Knowing the product you plan to sell is one thing but understanding your target audience is another. Knowledge is power and knowing who you are targeting will allow you to prioritize their needs, wants, and preferences. This prioritization is bound to not only expand but create further loyalty within your customer base.
What is a target audience?
A target audience is a specific group of people who could make use of your products or services This group could be a large group or a small niche. These target audiences are developed by market segmentation.
Market segmentation is, at its core, the practice of dividing your target market into more approachable groups. This segmentation creates subsets of the market based on certain characteristics. By understanding these common characteristics, you can leverage these targets in marketing strategies and product sales.
According to NOVO, you should be familiar enough with your industry to know which people are likely to use your goods and services. Make sure that along with the basic characteristics of age, gender, and location, you should also include interests, hobbies, lifestyles, and online behavior.
Research and Insights
The first step in finding your individual target audience is to conduct proper research to find what your customers really care about. During this research, you may even find that your initial idea of who they are changes drastically.
Whether you are selling coffee, computers, or conferences, it is worth it to know your target audience and cater to them. Big businesses will often conduct costly research to learn more about the demographics they are serving. They have teams that will carry out surveys or arrange focus groups to learn more about their audiences. While some of this work can be costly, smaller businesses can carry out very effective market research at a lower price.
One of the most important tips to keep in mind is to remember that a demographic is not the same as a target audience. Compared to demographics, target audiences tend to be much larger. This is because multiple demographics can be combined to create one target audience.
Taking the next steps can be overwhelming, here are some important phases that you must complete to discover who your target audience really is and how to contact them.1. Start with your existing customer base
Growing your customer base is the ultimate goal of all businesses. With the increasing amount of technology, businesses can reach their customers from anywhere. However, businesses need to understand the importance of retaining their existing customers as well as gaining new ones.
According to Hubspot, a 5% increase in customer retention can lead to a 75% increase in customer lifetime value. Customers who are familiar with your company are more likely to buy from you again and will provide more value to your business over time. Understanding who this existing customer base is and catering to their needs will not only create a more loyal base but also give you an idea of exactly what demographics love your product or service.2. Take into account any demographic “grey areas”
A common mistake made by businesses of all sizes is a failure to recognize that not everyone fits into neat demographic boxes. Many people can not fit into a traditional group. It is important to be as inclusionary as possible when looking at all groups, especially those potentially sensitive ones. If you fail to do this, you could risk alienating members of your community and other prospective customers.3. Refining market segmentation
Unfortunately, many target audiences will not encompass all of your prospective customers. At this time, it is important to segment and refine your target audiences. Market segmentation is bound to fall into four distinct categories:
- Geographic: this segmentation is used to describe people living in a certain area. This area could be as large as a country or as small as a neighborhood block.
- Demographic: this segmentation includes characteristics like age, race, and gender and is an extremely important part of the market segmentation process. Learning about how to target various demographics can be a necessary skill when it comes to widening your customer base. Check out our advice on how to successfully cater to different generations.
- Psychographic: this segmentation categorizes people by their personality, interests, and other factors. This can be a powerful way to connect people from possibly radically different groups.
- Behavioral: this segmentation refers to how people behave, specifically what potential customers expect from a product and how their experiences influence their behavior.
Each of these steps from demographics to market segmentation, is vital to creating the most effective and least costly marketing strategy. If you are looking to take the next steps towards advertising, check out our tips on how to create a compelling advertisement.