Target
Market: Business Plan Basics
The target market section of your business
plan must clearly identify the current and prospective buyers
of your CompanyÕs products and/or services.Ê Your goal in
preparing the target market section is to demonstrate to readers
that you clearly understand who your customers are and how
your products/services directly meet the needs of the marketplace.Ê
Properly identifying your potential customer base also helps
to drive overall marketing and sales strategies that you will
include within other sections of your business plan.
Although your product or service may meet
the needs of a large constituency of potential customers,
the goal is to define your customer base as specifically as
possible Ð both quantitatively and qualitatively.ÊÊ Consider
the follow types of characteristics for inclusion in the target
market section of your business plan:
Size
How large is your target market?Ê Are there 1,000
business buyers?Ê 10 million potential consumers ready to
purchase your product?Ê Or a small handful of very large target
customers?
Demographics
The demographic traits of your customers often vary
based on whether you are focused on serving the consumer or
business markets:
- Consumer - Income, Occupation, Gender,
Single/Married, Ethnic Group, Education
- Business - Industry, Product/Service,
Years in Business, Revenue, Employee Size, Private/Public
Geographic
Where are your customers located?Ê While technology
has made location less of an issue for many companies, it
doesnÕt mean you should overlook the importance of defining
the geographic location of your customers.Ê Clarifying these
issues also helps to ensure that your marketing and sales
strategies/budgets properly match your goals to capture market
share.
Other Characteristics
What are some of the more subjective traits that define
your customers?Ê This might include things such as current
buying motivations, perceived shortcomings of other solutions
in the market, and trends/purchasing shifts likely to occur
within your target market.
Naturally, the more you understand your
customers, the better your chances of success.Ê Many times
the best approach to answer the target market question: ÒWho
is our customer?Ó is to invest time and resources in primary
market research.Ê Conduct simple surveys or focus groups.Ê
And if feasible, work with a reputable market research firm
to guide you through the process.
At the very least, use the Internet and
industry groups to locate market research studies and statistics
for your business plan.Ê These resources can range from free
information available on websites to expensive professional
market research studies prepared by experts in the field.
Performing primary research enables you
to gather and document the quantitative and qualitative information
needed to prepare a solid target market section for your business
plan.
For more advice on writing the target market section of your
business plan:
Email
us at BizPlanIt if you have comments or suggestions about
our Virtual Business Plan.
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