What are the key factors to consider when choosing a target market?

1 Market Size and Growth

The first factor to consider is the size and growth of the market, which indicates the demand and opportunity for your product or service. You want to estimate how many potential customers exist in the market, how much they spend on similar products or services, and how fast the market is expanding or contracting. You can use various sources of data, such as industry reports, surveys, census, and online tools, to estimate the market size and growth. A large and growing market can offer more potential revenue and profit, but also more competition and challenges.

2 Market Segmentation

The second factor to consider is the market segmentation, which involves dividing the market into smaller groups of customers based on their characteristics, needs, preferences, and behaviors. You want to identify the most relevant and attractive segments for your product or service, and understand their pain points, motivations, goals, and expectations. You can use various methods of segmentation, such as demographic, geographic, psychographic, and behavioral, to create customer profiles or personas. A well-defined market segment can help you tailor your value proposition, positioning, and messaging, and increase your customer loyalty and retention.

3 Market Trends and Drivers

The third factor to consider is the market trends and drivers, which are the external forces that shape and influence the market dynamics, such as technological, social, economic, environmental, and political factors. You want to analyze how these factors affect the market demand, supply, competition, and regulation, and how they create opportunities or threats for your product or service. You can use various tools, such as PESTEL analysis, SWOT analysis, and Porter's five forces analysis, to examine the market trends and drivers. A favorable market trend or driver can create a competitive edge or a niche for your product or service, but also require you to adapt and innovate.

4 Market Competition

The fourth factor to consider is the market competition, which is the level and intensity of rivalry among the existing and potential players in the market, such as direct competitors, indirect competitors, substitutes, and new entrants. You want to identify who your main competitors are, what their strengths and weaknesses are, what their strategies and goals are, and how they differentiate themselves from you. You can use various tools, such as competitive matrix, benchmarking, and customer feedback, to evaluate the market competition. A high level of market competition can challenge your market share and profitability, but also motivate you to improve your product or service quality and value.

5 Market Fit and Gap

The fifth factor to consider is the market fit and gap, which is the degree of alignment and compatibility between your product or service and the market needs and expectations. You want to assess how well your product or service solves the customer's problems, satisfies their desires, and meets their standards. You also want to identify any unmet or underserved needs or expectations in the market, and how you can fill them with your product or service. You can use various tools, such as value proposition canvas, customer journey map, and gap analysis, to measure the market fit and gap. A high level of market fit and gap can increase your customer satisfaction and loyalty, and reduce your customer acquisition and retention costs.

6 Market Entry and Expansion

The sixth factor to consider is the market entry and expansion, which is the feasibility and viability of entering and growing in the market with your product or service. You want to evaluate the resources, capabilities, and risks involved in entering and expanding in the market, such as financial, human, operational, legal, and cultural aspects. You also want to define your market entry and expansion strategy, such as your target segment, value proposition, pricing, distribution, promotion, and partnership. You can use various tools, such as business model canvas, financial projections, and risk analysis, to plan your market entry and expansion. A successful market entry and expansion can generate revenue and profit growth, and enhance your brand awareness and reputation.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?