Define Your Target Market and Marketing Mix in a Business Plan

TARGET MARKETS

Target Clients: Clearly define your customers. Keep in mind the demographics describing the typical customers in your industry. There may or may not be a differentiation between who you and your competition. A classic example in recent times provides product or service delivery to women. For example, there are very many web sites devoted to entrepreneurship. However, there are some devoted exclusively to women, Hispanic, Black and Black female entrepreneurs. Other examples can be found in brick-and-mortar environments. For example, some auto shops do body work. Others will align vehicles or change oil pan gaskets.

Rely, in part, on the industry data in the General Market & Industry Analysis section to define which will be your targeted client base. Then consider local demographics (see below) in your target market. Do they provide sufficient numbers to potentially generate sufficient sales?

Geographic Target Markets: This appears pretty simple to define. Yes? Maybe so, but you better be certain your target clients reside or do business in the geographic target market. Economic and Demographic Census data play a key role in deciding geographic markets for institutional and individual clients respectively. For institutional clients this data, when compared over time, can identify types, rises and declines of specific industries. For example, your business is in California, and your clients are typically high-tech. It only seems natural that Silicon Valley and the surrounding area will be one of your markets. Others areas of the United States are defined as "upstarts" in the high-tech industry. You may want to target those areas. If you direct your business to high-tech markets overseas Dubai in the Middle East and Bangalore in India are Silicon Valley counterparts.

The individual client is not located everywhere. Demographic data plays a key role in identifying the growth or decline of your targeted client by country, province, state, county or city. In the North America, for example, compare census data from 1990 to 2000. Furthermore, there are county growth patterns for intermittent periods between each decennial.

Likewise, there are other geographic patterns that can impact your business. For example, you may cater to tourists. Certain parts of the United States are subject to seasonal sales due to the tourist seasons. If you do business in Mexico consider Cancun, Acapulco and Baja California, which are premier tourist destinations.

Pricing Structures: There are three primary categories of pricing - discount, customary and prestige. The pricing structure you choose should be a part of the total advertising and promotional strategy, which is influenced by your market research. Furthermore, the financial analysis should be able to substantiate positive cash flow and profitability under the pricing structure chosen. Don't choose a discount price structure simply to undercut the competition. It may prove unprofitable.

For example, there are perfumes and colognes, of the same brand name, that are found in all three pricing models. They are discounted by high-volume discount retailers like Wal-Mart. They are customarily priced at such outlets as JC Penney or Sears. Finally, the same perfume or cologne will receive prestige pricing at Saks, Burdines or Dillard's.

We do not endorse predatory pricing - long-term selling at a price so low as to gain the attention of all consumers, and wean them away from the competition. Predatory pricing is not profitable, and it can lead to competitor retaliation. Some competitors may be so cash-rich has to endure rock-bottom prices longer than you. Other competitors may have such customer loyalty that your predatory prices will have minimal impact on them. In the meantime, you suffer negative cash flow, create questionable images in the minds of some potential customers and create instant enemies in your competitors. Besides, where will the customer loyalty go when you move up to customary pricing?

Summary: Again, use your excellent writing skills to identify the target customers, geographic target markets and pricing strategies. The summary must convey a consistent image from client to market to price. It becomes the foundation of your advertising and promotional strategy.

Note: Reliable research data plays the most important role in determining the feasibility of this section. Document the data that supports your definitions of targeted clients, geographic target markets and pricing structure.