Growing Small Businesses

Lesson 1: Finding your target markets

Put your potential market in groups

You have all these people out there wanting to buy what you have to offer so now you really want to get going. There's one more problem to address. You've started with groups of people who might be interested. You've familiarized yourself with how they relate to your product or service. You've refined the selection to include only people who definitely would be interested. You've filtered out the people who can't or wouldn't buy from you. But the remaining people are not all the same. They might have quite different interests and they might be interested in what you have to offer for quite different reasons. It won't work to approach them all the same way.

If we go back to our computer example, we had retired people, parents with college students and small business people as our starting groups. Once you've familiarized your self with how they would use the computers and once you've eliminated people who couldn't or wouldn't buy computers from you, you would probably still be left with certain kinds of retired people, certain parents with college-age kids and certain small businesses.

Now you can see that the retired people and the parents are both likely to use their computers mainly for e-mail to stay in touch with family but the small business people would make a much more comprehensive use of their computers, including, book-keeping, word-processing, spreadsheets etc. Approaching these two groups the same way will not work.

To fix this, you have to look at the characteristics of the people who are going to buy your computers. What is it about your computers that they find attractive? Everyone who would answer the same way goes into the same group. So parents and retirees who would answer that they want to do e-mail go into one group and small business people who would answer that they want a general purpose computer would go into another group. In the computer example it would make sense to have two groups or two target markets for which you would generate two different approaches, each geared towards explaining the advantages of your computers in terms of what the people in each group want to do.

The small business people would hear about the general capabilities of your computers, their reliability, their capacity to do word processing and spreadsheets quickly and their book-keeping capabilities. You may even decide to offer computers with the corresponding software already installed to this group.

The retirees and the parents, on the other hand, would be told about how simply your computer does e-mail and how they can just plug it in right out of the box and use it. You may want to pre-install e-mail accounts on these machines so that it's even easier for them.

The last step in this preparation process is separating your potential customers into groups whose members can all be approached the same way. Because of your selection process, all those potential customers are ready to buy from you - they just have to be informed about your products or services. By grouping them, or by segmenting your market, you make sure that they only hear the parts that actually interest them. Your aim for this process is to first find the people who need what you have and then to let them know you have what they need as efficiently as possible. You're not selling - you're showing people how to best satisfy a need they have or how to best solve one of their problems.

Now you can get going. You know who you need to contact and you know what you're going to tell them. You could actually proceed with this now. But, in the interests of efficiency, there is one more open question: you have more than one group or, at least, many prospective customers in a group. Where is it best to start?

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