The Importance of Choosing the Proper Target Market - Essay Example

? Entrepreneurship Executive Summary Over the past few decades the number of entrepreneurs has experience a dramatic increase. The entrepreneurs are seen to come up with brilliant innovative ideas and exploit the opportunities available to them. In order to make their business venture successful, choosing the right target market is critical. Marketing efforts made towards wrong target customer will turn all the initiatives null and void. In this context the report focuses on the importance of choosing proper target market and conducts a critical analysis on the same. The analysis reveals that the success of the business is largely dependent on choosing the right market based on the demographic, psychographic and geographic status of the customers, understanding their requirement and designing the proper marketing mix accordingly. Table of Contents Executive Summary 2 Introduction 4 Literature Review 5 Critical Analysis 7 Conclusion 10 Reference List 11 Introduction The early definitions of entrepreneurship given by economist are seen to emphasize on risk, ownership, supply of financial capital and co-ordination of various factors. However, entrepreneurship is seen as the efforts made by an individual that goes against every odds towards converting a vision into successful business enterprise. Entrepreneurship is the search for some discontinuous opportunities that are involved towards creation of an organization or sub organization in the expectation of creating value for the participants. Entrepreneur is a person or a group of individuals who identifies opportunities, collects necessary resources and makes effort towards the performance of the organization (Gungaphul and Boolaky, 2009). In order to make a business venture successful the entrepreneurs need to choose a proper target market (Crane, 2007). Target market is defined as the specific group of customers towards whom the marketing effort created by the firm is directed. It is selected as a part from the whole market. Defining the target market correctly is a critical element in creating a successful marketing strategy. It may be a disaster if marketing plans are made to cater to wrong target customers. Employees and manager are seen to focus on providing value to the well-defined segment of target customers (Gitman and McDaniel, 2008). Entrepreneurs with exciting ideas and innovative product and services often forget about focusing towards right customers. This study focuses on critical analysis of the importance of choosing right target market for success of entrepreneurs. Literature Review Defining target market Business firms and entrepreneurs tempted to describe the target in the broadest and best possible way in which they look for including a large set of customers who can be huge potentials in using the services and products. By doing this they get a huge comfort by the sense that they have a huge market to exploit. But in reality this is seen to provide very little genuine information based on which business decisions will be made. This insists the need for identifying a particular market segment that would provide a more exact description of distinct and meaningful components of the overall market which in turn helps in identification of target market of the business based on certain specific characteristics (Abrams, 2003). However, while defining the target market certain criteria needs to be met, like it needs to be definable which signifies that specific characteristics should be identified based on the requirement and needs of the customers that are in common. It has to be meaningful, which signifies that the characteristic should be as such that it is related to the decision of purchase made by the clients. The target market needs to be sizable which signifies that the target market needs to be large enough so that it can help the profitably sustain in the market (Barringer and Ireland, 2008). The target market should be reachable which signifies that the size and definition should be as such that it provides effective and affordable ways to market the product and services to the potential customers. While defining the target market some of the characteristics also play major roles like the demographic, geographic and psychographic characteristics (Machado and Cassim, 2004; Boone, 2012). Defining target market for entrepreneurs Entrepreneurs with exciting ideas are sometimes so concerned about the services or products that in the mean time they forget about their customers. Having a great idea or designing an innovative product is not enough to guarantee that the business will be a huge success. The products offered by the firms are bought and consumed by the customers who may be an individual or an organization. For the success of the business it is important that before establishing or initiating any new business or enterprise, the primary customer to whom the firm will be serving should be decided. At the same time the company should also focus on whether the customers will be interested and willing to buy their products or services. The most appropriate way to meet this requirement is to conduct market research before starting any new business. By understanding the wants and needs of the customers the business will be able to identify and evaluate the opportunities that they have from the current market. The belief says that the more the business understands their customers, the more effectively the business realises what is the wants and need of the customers (Stokes and Wilson, 2006). As an entrepreneur it is important to estimate and evaluate the demand of the product and services produced by them by identifying the target customers. The target market should include those individual or groups who are interested in buying the product and moreover able to and willing to pay for the product. By identifying the target market, the firm is able to reach the people who are interested in purchasing the product and services provided by the firm. Target customers of the company are those who are more likely to get attracted to the product of the business (Greene, 2011). While identifying the target market whether it is an entrepreneur or a business firm, both of them need to find the answer to the following questions: Who are the potential customers? Are they any particular organization or individuals? If the customer is an individual, then the age group within which they fall must be decided. How much money they earn and how much money and time they want to spend should also be decided. At the same time it should be also decided where potential customers of the firm lives. On the other hand if the customer is any organization then the firm need to decide which industry it is in and where it is located. The needs and wants that will be satisfied by the service nad product should alos be decided. Where the customers visit currently for buying the products or services? The price that the customers are willing to pay for the products and services offered by the firm. The competitive advantage should also be decided, which would help the firm in attracting the customers. Critical Analysis For some of the exceptional companies it has been the overarching rule to understand and know their customers. Hall (2012) has claimed that successful entrepreneurs exactly know the buying behaviour, wishes and wants of the specific individuals who are potential buyers of the organization. They are seen to deeply analyse the number of potential customers that they will be having or the size of the market that will fit into the profile of the target market. Moreover they even know “their customers’ names, ages, genders, incomes, home and Internet addresses, professions, education, associations, and marital status, number of children, hobbies, their tastes and interests” (Hall, 2012). They have a strong grasp over the likes and dislikes of the customers and what they like to hear, read and watch. Knowing and understanding the potential customers to such a depth is one of the primary features that a successful business leader should have. A company or an entrepreneur who is having chosen the right target market, have knowledge about the customers to such a huge extends and using it in a profitable manner is seen to be successful. By knowing what the customers want, the savvy and intelligent business leaders can deliver and build solutions in order to meet the requirement of the customers. Along with this the entrepreneurs also chooses the right location, price, features, support and warranties to create a positive buying experience and environment. Conversely the leaders who do not focus on the customers have experienced failure in their business. A good relation with the customer or potential customer is essential but many have been seen to forget this critical aspect of their business. Many of the entrepreneurs are seen to utilise their energy in doing everything except having conversation with their potential and existing customers. The best example of proper selecting proper target market is Tide, a major laundry detergent, which was launched by Procter and Gamble. Before launching Tide the company conducted enormous research to understand the needs of the customers and establishing the target market. Tide was designed by the target the mothers of the middle class family for whom removing strains and lengthening the life of the cloths was important. By capitalizing on this wish the company Proctor and Gamble launched Tide (Brown and Anthony, 2011; Procter & Gamble, 2006). On the other hand if the focus is casted on the huge success of a publicly traded company named Skullcandy, which sells headphones to specific set of target audience, one would look for the reasons of such success. This company was launched by Rick Alden and within a short period of time after its inception the company became darling to its investors because of its consistent growth (CNBC, 2013). The secret behind the company’s success is that the founder of the firm is well aware about the likings of the customers and targeting the correct customer base. He understands the needs and requirements of the customers in true sense, who looks for his funky products. The target market is within the age group of 12 to 26 years. He knows that his customers like music, skateboard, surf and ski. He knows what they wear starting from toe to top of the head, what applications they have on their iPhones or cell phones. This shows clearly the business owner not only identified the proper target market but also conducted a thorough research on their likes and dislikes. This made the products of the soon reach every corner of world attracting huge chunk of customers (Hall, 2012). The above discussion clearly reveals that the key to the success of the firm lies in understanding and knowing the customers, identifying the proper target market and delivering as per their requirement. After identification of target market and delivering products the firm should also spend time and money in understanding the changing requirement of the customers and plan accordingly. Identification of proper target segments helps the business in focusing on a particular group rather than a huge group, increases the cost efficiency, and makes it easier to build strong and genuine relationship and offer value and increases the chances of being successful. This is due to reasons that by knowing the target market the firm will be able to launch proper marketing mix strategy. The product will be so designed that it caters to the needs of that particular target market. Pricing strategy can also be framed by having a knowledge regarding how much the target customers can afford. Promotions or advertisements can be designed so that it highlights on the values that the target customers would get from the purchases that they make. They can also choose the proper place from where the customers can procure the product or services that the business is offering (G. Belch, M. Belch and Guolla, 2011). However, it should be clearly understood that job of an entrepreneur does not ends only by choosing the target market but should also understand the requirements of the customers and should design strategies so that the business can attain success. Conclusion In business, no matter what the mode in which it is conducted, online or in a traditional way, the most important thing is choosing a right target market. While selling the products, the entrepreneur or the business owner needs to understand the requirement of the customers as well as outline the target market on the basis of location, income and age of the potential customers. Therefore, as an entrepreneur to be successful they need to put themselves in the shoes of the customers before they are taking initiatives to start the business. After starting the business the business owner should evaluate the viewpoint and needs of the customers on an everyday basis. By continuously evaluating the market the entrepreneurs will be able to understand the changes that are occurring and accordingly respond to these changes related to the offering of the competitors, consumer’s buying habit and taste and changes in the communities. Reference List Abrams, R., 2003. The successful business plan: Secrets and strategies. California: The Planning Shop. Barringer, B.R. and Ireland, R.D., 2008. Enterpreneurship: Successfully launching new ventures. New Delhi: Pearson Education India. Belch, G., Belch, M. and Guolla, M., 2011. 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Hall, A., 2012. To Succeed as an Entrepreneur, Know Your Customer. Forbes [online] Available at < http://www.forbes.com/sites/alanhall/2012/06/14/to-succeed-as-an-entrepreneur-know-your-customer/> [Accessed 26 July 2013]. Machado, R. and Cassim, S., 2004. Marketing for entrepreneurs. Cape Town: Juta and Company Ltd. Procter & Gamble, 2006. A Company History 1837 – Today [pdf] Available at < http://www.pg.com/translations/history_pdf/english_history.pdf> [Accessed 27 July 2013]. Stokes, D.R. and Wilson, N., 2006. Small business management and entrepreneurship. Connecticut: Cengage Learning EMEA. Read More