One of the most important things any business can do is define their core target market. It is not an easy task but it is the key to determining the optimum business model. Meeting client needs consistently requires a “value proposition” well defined and then built into how the company operates, as well as who they hire. With that said, how do you define your target customer?
Regardless of whether you are B2B or B2C, there are three key questions:
- Who do you make money on? The 80/20 rule often applies.
- What segment can you best satisfy? What customers needs are best met by the organizations’ capabilities?
- What segment can you grow with? It is important to be sure your business model will be effective for a few years to come.
Too many define their customers by what they can see–purely demographics, like size and industry for B2B or age and income for B2C. That leaves a lot of relevant facts out of the equation.
- Who shops $1 stores? I know I do–they offer some great deals, and I love great deals, whether I need them or not.
- Why are title loans a good value? Most people detest the payday loan approach as a rip-off, but did you know that it is actually less expensive than an overdraft and usually the only recourse for over 54% of the US population who live paycheck to paycheck when an emergency arises? It is a needed value for many.
- Who buys a Lexus? While I don’t own one, I value a great car that lasts a long time, is high quality, and where I can count on good service. I might be more inclined to buy a used certified Lexus than a new average priced car.
It would be pretty difficult to determine whose target customer I would be by age and income. I feel younger than my age and think my purchases may reflect that ,and my income allows me to buy certain items that I personally believe are a waste of money. So what drives my purchases? Value, or said another way, the benefits I value for a fair price. In fact, the definition of “value” is “worth what is paid for it”. Who decides if it is worth it? The customer. Anyone who tries to define a target customer without considering the benefits they most desire and delivering those benefits consistently is unlikely to be able to retain that customer or others. Marketing is not a one size fits all proposition, as companies must choose which target they can best serve. You can only determine whether it will be a good value by what is in their head–not their wallet.