What is the importance of knowing your target market in preparing your business plan?

The importance of Choosing a Target Market

My friend Matt posted on Facebook: I just drove 4 hours round trip for a burrito. And I thought that must be a good burrito. And since the place he drove to was located only 5 minutes from my house, I went and bought one. And it was good maybe not 4 hours good, but REAL good.

When we got there, the small take out place was packed with college students. Good service, quick Mexican food made to order, good food, and decent prices. A perfect place for the area demographics (the college town of Amherst, MA) and clearly catering to their target market of the somewhat broke, busy, college kids in town.

So, what does a burrito have to do with selling more of your products or services? Well, I have lived in this town for two years and this was the first time I set foot in this restaurant, but the place is well known and thriving. One of the main reasons why is because they have a target market. They arent targeting me. I am a professional mom, not a college student. And generally, when I go out to eat, I prefer a calming experience with sit down dining, even if the prices are a bit higher. That doesn’t mean that if I come in they don’t sell to me, just like you might accept a client that is not in your target market if they are an ideal client for you.

Picking a target market means that you are making a decision on how to spend your limited resources of time and money within where you will market. If your target market is local college students, you will advertise on campus, in the campus newspaper, or on the campus website. If your target market is in a particular industry (for example, doctors), then you will focus your marketing in that industry. The more specific you can be the better. Instead of picking doctors, you may want to pick neurosurgeons. You may also want to determine if there is a geographic area that you are targeting. Choosing to target neurosurgeons in the UK may result in a different marketing plan than choosing to target neurosurgeons in New York.

Choosing the right target market for your business is a valuable key to your success. Here are three primary reasons that are revealed by Michael Port in his book aptly called Book Yourself Solid:

1. Having the right target market helps you determine where to find potential clients who are looking for what you have to offer. If you have a target market, you know where to concentrate your marketing efforts and what to offer that is compelling and well received. You know what associations to speak to, magazines and journals to write for, and influential people with whom to network—you know where your potential clients gather. Voila! You now know where to show up.
2. Virtually every target market already has some kind of network of communication established. For your marketing to work, your clients need to spread your messages for you. If they already have a network of communication set up, they can talk to each other about you and your marketing messages can travel that much faster. What are networks of communication?
3. Environments that are set up to help a group communicate — associations, social networking sites, clubs, various publications, events, and more.

And, finally, choosing a target market lets the people in that target market know that you’ve dedicated your life’s work to them. You will get to know everything about their wants, needs and compelling desires. And by showing up for them on a consistent basis, they will get to know you and love you because you will demonstrate that you understand them, which will be true. You will understand them as no one else will.

There are many ways to generate leads to more business. However, unless you take a moment to choose your target market, your leads will be scattered all over the place and you will find you are spending more money with a less financial return and less personal fulfillment. Pick your target market, for now, you can change it later. By understanding your target market, you’ll not only recognize a good lead, you’ll recognize your ideal client who will drive four hours or fly across the country just to work with you.

This article was inspired by insights derived from the Book Yourself Solid system. More tools can be found at Book Yourself Solid or here.

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