Target Markets

One subject that always seems to come up when working with small businesses and business start-ups is the target market.  The identification of the target market is one of the most important exercises for the business owner.  The target market drives many other business decisions and the lack of target market identification can lead to costly mistakes.

A business can have more than one target market.  It is usually good for business owners to identify at least three.  Sometimes one target market will have a completely different product or service mix.  Other times a target market will be a different group of customers served with the same products.

When I ask the business owner: “Who is your target market?” I often get the answer: “Everyone in Suwannee County,” or “Everyone in Cross City.”  This is not true and I can prove it.  Let’s say a natural gas business owner provides service to Gilchrist County.  Is all Gilchrist County the target market for this business?  No.  He does not sell to children under the age of 12 in Gilchrist.  Nor does he sell to homeowners in Gilchrist who only have electric ovens and electric water heaters.  Sometimes it helps to make a list of non-customers when identifying a target market.

The best question to identify a target market comes from Joe Abraham, author of Entrepreneurial DNA.  “Who is the person and situation for which your company is always the best choice?”  A Small Business Development Center colleague expressed it this way: “Who do you hit a home run with every time?” 

There are some customers that love your business; and you love them.  They never complain about your prices and you are always happy to serve them.  It is what some business owners call their “sweet spot.”  On the other hand, most business owners can name a few customers who are a pain.  The work is never right, the price is always too high, the product isn’t exactly what the customer wanted and you are seldom happy trying to make them happy.

When both parties are very satisfied with the transaction, it lifts the quality of the work and strengthens the relationship between business and customer.  These are the people you like to serve.  These are the customers you want to have.  This is the group you want to target.

Knowing specifically who your target customer is will make other business decisions easier.  The story is told of a barber who was successful at cutting elementary boy’s hair.  Mothers loved to bring their boys to him because the barber was able to do a good job without the drama they encountered in other shops.  The boys didn’t mind this barber because he had a cool spaceship chair and played corny old black and white space shows while he cut their hair.  The barber didn’t mind because the appreciative mothers were glad to pay a couple of dollars more than the going rate for his service.  He had identified elementary school boys as one of his target markets.  One day, the local Parks and Recreation Department called to see if he wanted to advertise on the outfield fence of the T-Ball field.  He didn’t have to think long about that decision because it would be a great venue to reach his target market – elementary school boys.

Knowing your target market will drive decisions that affect the product mix, employee training, advertising, location and expansion as well as a host of other small and big decisions that an owner is faced with every day.

Your Small Business Development Center Consultant can help you figure out your target markets and brainstorm with you about how to reach them.  The SBDC has 250 consultants and 40 offices in Florida.  Mark Yarick is a certified business consultant with the Small Business Development Center (SBDC) in North Central Florida and is hosted by the University of North Florida in the offices of the Suwannee County Chamber of Commerce.  SBDC confidential consulting is available at no charge.  Please call us (386-362-1782) if there is any way we can help you start and grow your business.