? 

You can then dig deeper into the shared characteristics of each group and tailor your marketing strategy to each one.

Occasions

On which occasions does your customer base prefer to purchase your products? With occasion segmentation intel at your disposal, you can craft product promos around the occasion.

Buyer Journey

How long do typical consumers spend on their buyer journey? Use this research to optimize your process so they go through faster?

Geographic Segmentation 

Next is geographic segmentation.

As I said earlier, this is grouping people according to their location. People who live in the same location have homogeneous characteristics.

Geographic segmentation is an easy yet powerful way to penetrate new markets.

Here is an example of geographic segmentation.

  • City
  • State
  • Country
  • Region
  • Population density
  • Zip Code
  • Neighborhoods

Each group represents people with similar interests, needs, and wants. You can survey the geographic unit you want to break into and localize your promotions to match their needs. If you are selling to many areas or regions, it’s important to note geographical differences in needs and preferences.

Firmographic Segmentation

Lastly, let’s explore firmographic segmentation.

Firmographics is demographics for companies.

If you are a small business owner that targets other businesses, this is the segmentation strategy you should use. A company that uses firmographic segmentation groups prospects based on funding, size, and scale.

To find the right company to target, you can group businesses using these variables:

  • Industry, e.g. AI in healthcare, accounting, and bookkeeping, biotechnology, etc.
  • The number of employees they have.
  • Ownership legal status (private, public, or government-owned entity?)
  • Company size.
  • Financial standing and size of their income.
  • Average sales cycle.
  • Years in business.
  • Location of stores, offices, warehouses, or manufacturing plants.
  • Market size and how large their clientele is.

Where can you find firmographic data?

There are many sources you can tap from.

First, you can search for info from trade journals. Each industry has leading journals packed with the latest data and trends. Another easy online source you can glean data from is federal and state government websites. You could always conduct a survey to collect firsthand data about your B2B competitors and target market.

After determining the type of segmentation you will use, move to the next step.

Create a buyer persona for each of your customer segments. To make the whole thing fun, name your personas to make them memorable to your team, e.g. Techy Terry, Fussy Fiona, Advocacy Andy, Foodie Philip, etc.

Here is an example of a buyer persona for a coffee shop targeting students.

Source: Alexa

With such a detailed persona, marketing becomes a breeze. The brand’s chances of success skyrocket.

6. Find out who buys from your competitors.

Finally, you can stalk your competition for precious nuggets about your target audience.

Study these strategic aspects:

Positioning

Pick up how they position themselves to win customers. How do they differentiate themselves from everyone on the market? Which gender or age group are they trying to win over? Which group of customers does their market positioning miss? Can you cater to them?

Pricing

Dig into their pricing strategy. Who are they trying to sell to? Is it monied premium buyers or budget-conscious who worry about cost? For example, if they focus on premium goods you can create lower-priced alternatives for the cash-strapped segments.

Social Networks Pages

Follow them on social platforms to eavesdrop on their conversations with their audience. What do consumers like? Is there a feature everyone is demanding? Also, note what they hate so you avoid it in your product development or marketing efforts.

Customer Reviews

Online reviews and testimonials are rich sources of target market data. Scour through competitors’ online reviews to see your target market adores and abhors to adjust target them more accurately.

It’s all about understanding your target buyers’ needs and tastes.

If you pick any weakness in the way the competition serves the audience, you could create related products that satisfy those underserved needs. Analyzing your competitor’s audience helps you determine if you are targeting a saturated market. Then you can go in a different direction and look for a hungry market.

Target Market Analysis Toolbox

To perform your target analysis job well, you need the right tools.

Without access to the right tools, your best intentions will fail. Here’s your target market analysis toolbox with everything you need to do a splendid job.

1. Google Analytics

Understand the makeup of your audience: demographics, age/gender, product-purchase interests, industry, and potential/actual target location.

2. CRM Platforms

Customer Relationship Management platforms store your customer base info: contact info, contract size, purchasing data, demographic data, and more.

3. Similar Web

Deep market insights into your market, including sales and shopper intelligence, traffic sources, audience interests, and competitors.

4. Social Media Platforms Analytics

Get fresh data about your target market from native analytics features on Facebook, Instagram, LinkedIn, or wherever your audience frequents.

5. Quantcast

Get live insights into your audience purchase behaviors, browsing interests, domain affinity, occupations, devices, and more.

6. United States Census Bureau

Gain access to info about a particular population group: city and state, age, ethnicity, education, income, housing, and more.

7. Pew Research Center

Get revealing data about social and demographic trends, global attitudes, and internet usage.

Grab these tools and similar ones to dig up all you can about your target market.

Target Market Analysis: A Vital Step To Business Success

Those are my best tips and resources for doing a target market analysis.

Target analysis insights are key for building a business that succeeds beyond your wildest dreams.

It helps you streamline your marketing processes, make smart decisions, and squeeze every ounce of value from all your marketing campaigns.

But remember that audiences change and grow. 

So target market analysis is a moving target and never ends.

Last Updated on August 13, 2021 by Hanson Cheng

Thanks For Reading!

You can get more actionable ideas in my newsletter.

 I'll give you info on actionable ideas to grow and cool things that are getting me excited.  Enter your email and join us!

Hanson Cheng

About the author

Living in Bali with my Fiancee and puppy, (Alina and Pickles). Scaling online businesses and sharing lessons learned on this website and in our email newsletter. Always happy to hear from you, so find me on Instagram if you want to say hi!

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
>