How defining your target markets can earn you bucketloads

growing, making Money, success | PlanHQ | 2 Comments

Have you ever had a project that ran over time, over budget and required you to do a whole bunch of stuff you have never needed to do before and will never need to do again?

Do you ever say ‘yes’ to customer inquiries even though they are asking you to do something that isn’t quite your core business?

Do you buy stock on a whim and then struggle to sell it?

If you answered ‘yes’ to one of the above, chances are, defining your target markets will earn you money (and make your job way less stressful, and your customers way happier!

Successful organisations know who they are targeting

  • Warehouse Stationary helps people who want office and stationary supplies on a budget
  • Basecamp provides project management to people who share the belief that projects succeed or fail based on communication
  • Greenpeace target people who think fighting for the environment requires taking a strong stance

While a lot of businesses have a vague idea of who they are targeting, actively writing it down is a massive step. If you hone in on a few groups who share a lot in common and focus on them individually, you very quickly get an idea of the need you are satisfying… And the needs you are not.

While all the above organisations would gladly accept money from people outside their target markets, they don’t actively seek them. By focusing in on a few groups, they can tweak their service and products and become more and more efficient in delivering them. You save time because you get faster which makes you more profitable.

Contrast this to the scattergun approach of offering anything to anyone, you can clearly see the difference. Instead of building on one base of knowledge, you consistently make your money from things that you will never do again - therefore the knowledge you gain is virtually useless. Everything becomes a LOT more expensive because you constantly have to learn new skills, which takes time, and are constantly guessing at timeframes without too much idea of the risks involved - which means projects run well over time.

2 people have commented on this post

  1. Thank you for your blog.

    1 million people see ONE thing a million ways.

    I think it is rather important to think *outside* of what you thought, of your customers and product/services.

    Look at richard branson, he did a impressive job by always expanding into new markets. He used company A to promote company B, to C…and finally build a huge virgin brand that people’s first impression is: Cheaper and quality, yet innovative.

    I don’t see many kiwi start-ups are very much keen on expanding, mostly locked down by “laid back” social environment.

    I say:
    “Defining your market helps, but also narrows you down, but talking to people and think/try hard to expand boarden your horizon”

    Look at Telecom’s $150mil for example, great looking site!!

    1. They defined their target audiences too well, just look at the charges they put onto the merchants.

    2. do they offer what the customer really want??

    I don’t think so…

    a. They did not offer bargains to bargain-seekers from Tradme.
    b. Like what they always do, they have *Rip off* charge for merchants using their site, and still demand them to sell thing cheaply?

    They tried to do business with *medium-to-big-merchants*, who can afford to pay those hafty fees, which all had the ability to join the online trade arena [warehouse is rolling out their own sites].

    They wanted everyone to join because everyone would think that they are big and reliable, but all they do is to squeeze your margins, which is the blood line to a retail business.

    At the end of the day, when those retailers calculates the real cost of the sales for those goods they put onto Ferrit, guess what?
    1. too little volume!! [300,000 online kiwi shoppers divided over 300 categories of products]

    2. too little margin!! [after 8% cost-per-sale, and monthly fees]

    Ferrit will not make over 30% of the kiwi online retail business, not even 15% if they continue their current strategy.

    WHY? is FREE, FREE is what everyone likes, whether they are selling something new, or old.

    nat | Oct 8th, 2007 at 9:18 pm
  2. Hmmm. aren’t you saying that while Ferrit APPEARS to have defined their traget markets they actually had no idea what people wanted, while Trademe are totally in touch with their market?

    Ferrit seems to me to be an example of an idea that had no focus on it’s target.

    admin | Oct 14th, 2007 at 7:26 pm

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