At GoForth Institute, we recommend that entrepreneurs narrow down their market into a few specific customer groups. These groups should be the most profitable and accessible ones to target.
How to visualize your target market
When you imagine your target market, consider these main elements:
Demographics – Age, income, gender, education, family status, income level, occupation, social class, ethnicity
Psychographics – Lifestyle, personalities, attitudes, opinions, values
Geographics – Cultural, climate, regional and national differences, population density, population growth rate
Behaviours – Buying patterns, usage rate, price sensitivity, brand loyalty, benefits wanted
Then, look for ways you can subdivide this market into one to four target customer segments. Essentially, your overall segments should be basically different from one another, but the members of each segment should be basically the same.
Seven rules for creating customer segments
These are the 7 basic rules we recommend entrepreneurs follow when creating customer segments:
- Each segment should be measurable; you should know how many potential customers you have.
- Each segment should be large enough to be profitable.
- Each segment should be basically different from other segments; they should be unique.
- Members of a segment should have common, unsatisfied needs.
- Each segment should have strong growth potential.
- Each segment should be suited to your company’s goals and capabilities.
- Each segment should be accessible through communication and distribution channels; you have to be able to reach them with your message.
There! Now you have a highly targeted group of potential customers you can focus on delighting. Check out our post on the Value Proposition Canvas for your next steps.