A Step-by-Step Guide to

Defining Your
Target Market

target-cover

A Definitive Guide from Mirasee

Chapter 1

Why Should You Start With Your Target Market?

Table of Contents

launching ideasIf you’re like most entrepreneurs, your business started with an idea. Usually, the idea has to do with what you want to offer. You see a problem you could solve, or you have something of value you want to offer the world. Either way, the center of your idea is you—your product or your service.
That can be a good way to start thinking about your business, but it’s not a good way to launch your business. In fact, 98% of businesses that start this way fail in their first year. And a lot more of them never gain traction and break significant numbers in income, forever spinning their wheels and never truly taking off.

What’s wrong with this approach? It puts the cart before the horse. If you have an idea for a product or a service and then try to figure out who will want to buy it, you’ll spend a lot of time spinning you wheels. Here at Mirasee, we believe there’s a better way: starting with your target market—even before you have a product in mind.

How to Fail at Business

The biggest problem with the product-first model is that it relies on you understanding the market so deeply that you can identify the problem and build the solution all by yourself. Nowhere does it even suggest that your target audience might not be aware of the problem, or that they might perceive it in a different way.

It doesn’t take into account if the people you’re making the solution for are willing (or even able) to pay you for it. For example, does an oil sheikh need a renewable energy source to diversify his energy infrastructure? Probably. Can he pay for it? Sure! But will he pay for it? Probably not.

The second problem with building your product first is that it demands a significant investment of time and money to build and market your offering. An investment that, might we remind you, has a 2% chance of paying off!

As you can see, this approach offers you lots of hard work with a slim chance of success. Those who get behind it will tell you that starting a business is supposed to be hard, that it’s supposed to be risky. They’ll tell you that it’s their way or the highway.

And they’d be wrong.

Let’s assume for a moment that you don’t want to charge in blindly and build a product that might appeal to nobody. But you still want to build a profitable business. What do you do then?

Is it hopeless? Do you have no other recourse except taking gigantic risks and investing tons of money?

There is a better, safer way, which is actually more profitable in the long run. And the core of it is this: start with your target market.

Start With the Audience, Not the Offer

Instead of trying to identify problems and come up with solutions all by yourself, why not listen to the people whose lives are already influenced by those problems? People who are already wishing for solutions to their problems.

Problems like:

problem-bubbles

And thousands upon thousands of others. Why try to come up with something yourself, when there are crowds of people eager to tell you what they want?

If you start with your target market, it becomes a lot easier to start a business.

You’re no longer staring at an insurmountable “I have to make something really awesome to solve problem X that I’m sure exists, and then lots of people will see how awesome my product is.”

Instead, you have a much more manageable task of “I need to find a group of people I can help, and then find out what they want to pay me for.” It’s not as dramatic… but it’s a lot less less hit-and-miss!

Still not convinced?

Here are a few more reasons why your target market should be your point of departure when designing a business idea:

  1. Finding a core audience of people and solving their existing problem is going to be much easier (and cheaper) than designing a product or service from scratch.You can validate your offer quickly, and go from zero to significant income in less than one month. This means that the potential downside and the risks you’re taking stay small early on (unlike in a traditional business model).
  2. Focusing on helping people instead of selling a pre-existing product means that you develop a life-long relationship with your audience. They will become your core customers, which means that you can sell lots of different products to them for a long time.

find your audience

Mistakes to Avoid

Starting with your target market is easier than the product-first approach, but this method has plenty of pitfalls, too. Here are some of mistakes to avoid with the people-first approach:

  1. Don’t focus on demographics alone. Remember, we are trying to identify the problems that exist in your target market. Information like gender, age, ethnicity, and income level is useful, but very limited. In addition to demographics, you need to focus on psychographics: things that matter to your target market, their primary concerns, their opinions about the world, and the worries that keep them awake at night.
  2. Don’t try to be original. You’ll be selling people a solution to a problem they already have, not your assumptions about what you think they need. If you look at all the successful online businesses today, you will notice that very few of them are truly original. Once you have some established income, then you can try and break new ground.
  3. Don’t look for markets with no competition. Lack of competition, or weak competition, means that there’s little to no money in your space. Ideally, you want fierce but incompetent competition. A good example would be any freelance marketplace – it seems cutthroat and oversaturated, but it’s actually really easy to stand out and beat 99.99% of competition, because most of the competition just isn’t very good.
  4. Don’t try to appeal to everyone. Everybody is different, and what seems like a unified group of people (small business owners) will actually have vast differences between different subsets (the owner of an independent barber shop has very little in common with a butcher). If you pick “women,” or even “young women” as your target market, you’re just asking for trouble. It’s good to go narrow. The more specific, the better.
  1. Don’t create a phantom market. It’s possible to invent a “target market” that doesn’t actually exist. If you already have a pretty clear idea of the product you want to sell, you might be tempted to invent a market around the product you want to create. That’s why it’s better to focus on the problem you want to solve instead of the solution you want to offer — the best solution might be different from what you come up with before you have your target market defined.
  2. Don’t pick a group based on what you want to make. The whole point of this guide is for you to find people you can help and develop a long-term relationship with them. You can’t reach out to a market and ask them to buy whatever you’ve made without earning their trust first. That’s the traditional approach, and we don’t want to be traditional: it’s wasteful and ineffective.

To recap:

  • The traditional “product-first” approach demands a lot of time and money upfront, and it has a very low chance of success.
  • A quicker, better way to start an online business is to find a group of people whose problem you can solve, and build a meaningful relationship with them.
  • This “Audience-first” approach lets you validate your business idea much faster and start generating income quicker than trying to sell products or service that aren’t guaranteed to succeed.
  • While picking your target market, avoid common pitfalls like focusing on demographics only, striving for originality, being too general, and avoiding areas that have competition.
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