This article is an excerpt from the Shortform book guide to "Play Bigger" by Al Ramadan, Dave Peterson, et al.. Shortform has the world's best summaries and analyses of books you should be reading.
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What is a target market? How can you identify the target market of your company?
A target market is a specific group of consumers that may potentially buy your product. It’s important to pinpoint your target market and understand what their unmet needs are so you can fulfill them.
Let’s discuss how to identify a target market in the five parts highlighted in Play Bigger.
Identifying Your Target Market
The authors write that the first step of designing your market and becoming its winner is to identify your target market by pinpointing an unmet need in peoples’ lives or a new way for your existing technology to fill an unmet need. At your low-tech company, you might identify the unmet need for less intrusive technology. Your market, then, becomes the market for low-tech devices.
Contrary to popular belief, you don’t first create the product and then decide what its market will be, note the authors. Instead, as we’ve discussed, you must build your product, market, and company at the same time for them so they support each other and create the flywheel effect you need to become the market winner.
The authors suggest learning how to identify a target market in five parts:
Part 1: Decide who will identify the unmet need. The CEO must support this effort, but someone with an outsider’s perspective—a firm or someone hired for this purpose—must spearhead it because identifying an unmet need requires a fresh outlook on the company and product. Plus, this person must be able to dedicate themselves exclusively to this work.
(Shortform note: If your company doesn’t currently have the resources to hire an outside firm or new employee, consider recruiting trusted friends or business associates into a casual business support group. You can meet regularly and offer each other fresh perspectives on your respective business questions.)
Part 2: Conduct research on the unmet need. The person leading the work must then gather information about the company, what it does, and the market it currently occupies. They can do this by speaking to company leaders, board members, and advisors, and by researching your industry. However, this person shouldn’t ask customers for their opinions. This is because the market you’re creating will be totally new, so customers won’t yet understand the need you’re fulfilling and will give you unhelpful feedback.
(Shortform note: In Raving Fans, Ken Blanchard and Sheldon Bowles argue that there’s one realm of your business in which you should ask for customer feedback: customer service. The Play Bigger authors might agree that obtaining feedback on customer service is useful because you’re not inventing customer service from scratch in the same way you’re inventing a new market (unless you are inventing a novel form of customer service no one’s seen before). What’s more, Blanchard and Bowles agree with the Play Bigger authors on the need to gather information internally but add that you should also obtain information from partners like suppliers and manufacturers.)
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Here's what you'll find in our full Play Bigger summary:
- Why financial success doesn't depend on education or intelligence
- Why the key to financial success lies in understanding human behavior
- How to create a financial strategy you can follow for decades
