Keeping Sightlines on Specific Small Business Target Markets

small business target market

Define market need, research the target and understand the channel.

 

Define a Market Need

A good business idea fills a need that exists in the market. You may have come up with your business idea because you, your friends or your family saw a need for a product or service you couldn’t find.

Maybe the product or service exists, but you think you can do it better.

Here are four questions to ask:

1.  What need does my product or service fill? What problem does it solve?

2.  What are the features and benefits of my product or service? (“Features” are the components of your product. For instance, a bicycle’s features might include a high-tech braking system and puncture-proof tires. The “benefits” of those features are safety and a smoother ride.)

3.  What is my competitive advantage? (How is your idea different from, or better than, the competition?)

4.  What is my business model? (How will you produce, deliver and market the product or service, and how will you make money?)

Research Your Industry

Another way to fine-tune your business idea is by researching the industry you want to enter.

You’ll want to know:

  • Growth trends: How fast can a business in this industry expect to grow?
  • Profitability: What kind of profit can you expect to make? What are average margins in the industry?
  • Trends: What current and future trends (demographic, economic, global) are affecting the industry?
  • Life cycle: The chart below illustrates the concept of life cycle. Ideally, you want to choose an industry that’s either at an early stage in its life cycle or in the reinvention stage. Choosing an industry in the mature or declining stages makes it harder to compete.

SOURCES OF INDUSTRY DATA

Use these tools to research your industry:

  • The North American Industry Classification System (NAICS) is the standard system federal agencies use to classify businesses. Search it online or go to www.census.gov/eos/www/naics/ to find your industry description.
  • Trade associations also have valuable industry information. Search for associations online or consult the National Trade and Professional Associations (NTPA) Directory, available at libraries or online.
  • Risk Management Association (RMA) Annual Statement Studies, available at libraries or online at www.rmahq.org, provide benchmark financial ratios for businesses in over 370 industries.

Consider Your Target Market

Target market question: Who will your business serve? You can’t be all things to all people. To create a winning concept, you need to narrow your market focus.

Ask yourself these questions:

  • Channel position: Where in the sales chain will your customers fall? In other words, are you
  • Selling to retailers, wholesalers, consumers or other businesses?
  • Number: How big is your potential market?
  • Income level/ability to pay: Are your customers upscale or bargain hunters?
  • Demographics: What are the demographic characteristics of your market (location, company size, sex, age, marital status and education level)?
  • Lifestyle: Are your target customers urban or rural? How do they spend their work, leisure and personal time?
  • Habits: What are the spending habits of your target market? Where do they shop and how do they buy?

Other key factors to think about when assessing a business idea include:

  • Competition: How many competitors are there? How big are they? What product or service features and benefits do they offer?
  • Suppliers: What kinds of suppliers will you need? Are sources of supply readily available? How reliable are they?
  • Business risk: Is the product or service you’re considering a short-lived fad, or does it have long-term potential? Are there legal or environmental factors that could threaten your business, such as pending legislation that might restrict your operations?

Next- RESEARCH YOUR TARGET MARKETS

RELATED POSTS

Hispanic Business Leadership for Uncertain Times

Hispanic Business Leadership for Uncertain Times

How to make delusional optimism work for your Hispanic business this year Congratulations to you and your business if you are in a position to grow your business and bring in a new employee as we progress into this new year. Thank you for your decision to take the...

Reclaiming Our Life In the Age of Technology

Reclaiming Our Life In the Age of Technology

Implementing a digital detox doesn't require drastic measures, but has multiple benefits In an age where technology infiltrates every facet of our lives, the importance of a digital detox has become increasingly apparent. This concept of consciously stepping away from...

Your Brand Is Not What You Think It Is…

Your Brand Is Not What You Think It Is…

Let’s talk about FEELINGS... If you look at today’s marketing and business headlines, there is a lot of chatter about BIG data and AI - it’s everywhere. This compelled me to recently tweet the following “It’s all about BIG data these days but we must never forget the...

Video Gallery

Polls

Sign Up for the Latin Biz Today Newsletter

PR Newswire

Featured Authors

Innovation & Strategy

Money

Talent/HR

Legal

Marketing

Mi Mamá Es Una Brava

Mi Mamá Es Una Brava

She was fierce, unapologetic, unselfish and brava. Editor's note: This is a reprise piece from Gaby Alcantara Diaz remembering her late parents and brother.   Over 21.2 million (all) immigrant women reside in the United States since 2013 with many traveling by foot,...

Culture

Fashion

Food

Music

Sports

Work & Life

Mindfulness

Health & Fitness

Travel & Destinations

Personal Blogs

Pin It on Pinterest