All Markets Are Not Created Equal– How to Compete: Understand Importance of Target Market (s)…

Targeting a market is a complex process with many variables, and choosing a model for targeting a market is crucial especially in the current global economic environment… But first; What is a Market? According to dictionary; it’s a set-up where two or more parties engage in exchange of goods, services and information… Ideally a market is a place where two or more parties are involved in buying and selling…

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At its core, every market is similar: On one side, there’s a seller (supply), on the other side a buyer (demand). The market acts as an intermediary to bring these two sides together… and, there can be much innovation in– How a market handles these transactions… How it takes care of its sellers and buyers… How it approaches monetization…

According to Khaled Almgren; targeting a market relies on capability of a market to ‘produce’ consumers that are willing to pay for a certain product or service… The factors of size, growth, stability, competition are the market variables that translate into growth. Markets are tough to identify and develop, but once they reach liquidity, they can be even tougher to kill. Perhaps the two most important strategic decisions a business can make is where and how to compete…

Different markets have different winning formulas. In some markets, brand strength may be the best competitive differentiator, in others a low-cost position, and yet others comprehensive product/ service offering or an ability to innovate more quickly than rivals…

In the article How to Identify a Target Market by Katey Ferenzi writes: Clearly defining a target audience (market), and creating a customer profile(s) is an imperative… You must not only determine– why someone would want to buy the product or services, but also who is most likely to buy… Often, its discovered that those who find the product or service appealing share similar characteristics, which will help in fine-tuning business messaging… When you are designing a product or service, one of the many questions ask ed is; Who is this going to appeal to? Who do I want to appeal to the most?

Knowing the target audience (market) determines which marketing tools to use… No business can just put up a marketing campaign and be done with it. It requires a lot of fine-tuning and adjusting and keeping in touch with consumer trends– all to keep adapting to change. Good marketing begins and ends with; Knowing your market… Knowing your customers profile(s)…

There are two basic areas of inquiry when defining customer profile, namely;

  • Demographic will get you started: Knowing– Age, Location, Gender, Income Level, Education Level, Occupation, Ethnic Background…
  • Psychographic will go a little deeper, bringing to light more of your target audience’s psychology: Knowing– Interests, Hobbies, Values, Attitudes, Behaviors, Lifestyle Preferences…

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In the article Factors To Consider When Evaluating a Market by Bill Gurley writes: A true market needs natural pull on both consumer and supplier side of the market. Aggregating suppliers is a necessary, but insufficient step on its own. You must also organically aggregate demand. With each step, it should get easier to acquire incremental consumer and supplier…

Highly liquid markets ‘tip’ towards becoming a clearinghouse where neither the consumer nor the supplier would favor an alternative. That only happens if momentum is increasing, and both consumers and suppliers are sensing an increasing importance of their place in the market…  Here are few factors to consider when evaluating the potential success of a market opportunity:

  • Experience vs. Status Quo: Great companies do not simply aggregate a market; they enhance it. They leverage the connective tissue to offer the consumer a user experience that simply was not possible before the arrival of this new intermediary…
  • Economic Advantages vs. Status Quo: Some markets provide enhanced economic advantages. If you can change the economics of a market, it gives a huge advantage when it comes to tipping a market…
  • Opportunity for Technology to Add Value: In many markets, the technology offering greatly enhances the user experience. Facilitating work-flow through the use of technology reduces work for the customers, and increasing switching costs…
  • Size of the Market Opportunity: A proper TAM (total available market) analysis is imperative, but it is easy to make mistakes looking only at TAM… For some markets it may not matter that the market is large, since an oligopoly of large players may control a massive percentage of the market and is unlikely to support a new entries…
  • Network Effects: Network effects are tricky and hard to describe but fundamentally it turn on the following question: Can a market provide a better experience to customer– ‘n+1000’ than it did to customer ‘n’ directly as a function of adding 1000 more participants to the market? You can pose the question to either side of the network– demand or supply. If the answer is yes,  then it’s magic, and you will get stronger over time…

In the article How To Identify a Market and Size-Up Competitors by Rebecca O. Bagley writes: Several of questions you try to answer are: How big is the overall market? How rapidly is it growing? What segments are most interesting? But it’s also important to distinguish between ‘addressable’ and ‘available’ market. The ‘addressable’ market is total revenue opportunity for a product or service. The ‘available’ market is the portion of the addressable market for which you can realistically compete.

Once you are clear about this distinction you can begin to collect data to size a market… Be aware that collecting information and finding relevant and accurate data can feel a bit like detective work, e.g.:

  • Customer Targeting: The goal is to identify customers that best fit a value proposition and can best influence broader adoption of the product or service… If you determined that the product’s or service’s primary value is, e.g.; technology, cost…then identify customers that prioritize with these values… Also, determine their influence and identify the decision makers… Use websites, personal connections and other tools to find out who they are and target them…
  • Competitive Assessment: Knowing who competes for customers is essential to assessing opportunities and odds for success. By understanding competitors’ value propositions, you can begin to evaluate top competitive threats and determine the availability of the market… Take broad inventory of competitive landscape, determine who are key competitors and identify their customers. Then, map their value propositions along three key dimensions: Cost, Service, Technology… Successful competitive strategies include highly differentiated value propositions tailored to the needs of a specific target market…

Companies often have a clear picture of their internal performance, but often have little visibility into markets, competitors… According to Karl Stark and Bill Stewart; knowing the attractiveness of your market, your competitive position, and a clear understanding of where and how to compete is critical… According to Finn Kelly; Who is your ideal customer? And if you say the target market is ‘everyone’, then you have a difficult task ahead…

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This is a fundamental mistakes that many businesses make. When you define the target audience (market) correctly and precisely, you focus marketing efforts on the people who are most likely to buy your product or service… hence you use valuable resources in the best way to solve that problem. They define an unmet need or under-served market, and offer a clear benefit to potential target customers…

According to Cindy Schulson; ask– what problem is your company trying to solve… people don’t buy a product or service; they buy a solution. Don’t define your business by what you want to sell, but by what target customers (market) want to buy…

Remember, it’s not about you – it’s about customers. Your audience (market) is not who you think they should be, but who they actually are… which may not be the same at all…