Understanding your target customer

Before you can start your business, you need to identify its target market by working out who will be using your product or service and what their habits are. This will allow you to determine how you will price your offering and work out how much you will spend on marketing.

Working out who your customers are

  • If you're starting up, looking at who your customers will be will help you to work out how you are going to market and brand your business. Think about how your brand will appeal to customers: if you're marketing to teenagers, you'll need to make sure your offering is eye-catching as well as affordable.
  • Once you have collected data about your customers, you will need to break them down into different groups, or segments, based on information such as age, income, region and lifestyle. This is called market segmentation and allows you to determine specifically how you will encourage each group to buy into your brand.
  • Once you have segmented your markets, work out how you will position your business in the market in order to compete. What will your unique selling propositions (USPs) be? Do you make faster deliveries or better customer service? How will you let your customers know about it?
  • You can get information about who your customers are from a number of sources, but try the following:
    • The Office of National Statistics (ONS), the government statistics agency
    • Figures provided by industry and trade bodies
    • Information from trade fairs and exhibitions
    • Industry and national press
    • Chambers of Commerce
    • The internet
    • Competitors
    • Competitors' annual reports (which can be downloaded from Companies House if they are a limited company)

What to find out

  • Begin by looking at your customers' demographics - what their profiles are. Look at:
    • Age
    • Income
    • Level of education
    • Gender
    • Race or nationality
    • Family status and size
  • Your customers' behaviour is also crucial to how you present your business. Find out:
    • What they spend their money on
    • What their habits are
    • How loyal they are to other brands
    • What their interests are
    • How often they spend their money, and how much they spend
  • Your customers' location will have a big impact on how much they spend and how frequently they buy. Find out:
    • How far they live or work from your premises
    • What sort of area they live in
    • If it's further afield, what the climate is like

Resources

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