example of market profile in business plan

Market Analysis Business Plan

At first, you may think that a market analysis business plan is complex and formal. However, if you are already aware of the basics of its development and execution, then you can easily understand how easy it is to create this document.

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Market analysis can be done in an efficient manner as long as you have all the firsthand details that you need, the equipment and tools that can help you within the entire market analysis, and the knowledge about the proper integration of analysis processes and results to your business plan.

Do not feel dissuaded in creating a market analysis business plan just because you think it is a critical document that you cannot create on your own or from scratch. If you are already planning to execute the steps that will help you draft a marketing analysis for your business, there are actually guidelines that will allow you to be more prepared in developing the document.

Do not worry on how to find these guides and other help that you need as we got you covered. Make sure to download the examples of market analysis business plans available in this post for references.

Market Analysis and Business Development Strategy Planning Example

Business Plan Template with Marketing Analysis Example

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What Makes a Market Analysis Business Plan an Important Part of Your General Business Plan?

It is already evident that customers play a vital role when it comes to the successes of the business. Hence, it is of utmost importance for you to continuously provide what they need and meet their expectations as well. However, this will not be possible if you do not know anything about them. This is where the benefits of planning, developing, and implementing a marketing analysis business plan come in. You may also see marketing plan examples .

A comparative market analysis , or any other kinds of market analysis business plan for this matter, is an essential process and document that will help you achieve efficiency and sustainability within the implementation of your marketing efforts, operational action plans, and business development strategies .

Listed below are a few of the reasons why it is recommended for you to include a market analysis business plan in your general business plan are as follows:

1. A market analysis business plan can help provide a thorough explanation of the market segmentation that you have considered as well as the focus that you allotted both for your current market and potential sales leads. With this, you can be more aware of the threats and opportunities that you can face in the future through a valuable market forecast. You may also like marketing strategy plan examples .

2. A market analysis business plan presents the needs, demands, and expectations of your target market. This helps a lot in terms of providing information that will guide you in the development of action plans that can meet the requirements for business sustainability and market relevance.

3. A market analysis business plan can showcase a more in-depth description of your audience. With the help of this document, you can specifically point out your target market, their locations, the things that are relevant and beneficial to their daily activities, and the factors that can affect their purchasing or buying decisions. You might be interested in define marketing plan and its purpose ?

4. A market analysis business plan can show not only the reaction of the market to your offers but also to those coming from the competitors. With this, you can analyze the difference of your products, services, and offers from that of your competition. This can help you a lot when there is a need to plot new market strategies, which can effectively get the attention and trust of your desired audience. You may also see business marketing plan examples .

Business Plan: Market Research and Analysis Example

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Supply Market Analyis and Business Plan Example

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How to Develop an Impressive Market Analysis Business Plan

Are you aware of what a market analysis – demand and supply is? Simply put, it presents the concept that there should be balance with regards the demands of the market and the supply that you provide them with. It is essential for you to know the market that you are catering to so you can successfully use your resources and present your offers. This can result to the improvement of your marketplace standing and operational efficiency.

Developing a market analysis business plan can be very helpful as this document can make it easier and faster for you to organize the call-to-actions that you need to execute and the tactics that you need to incorporate in your efforts and movements to achieve maximum results. You may also see strategic marketing plan examples .

Some of the guidelines that you can follow if you want to develop an impressive market analysis business plan include the following:

1. Know the market segments that you have a hold of and define the kinds or types of customers that are present in each segment. It is essential for you to know the groupings of your target customers so that you can point out the specific key factors that can affect their decisions when buying an item or acquiring services. You always have to be reminded that different market segments have different qualities and characteristics. You may also like apartment marketing plan examples .

Hence, there is a need for your market analysis business plan to provide particular strategies and tactics.

2. Be aware of the factors that can affect the implementation of your market analysis business plan. This includes the nature of the activities of your market segment, the description of the forces that can affect your competitive advantage, the communication and distribution channels that you will use, and the required simple action plans that you need to execute in a timely manner to achieve your goals and objectives.

3. Know the ways on how you can effectively get information of your market. Aside from surveys and questionnaires , there are still different tools and equipment that you can use to have a hand on the details that you need to analyze to come up with the strategies and general action plans that fit your business operations and marketing efforts.

Marketing Business Plan Example

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Market Analysis to Support Business Planning Example

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Business Plan: Market Research Report for Advanced Product Example

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Elements to Consider When Developing a Market Analysis Business Plan

Not all elements of a comparative market analysis are the same with that of a market analysis business plan. There are also differences when you compare the functions of each elements in both documents. Before you create a market analysis business plan, you have to make sure that you will make yourself knowledgeable of the things that you will work on so that you can achieve your desired final document.

Some of the most important elements that you need to consider if you have already decided to start the processes of developing a market analysis business plan are as follows:

1. Geographical and demographic conditions.

How many of your desired audience are within a particular market segment? Is the location of the marketplace convenient to your business and your operations? You have to know the number of people that you can reach through your marketing efforts as well as the areas in which specific activities are needed to be done. You may also see restaurant marketing plan examples .

In this manner, your market analysis business plan can present whether it is really reasonable to tap the particular market specified in the document.

2. Sales leads and potential customers.

Do not just focus on the current customers who provide you with their purchasing power. You always have to be innovative when creating a market analysis business plan as not all customers will forever be there to execute repeat business. Know how to analyze market segments that can be your next target. Doing this can give you a higher possibility of bigger sales and wider market reach. You may also like event marketing plan examples .

3. Market movement, purchasing power and buying habits.

The financial and sales aspect of the business should be prioritized when making a market analysis business plan. Analyzing a market whose activities does not align to the business offers will only waste your time, efforts, and resources. This is the reason why you first need to have an initial findings about your target or desired audience. With this, you can assess how they match your business operations and needs. You may also check out digital marketing plan examples .

4. Direct competition and their activities.

A market analysis business plan does not only rely on the evaluation and assessment of the consumers, customers, and/or clients. You also have to look into the activities of your direct competitors.

Doing this can help you become more aware on how their processes affect or impact their operations and brand. Hence, you can veer away from activities that can produce negative results and you can also give more focus on the strategies that can provide you with the most benefits. You might be interested in personal marketing plan examples .

Market Research and Analysis for a Business Plan Example

Transmedia Marketing Plan and Analysis for a Business Example

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Market Analysis and Business Plan Example

In Need of Tips for Creating a Market Analysis Business Plan?

Having the best products and/or services is not enough. If you cannot carry out the exact marketing message that you would like to disseminate in the marketplace, then you cannot expect the best returns from your audience. You may also see annual marketing plan examples .

More so, not knowing how you can connect to your audience or how you can incorporate the usage and benefits of your offers to their needs and activities will most likely lessen the potential successes of your business.

Developing a market analysis business plan is very important as it helps you focus on the environment rather than just internal functions and abilities. With this, you can thoroughly align and use your resources based on the expected results and reactions of your market. All the useful tips that can help you create an outstanding market analysis business plan are listed below. You may also like marketing strategy business plan examples .

1. You should have enough knowledge on how to do the market analysis for a business plan . Aside from the discussions and examples in this post, it will be best if you will still research and find resources that will help you understand the full concept of market analysis. The more you know about the development of this document, the easier it will be for you to put together necessary and relevant information.

2. Make sure that you will come up with a concise and well-defined industry description. You have to know the size and growth forecast of the marketplace where your business belongs. In this manner, you can point out the life cycle of market processes as well as the changes in trends that can affect the decision-making processes of your target audience. You may also check out importance of business plan .

3. Focus not only on your desired market size and the characteristics of your target market segment. You also have to look into the competition and other external factors that you cannot control. This can help you be prepared when facing threats and risks from elements that you do not have a hold of. You might be interested in simple marketing plan examples .

4. Present the market analysis business plan accordingly. Use clauses that can group all the discussion areas or parts that are intended to be together. Using proper headings and subheadings is also a great way to make the document more organized and presentable. If you need help in formatting the document, do not hesitate to use market analysis business plan template examples .

Do not skip the evaluation, review, and assessment of your market when making a business plan document. Knowing the quality standards that you incorporate in your operations and offers is one thing. Knowing how the market will react to your marketing message is another. For you to ensure that your practices and activities are relevant, you have to perform market analysis. Try developing your own market analysis business plan now.

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Business Plan Market Analysis Example

In today’s highly competitive business landscape, having a comprehensive Business Plan Market Analysis Example is crucial for success. Market analysis plays a vital role in crafting a winning business plan, as it provides valuable insights into the target market, competition, and industry trends. By conducting thorough market research and analysis, entrepreneurs can make informed decisions, identify opportunities, and mitigate risks.

In this blog post, we will delve into the world of market analysis and provide you with a step-by-step example to master this essential aspect of business planning. From defining the importance of market analysis to conducting effective research methods, we will cover all the necessary components to create a robust market analysis section in your business plan.

First, we will explore the definition and significance of market analysis in a business plan. Understanding what market analysis entails and why it is crucial for business success will set the foundation for your market research journey. We will discuss how market analysis helps you gain insights into the target market, understand the competition, and make informed strategic decisions.

Next, we will guide you through the process of conducting market research for your business plan. Defining research objectives and questions, we will explore both primary and secondary research methods. From surveys and interviews to industry reports and competitor analysis, we will equip you with the tools needed to gather and analyze relevant data.

With the research data in hand, we will then dive into the components of a market analysis in a business plan. We will explore target market analysis, competitive analysis, customer analysis, and industry analysis. Each component will be discussed in detail, covering topics such as defining the target market segment, assessing competitors’ strengths and weaknesses, understanding customer needs, and analyzing the industry landscape.

To bring it all together, we will provide you with a real-life example of a market analysis in a business plan. Through a case study of XYZ Company’s market analysis for a new product launch, we will showcase how the gathered data and insights can be utilized to identify opportunities, position the product in the market, and gain a competitive edge.

In conclusion, mastering market analysis is essential for crafting a winning business plan. By understanding the importance of market analysis, conducting effective research, and analyzing the gathered data, entrepreneurs can develop a solid foundation for their business strategy. Ongoing market research is also emphasized as a key factor in business growth. So, get ready to dive into the world of market analysis and unlock the potential for success in your business endeavors.

Effective Communication and Order Management

In any business, effective communication and efficient order management are crucial elements that contribute to overall success. Without clear and streamlined communication channels, miscommunication and misunderstandings can occur, leading to delays, errors, and customer dissatisfaction. Similarly, if the order management process is not well-managed, it can result in inventory issues, delivery problems, and ultimately, loss of customers.

To ensure smooth communication within a business, it is important to establish clear lines of communication and promote open and transparent dialogue among team members. This can be achieved through various means such as regular team meetings, email correspondence, instant messaging platforms, and project management tools. By encouraging effective communication, businesses can enhance collaboration, problem-solving, and decision-making processes.

Moreover, businesses should also focus on optimizing their order management systems to ensure efficient processing and timely delivery of orders. This involves implementing a robust order management software or system that can handle order tracking, inventory management, and fulfillment processes. By leveraging technology and automation, businesses can minimize errors, improve order accuracy, and enhance customer satisfaction.

Additionally, businesses can further enhance order management by implementing effective inventory management practices. This involves maintaining an accurate and up-to-date inventory system, conducting regular stock audits, and implementing strategies such as just-in-time inventory or drop-shipping. By keeping a close eye on inventory levels and ensuring sufficient stock availability, businesses can avoid stockouts, reduce carrying costs, and fulfill customer orders promptly.

Furthermore, businesses should strive to provide excellent customer service throughout the order management process. This includes promptly responding to customer inquiries, providing order status updates, and addressing any issues or concerns that may arise. By prioritizing customer satisfaction and maintaining clear lines of communication, businesses can build strong customer relationships, foster loyalty, and generate positive word-of-mouth referrals.

In conclusion, effective communication and efficient order management are vital components of a successful business. By establishing clear communication channels, optimizing order management systems, implementing effective inventory management practices, and providing exceptional customer service, businesses can streamline operations, minimize errors, and enhance customer satisfaction. Investing time and resources into improving these areas will ultimately contribute to long-term success and growth.

Conducting Market Research for Business Plans

Market research is a critical component of developing a comprehensive business plan. It provides valuable insights into the target market, customer preferences, industry trends, and the competitive landscape. By conducting effective market research, entrepreneurs can gather the necessary data to make informed decisions, identify opportunities, and develop a solid business strategy.

When embarking on market research for a business plan, it is essential to define clear research objectives and questions. This helps to focus the research efforts and ensure that the collected data is relevant and actionable. Whether it is understanding customer needs, assessing market size and potential, or evaluating the competitive landscape, clearly defined research objectives guide the entire market research process.

Primary research methods play a crucial role in gathering firsthand information directly from the target market and potential customers. Surveys and questionnaires are commonly used to collect quantitative data, allowing businesses to gather insights on customer preferences, purchasing behavior, and satisfaction levels. By designing well-structured surveys and questionnaires, businesses can obtain valuable data that can be analyzed to identify patterns and trends.

In addition to surveys, interviews with industry experts and potential customers provide qualitative insights into their experiences, opinions, and expectations. These interviews can be conducted face-to-face, over the phone, or through video conferencing platforms. By engaging in conversations with relevant stakeholders, businesses can gain a deeper understanding of market dynamics, emerging trends, and customer pain points.

Another primary research method is conducting focus groups, which bring together a small group of individuals to discuss specific topics related to the business or industry. Focus groups allow for interactive discussions, generating valuable feedback and insights. By observing participants’ reactions, opinions, and discussions, businesses can uncover new ideas, identify market gaps, and validate assumptions.

In addition to primary research, secondary research methods are equally important in gathering information for market analysis. This involves leveraging existing sources of data such as industry reports, market research publications, and government data and statistics. These sources provide valuable insights into market trends, industry growth rates, and consumer behavior.

Furthermore, conducting a thorough competitor analysis is essential in understanding the competitive landscape. This involves researching and analyzing direct and indirect competitors, their products or services, pricing strategies, marketing tactics, and market share. By identifying competitors’ strengths and weaknesses, businesses can position themselves strategically and develop unique selling propositions to differentiate themselves in the market.

In conclusion, conducting market research is a vital step in developing a business plan. By defining research objectives, utilizing primary and secondary research methods, and conducting competitor analysis, businesses can gather the necessary data to make informed decisions. Market research provides valuable insights into the target market, consumer preferences, industry trends, and the competitive landscape, enabling entrepreneurs to develop a solid business strategy.

Components of a Market Analysis in a Business Plan

A comprehensive market analysis is a critical component of a business plan as it provides valuable insights into the target market, competition, customers, and the overall industry landscape. By analyzing these key components, entrepreneurs can gain a deep understanding of the market dynamics and make informed decisions to drive their business forward. In this section, we will explore the key components of a market analysis in a business plan.

The first component of a market analysis is the target market analysis. This involves identifying and defining the specific segment(s) of the market that the business intends to target. It is essential to understand the demographics, psychographics, and behavior of the target market. This includes factors such as age, gender, income level, interests, values, and purchasing habits. By analyzing the target market, businesses can tailor their products or services to meet the specific needs and preferences of their customers.

Another important component is the competitive analysis. This involves identifying and assessing both direct and indirect competitors in the market. Direct competitors offer similar products or services to the target market, while indirect competitors may provide alternative solutions to the same customer needs. It is crucial to analyze competitors’ strengths and weaknesses, their market positioning, pricing strategies, distribution channels, and marketing tactics. By understanding the competitive landscape, businesses can identify opportunities for differentiation and develop strategies to gain a competitive advantage.

Customer analysis is another key component of a market analysis. This involves understanding the needs, preferences, and buying behavior of the target customers. By segmenting customers based on demographics, psychographics, or other relevant factors, businesses can tailor their marketing messages and strategies to effectively reach and engage their target audience. It is also important to estimate customer acquisition and retention rates to determine the potential growth and profitability of the business.

Additionally, industry analysis is crucial to understanding the overall industry landscape and trends. This includes analyzing market growth rates, industry challenges, regulatory factors, and technological advancements. By staying informed about industry trends and developments, businesses can position themselves strategically and adapt their strategies to meet changing market conditions.

In conclusion, a market analysis in a business plan comprises several key components that provide valuable insights into the target market, competition, customers, and the industry as a whole. By conducting a thorough target market analysis, competitive analysis, customer analysis, and industry analysis, entrepreneurs can develop a comprehensive understanding of their business environment. This knowledge enables them to make informed decisions, identify opportunities, and create a solid foundation for their business strategy.

Example of Market Analysis in a Business Plan

To understand how market analysis is implemented in a business plan, let’s dive into an example of XYZ Company’s market analysis for a new product launch. This case study will provide insights into the practical application of market research and analysis in developing a robust business plan.

Description of the product and its target market:

XYZ Company is a tech startup that has developed a cutting-edge mobile app for fitness enthusiasts. The app offers personalized workout plans, nutrition tracking, and social features to connect users with like-minded individuals. The target market for this product includes fitness enthusiasts, health-conscious individuals, and those looking to improve their overall well-being.

Research methods used to gather market data:

To gather market data, XYZ Company utilized a combination of primary and secondary research methods. Primary research involved surveys and interviews with fitness enthusiasts and gym-goers to understand their fitness goals, preferences, and pain points. Additionally, focus groups were conducted to gather qualitative insights on user experiences and expectations from a fitness app.

Secondary research involved analyzing industry reports, market trends, and competitor analysis. This provided valuable information on the current state of the fitness app market, emerging trends in the fitness industry, and insights into the strategies of existing fitness apps.

Findings from the target market analysis, competitive analysis, customer analysis, and industry analysis:

The target market analysis revealed that the majority of fitness enthusiasts were looking for a comprehensive app that offered personalized workout plans and nutrition tracking features. They emphasized the importance of social features that allowed them to connect with like-minded individuals, share progress, and stay motivated. This information helped XYZ Company refine its product features and messaging to align with the target market’s needs and preferences.

Competitive analysis revealed several existing fitness apps in the market, each with its unique features and value propositions. XYZ Company identified the strengths and weaknesses of each competitor and analyzed their market positioning and user reviews. This analysis helped XYZ Company identify gaps in the market that their app could fill, such as a more intuitive user interface and enhanced social features.

The customer analysis provided insights into the target market’s demographics, psychographics, and buying behavior. It helped XYZ Company understand their customers’ willingness to pay, customer acquisition costs, and the potential lifetime value of a customer. This information was crucial for developing a pricing strategy, customer acquisition plan, and overall revenue projections.

Industry analysis revealed that the fitness app market was growing rapidly, fueled by increasing health consciousness and the popularity of fitness tracking devices. The analysis also highlighted the regulatory considerations, such as data privacy and security, that XYZ Company needed to address when developing the app.

Analysis of the market data and insights gained:

Based on the market data and insights gathered, XYZ Company identified several opportunities in the market. They recognized the demand for a user-friendly fitness app with strong social features and personalized workout plans. By leveraging these insights, XYZ Company developed a marketing strategy that emphasized the app’s unique features, such as real-time workout tracking and a supportive community. They also identified potential partnerships with fitness influencers and gym chains to promote the app and increase user adoption.

Furthermore, the market analysis helped XYZ Company identify potential threats and challenges. They acknowledged the competitive nature of the fitness app market and the need for continuous innovation to stay ahead. They also recognized the importance of addressing data privacy concerns to gain users’ trust.

In conclusion, the example of XYZ Company’s market analysis for a new fitness app launch showcases the practical application of market research and analysis in a business plan. By conducting extensive research, analyzing the target market, competition, customers, and industry trends, XYZ Company was able to refine its product offering, develop a marketing strategy, and identify opportunities and challenges in the market. Through market analysis, XYZ Company gained valuable insights that informed their business decisions and set them on the path to success.

Conclusion and Key Takeaways

In this comprehensive guide, we have explored the importance of market analysis in a business plan and provided insights into conducting effective market research. We have discussed the various components of a market analysis, including target market analysis, competitive analysis, customer analysis, and industry analysis. Additionally, we examined an example of how market analysis is implemented in a business plan, showcasing the practical application of market research and analysis.

The key takeaway from this discussion is that market analysis is a crucial step in developing a successful business plan. It provides valuable insights into the target market, competition, customers, and the overall industry landscape. By conducting thorough market research and analysis, entrepreneurs can make informed decisions, identify opportunities, and mitigate risks.

Furthermore, market analysis is an ongoing process. It is essential for businesses to continuously monitor and evaluate market conditions, customer preferences, and industry trends. By staying informed and adapting their strategies accordingly, businesses can remain competitive and seize new opportunities as they arise.

In summary, market analysis is not just a box to check off in a business plan; it is a dynamic and integral part of strategic decision-making. By understanding the target market, competition, customers, and industry trends, businesses can position themselves for success and drive growth. So, as you embark on your own business planning journey, remember the importance of market analysis and the valuable insights it can provide.

In conclusion, we hope this guide has provided you with a comprehensive understanding of market analysis and its role in developing a business plan. By conducting effective market research, analyzing the gathered data, and applying the insights gained, you can create a robust market analysis section in your business plan. Armed with this knowledge, you are well-equipped to make informed decisions, identify opportunities, and set yourself on the path to business success.

Tips for entrepreneurs on using market analysis to develop a successful business plan

Developing a successful business plan requires careful consideration of market analysis. To help entrepreneurs make the most of their market analysis efforts, we have compiled a list of valuable tips. These tips will guide you in utilizing market analysis to develop a robust and effective business plan.

• Start early and be thorough : Begin your market analysis as early as possible in the business planning process. This allows you ample time to gather relevant data, analyze it thoroughly, and make informed decisions based on the insights gained. Rushing through market analysis may lead to overlooking critical information that could impact your business strategy.
• Define clear research objectives : Clearly define the objectives of your market analysis. This will help guide your research efforts and ensure that you gather data that is aligned with your business goals and target market. Having well-defined objectives will also make it easier to evaluate the success of your market analysis efforts.
• Utilize a combination of research methods : To gather comprehensive market data, leverage both primary and secondary research methods. Primary research allows you to gather firsthand information directly from your target market and customers. This can be done through surveys, interviews, and focus groups. Secondary research involves analyzing existing data from industry reports, publications, and government sources. A combination of both methods provides a well-rounded view of the market.
• Stay up-to-date with industry trends : Regularly monitor industry trends and developments to stay ahead of the curve. Keep an eye on emerging technologies, changes in consumer behavior, and market shifts that may impact your business. By staying informed, you can identify new opportunities, adapt your strategies, and ensure your business remains competitive.
• Consider the competitive landscape : Conduct a thorough analysis of your competitors to understand their strengths, weaknesses, and strategies. Identify what sets your business apart and develop strategies to differentiate yourself in the market. By understanding your competition, you can position your business effectively and identify areas where you can gain a competitive advantage.
• Validate assumptions with real data : Avoid making assumptions based on personal opinions or biases. Instead, validate your assumptions with real data and evidence. This will help you make more accurate projections and avoid potential pitfalls.
• Regularly reassess and update your market analysis : Market conditions and customer preferences can change rapidly. It is essential to regularly reassess and update your market analysis to ensure it remains relevant. By staying informed about market dynamics, you can make necessary adjustments to your business strategy and seize new opportunities.

By following these tips, entrepreneurs can leverage market analysis to develop a successful business plan. Market analysis provides valuable insights into the target market, competition, customers, and industry trends, enabling entrepreneurs to make informed decisions and set their businesses on the path to success.

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How to Define Your Target Market

4 min. read

Updated April 4, 2024

One of the most powerful tools of small business marketing strategy is defining and addressing your target market—the audience that you think is most likely to buy your product or service. The key to identifying this customer base is market segmentation, or figuring out the demographics of your specific market.

Common sense makes it seem obvious from afar. You can’t (and shouldn’t) try to sell your product to everyone in the world. You’d waste a lot of money and resources very quickly.

But how do you figure out who your target audience is? Who or what should it be? How would you know? Here are five tips to help you figure it out.

1. Don’t try to please everybody

Strategy is focus. Say you’re planning to start a restaurant ; which of these three options is easier?

• Pleasing customers 40 to 75 years old, wealthy, much more concerned with healthy eating than cheap eating, appreciating seafood and poultry, liking a quiet atmosphere.
• Pleasing customers 15 to 30 years old, with limited budgets, who like a loud place with low prices and fast food.
• Pleasing everybody.

I really hope you chose one of the first two, and not the third. This is the essence of target marketing—divide and conquer. Different groups of people have different pain points and different desires. Most of the time, efforts to please everyone end up pleasing no one.

• 2. Learn market segmentation

It’s about segments, like pie segments or orange segments—except that in this case, it’s segments of a total market, or TAM .

In my “divide and conquer” example above in the first point, the specific age ranges, wealth, and atmosphere preferences describe particular market segments.

In the illustration here below, U.S. census data divides the population into demographic segments. Demographics are the old standards like age, gender, and so on.

You’ve seen market segmentations referred to frequently in business articles, interviews, and discussions. People will appeal to certain age groups, genders, income levels, and so forth. Divide and conquer is a simple concept; market segmentation is how you make it practical for your business.

Let’s say you think your target market is age 40 to 75 years old, wealthy, and interested in healthy eating. How do you validate your assumption that that demographic will be your ideal target customers? That’s where market research comes in. Talking to customers and potential customers is one of the best ways to do this kind of research, but there are many approaches.

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• 3. Use segmentation creatively

Don’t limit your target market strategy for market segmentation by age, gender, and economic level.

For example, when I was consulting for Apple Computer, we divided the market into user groups:

• Small business
• Large business

I also liked a shopping center segmentation that divided its market into so-called psychographic market segmentation:

• Kids and cul-de-sacs were affluent upscale suburban families, “a noisy medley of bikes, dogs, carpools, rock music, and sports.”
• Winner’s circle were wealthy suburban executives, “well-educated, mobile executives and professionals with teen-aged families. Big producers, prolific spenders, and global travelers.”
• Gen X and babies were upper-middle income, young, white-collar suburbanites.
• Country squires were wealthy elite ex-urbanites, “where the wealthy have escaped urban stress to live in rustic luxury. Affluence, big bucks in the boondocks.”

I knew a business that segmented its business customers into decision-process types as well:

• Decision by committee
• Decision by functional manager
• Decision by owner

And I call this final example, for lack of a formal definition, strategic intersection.

In the diagram here, the social media services that Have Presence offers are targeted to small business owners who:

• Want outside help with their social media; and
• Value business social media; and
• Have a budget to pay for the service.

Any of these creative segmentations can help you set a target market, and can also be a jumping off point for putting together a user or buyer persona —another useful tool for understanding your target audience and developing better marketing messaging.

• 4. Consider your own unique identity too

Your business probably reflects who you are and what you like to do, as well as what you do best. Marketing to people you like as the target market is an advantage. If you like the feel of small business better than the big corporate giants, then you’re probably better off setting the small business as a target market.

As Palo Alto Software, the host of Bplans, grew up and grew our business plan software, its founder (that would be me) was more comfortable with the do-it-yourself entrepreneur and business owner than the high-end consultants, so we ended up targeting the do-it-yourselfers in business.

So, somebody who loves fine food, tastefully prepared and served, is probably more comfortable with an upscale target market than with price-sensitive young families.

• 5. Define your target market early and revise as needed

Do it well as soon as you can, and keep reviewing and refreshing as you go along. You shouldn’t think of your target market as set in stone. As you learn more about your customers, how you define your target market will probably change.

The right target market increases your chances of success because you can communicate better with a well-defined group, and that holds expenses down and makes results better.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• 1. Don’t try to please everybody

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