Many small companies overlook target markets as a cost-effective approach to focus and align marketing, sales, products, and services.  That’s unfortunate because thinking in terms of target markets is useful for allocating resources and coordinating efforts that may otherwise be difficult to synchronize.

As well, assessing results in light of target markets can reveal new opportunities as customers from outside your target markets standout from the crowd. Another advantage is that target markets can frame your monitoring of developments and trends including hotbeds for growth and changing competition as signs of significant developments in the marketplace and new customer needs that offer market-based ideas for new products and services.

Best of all, many companies are already operating in one or a few target markets and need only take advantage of this to reap the benefits. Depending on your circumstances first steps in such an effort may include:

• Working backwards from your customer base and product(s)/service(s) to explicitly define your target market(s). A potential bump in the road on this type of effort is that you will discover different parts of your business are working with different assumed target markets.  While this is frustrating, it is an opportunity to better integrate efforts and improve overall organizational effectiveness.
• Communicating the target market(s) identified in your strategic business and marketing plans so they can be put to work on everything from marketing communications to sales prospecting to new product offerings.
• Assessing your broad market to evaluate your current target markets and to find the best target markets for your business in the future.

If you decide to try one or more of the above, remember to keep it practical.  Define target markets based on attributes that will allow you to find members easily. Ideally, your company will want to focus on target markets that are growing, economically healthy, composed of potential customers who will find your value proposition especially compelling, can be reached with the resources you have available, and can afford your products and services.

Once you have determined your business’ target markets remember to communicate them throughout your company so that everyone has a shared understanding, build them into your review of results and company performance, and reconsider them periodically in annual planning.

Putting this into practice

For example, a restaurant’s menu and marketing efforts have always been designed to appeal to ‘anyone who stops for a meal.’ However, the chef/owner and her staff pride themselves on the kitchen’s ability to serve customers with special dietary needs. She observes that this is a growing market due to the aging population and the increase in food allergies and intolerance. She knows locally grown fresh ingredients and healthy choices on the menu attract regular diners.  To take advantage of these observations and the kitchen’s capabilities, she decides to try a target market approach.  The target markets are: local products/health-minded diners and people with food allergies or intolerances.

To implement this approach to the health-minded target market, new menus highlight dishes made with local ingredients. Current marketing is revised to recognize local suppliers in ads and on the Web site. As well, the owner asks her local suppliers to mention that their products can be enjoyed at the restaurant.

To implement this approach for the special diets market, the owner:

• documents the kitchen’s ability to handle special requests so she can represent this service accurately;

• reinforces the kitchen’s interest in special requests by training the wait staff to ask about special needs; and

• revises menu and Web site to encourage customers to speak up.

These changes allow her to seek growth from diners (and their families and friends) who want to enjoy the restaurant experience but don’t go because the dietary restrictions make ordering too difficult.  To attract these customers she adds to her general marketing efforts by contacting local dieticians, allergists, and support groups explaining her procedures and inviting diners with special requests. She also pitches articles to local food and health journalists.

Finally, she tracks changes in ordering patterns, new business, and the number of special requests to assess her efforts.