Finding your target market requires analyzing your skillset, market characteristics, competitive landscape, and barriers to entry.
It is shocking how many entrepreneurs select their target market without a thorough analysis. Entrepreneurs often base their identification of the target market solely on their experience. This is a massive mistake. A developer wouldn’t build a house only on their knowledge of how to frame a wall. They would look at the soil underneath, the weather, the population, regulations, and much more.
A complete analysis to find your target market requires finding the intersection of your skillset, market characteristics, competitive landscape, and barriers to entry. Let’s discuss in greater detail:
- Your Skillset: Your skillset is what you do well. Your skillset will include key personnel experience and connections, existing market knowledge, intellectual properties / operational know-how / institutional knowledge, and competitive advantages. Entrepreneurs often stop their research into target market identification here.
- Market Characteristics: Market characteristics are elements such as rate of growth, size, behavior and consumption habits, segmentation and trends.
- Competitive Landscape: The competitive landscape encompasses the overall industry. This includes your direct and indirect competitors, the sectors that your competitors occupy, because even direct competitors will offer the same set of products and services.
- Barriers to Entry: Barriers to entry are the hurdles that potential competitors face when entering your space. Hurdles can include regulations, capital expenditures(e.g., the cost of acquiring expensive equipment), and knowledge capital from specialists on your team. Barriers to entry can also encompass emerging technologies that disrupt the ecosystem players in the space that they contend with. This is a separate consideration from the competitive landscape because barriers to entry focus on the environment that competitors must overcome.
As you can see, there are a significant number of considerations beyond just the entrepreneur’s skill set. Contact us today to conduct a thorough analysis to find your target market.