How to create happy, loyal customers by Defining and Analysing your Target Market

To create and keep happy, loyal customers, small businesses need to have identified who they are.


Not all your customers will fit the same profile, but it’s far more effective use of your time to focus on a core customer base than spread the net too wide and be constantly mixing your message. Beyond helping you streamline your offering, it allows you to give the best possible experience to those customers.

Understanding your target market

Your core customer base is your ‘target market’. These are the people whose desires, values and needs most closely align with what your business can offer them. Ultimately, they’re already looking for what you have.

Understanding your target market requires research over assumption. It’s about trying to grasp on a much deeper level who those people are, what motivations they’re driven by and how you can reach them.

Demographics such as age, gender, education level, occupation and family situation give you a broad idea of their lifestyle. Also consider the small details of their daily lives. Where do they work? What gives them enjoyment outside of work? What are their goals in life? The answers to questions like these help you create an authentic understanding of who they are instead of relying on a hunch.

How to determine your target market

Hoping for a certain demographic or using guesswork won’t help you determine your target market. It requires an in-depth review of your products and services, the behaviour of existing customers and the marketplace as a whole. Breaking down the process will give you focus, direction and maximum insight.

Analyse your offering

What do your products and services solve? To whom do they appeal and why? Try to be as granular as possible when you’re answering these. For example, a gardening business helps people manage their outdoor space. If that business is based in a city, its services become specifically useful for busy professionals wanting to make the most of limited space, and people without the means to travel to out of town garden centres.

It’s important to drill into the detail when you’re running this analysis. Make note of everything you stumble across — the niches and finer points will be crucial in giving your business a unique edge against competitors.

Conduct market research

To analyse your target market fully you need to go beyond your customers and understand the marketplace. Analytics tools like Quantcast and Google Trends identify and assess potential competitors, helping you find new customers and find ways to improve your competitive offering.

Well-known sites like Yell help you see what competition exists in your business’s local area — and don’t underestimate the power tools like surveys, focus groups and in-person discussions. These are a great way to tap into the mindset of people who are already buying from your company or competitors: what they need, why they are (or aren’t) shopping with you and what you can do to make your offering more appealing.

With POS systems and your sales reports you can also look into the specifics of what people are buying from you, when and how often, this will help you to identify your most popular products and services.

Create customer profiles and market segments

Market segmentation is the process of organising a group based on various categories, such as demographics and psychographics.

  • Demographics describe the more fundamental characteristics of a person, like their age, gender, education level, ethnic background and marital or family status.
  • Psychographics offer deeper, psychological insights into who people really are as individuals, like their behaviours, values, personality and lifestyle.

You’ll find yourself with more accurate segmentation and profiling when you consider both demographics and psychographics in your analysis.

Assess the competition

Use the online tools discussed above to get a comprehensive view of the competitive landscape. Who are the businesses offering comparable products and services? How much do they charge? What are they doing differently?

You could create a SWOT analysis chart to demonstrate weaknesses, strengths, opportunities and risks for both your business and theirs. This will give you a good idea of what improvements you can make, and where you’re excelling already.

If you’re going after customers in a densely competitive space, make sure you’re well aware of your USPs. It’s harder to succeed when you’re contending with numerous others, so thoroughly develop an understanding of how why you excel above them what, makes you unique.

A business owner behind a counter in a light and bright shop space - talking to a female customer seated in front fo the counter

Using your target market analysis

Once you’ve completed your analysis, put that data to work. Here are some ways to use the insight you’ve gathered to grow and improve your business:

  • Product development.
    If your analysis exposed holes in the market, plan how new services and products or an improved subset of your existing offering can plug them.
  • Niche markets.
    Did you identify an underserved group? Instead of going after the same customers as your competitors, explore these untapped markets.
  • Expansion opportunities.
    If you identify underserved areas while assessing your local market, you might consider franchising or adding a new location.
  • Pricing strategy.
    If the insights into your competition reveal that you’re either pricing yourself out of the market or not charging enough, use comparative data to determine competitive prices or deals.
  • Curation.
    There is such a thing as offering too many options, and it can confuse and deter customers. Try specialising more instead. If you offer many of the same items as your competitors (especially if they aren’t big sellers anyway), pare down your inventory to focus on top-selling and exclusive items.
  • Marketing.
    Your target market should be the foundation of your marketing strategy. Use what you know to determine which channels and messages to use when communicating with customers. Whenever you think about implementing something new, whether it’s a social platform or a promotional campaign, check your analysis to see if it’s likely to reap a positive response.

Easy Peasy Business is a leading digital marketing Agency, Consultancy and Network. We offer extensive online courses covering all aspects of digital marketing as well as providing bespoke consultancy and agency services.

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