How to establish a target market for your startup
Updated: Jun 6, 2019
Starting a new business is overwhelming, as an entrepreneur, you have to wear multiple hats all the time. You can get by without nailing many other parts of your business but if you don’t nail your target market you won’t have a business to begin with. Here is what we mean by that. You are passionate about the idea you are working on, you built a shiny new product that no one has ever built. But if you don’t have any idea about who will use that product, how will you sell?
Who will you call, who will you reach out to when you want to make your first sale? In this blog post we will take you through a strategy you can use to find people who will buy your product. Basically after reading this post you will know where to concentrate your focus and it will enable you to create a marketing strategy that targets the niche audience that you will then learn to built.
Some customers are worth more than others.
Startups always seek to serve their audience and provide them with benefits like no other business. Take restaurants for example, they keep pictures of local food critiques and influencers on the kitchen wall. The idea is that if they can spot them early into the meal, the restaurant can increase their experience and get better ratings. Although in the digital era we are living in, everyone is a food critic. People can simply tweet about the experience they had in a restaurant. Everyone has the power, and hence you will have to provide everyone with a better experience.
The question is, with resources that startups have is it really possible? No, instead you can create your niche target market, find people who are ready to adopt to your cause, who are eager to talk about you. These people will generate immense brand loyalty and influence other people around them to buy your product and services.
The theory of diffusion of innovation
To understand how a product, a service or a technology spreads across different segments of our population, Everett M Rogers articulated a theory in his book released in 1992. This theory is essential for business owners who want to excel in positioning and marketing their brand.
Imagine a bell curve split into five segments (image pasted below). Population segmentation is done across these five segments — innovators, early adopters, early majority, later majority, laggards (left to right).
Innovators are a very small percentage of our population. They challenge the rest of us to see the world differently. They love to experience new products, try new ideas. They believe they are ahead of others. They buy new products first because they believe they are the first to do that.
These people recognise the value of an idea early. They rely on their gut instinct. They accept new ideas or buy new products. They do not want to lose the advantage of being in the front. They are even willing to put up with imperfections in the product because of that.
Practical minded people. They take more rational decisions while buying a product. The early majority is easily persuaded to buy new ideas only when they hear feedback from early adopters.
The late majority will invest in a new product or idea when they see how others have benefited from it and are assured that there is no risk associated with it.
These are people who will accept change when there is no other option.
How can you apply this theory to your startup business?
All consumers sit in different places on the spectrum depending upon the product or the idea. Since you have downloaded this pdf we presume you are on the farthest left side of the spectrum running a startup.
You are an innovator who sees the world differently and would want others to see things through your glasses. Focus your time, energy and money in communicating and connecting with the early adopters instead of the people on the right side of the curve.
Observe and learn to figure out what to offer and who to offer it to. Don’t treat all the people similarly as their purchase decisions are based upon totally different values and beliefs.
Do not attempt to simply sell to anyone who you think will benefit from a product/service you have. Rather, find people who believe in what you believe; those on the left side of the curve.
Why it should be your focus?
Your focus should be to attract the Early Adopters because this segment out of the whole market, is the most receptive to change. These people are always setting new habits/ patterns and are open to new things and would be looking forward to your product. Find people who are starting a new phase in their lives for ex. new dads, people shifting to a new place, etc.
Look for your early adopters, and tell stories they can relate to. They will buy your product or service with a very little nudge because they are excited about being the first to do so. They will persuade the early Majority — the next segment to do the same.
Working from left to right
If someone is satisfied with what they have, it is unlikely for them to buy something with the uncertainty of being dissatisfied.
Early majority and other segments on the right need testimonials or referrals from friends and family to be able to purchase a product or a service. If you try to market your product to the masses directly without marketing to the early adopters, it won’t work since the masses don’t buy without recommendations.
With time you might be able to get to these people with persistent and frequent communications but not now.
From roots to fruits
The basic root foundation that marketing and communications should be based on is how the product/service helps your audience to achieve their desires and dreams.
Those roots go deeper only when you find a particular niche in the audience and hence that niche starts benefitting from the product/service you provide for them and the tree only grows taller bearing all the fruits of your hard labor.
On reaping the benefits of the fruits the smell just grows sweeter attracting the early majority who are convinced of the early adopters keeping the cycle continues and growing.
Case Study: Slack
Slack started at a time when there was no other tool to communicate with your team for projects. They smartly created a marketing strategy plan to target their product to the early adopters who were excited about trying this new software. Now the early majority weren’t open to changing their working pattern and they generally aren’t the ones who would try a new product in the ever-evolving market.
Although evolution as we know it is a must whether it’s scientific, technological or even psychological. That being the case the buzz that the early adopters had created was slowly creeping into the minds of the early majority creating excitement and a must to the use of the software. Hence creating an influence, leading to grow their market share tremendously.
Every entrepreneur creates a service or a product to relieve a pain from a particular set of audience. It could be a software which automates your accounting process, saving time for you. Or a shoe sole which acts as a cushion to keep your feet comfortable in high heels. To be able to sell such products and services, it is immensely important to be able to reach out to your target market who will buy your solution.