How to define your target market

Understanding who your target market is, is probably one of the key rules for understanding your business.

At school, and I mean your school, they may have taught you things that were very interesting and at the same time misleading. Because both you and I were taught to know demographics, and demographics lied to us! I can give you a hundred different examples of people who have million-dollar homes and drive fantastic new cars, and have two children at private school, and where do they do their shopping?

They shop at Target, because they are already at the limit of their spending power. Understanding demographics is not as important as understanding the psychographics of the consumer.

It is essential to understand “why they buy things.”

If we take the last economic crisis, we see that sales of designer shoes, which are classed as shoes over €800, never lost ground. Never.

This means that during that crisis people’s value system was different. They could have given up taxis, their lunches or exotic holidays, but they did not give up their luxury shoes.

Understanding a customer’s value system is important, and so is knowing where they spend their money. You also need to understand their shopping routine. You might say to yourself: well, I’m going to open a shop in this location because there’s nothing like it here.

But is there a reason why there is nothing like it?

Some of my clients are in the south; their competition is actually in the north of the country. People will get on a plane, fly north, shop in the malls and go back to their warm south. Understanding customers’ buying patterns is also very important. The other thing is to understand price resistance. This is very scientific, and people spend all day studying why someone will be willing to spend more on one thing and less on another. Let’s take an example: you wake up in the morning and after breakfast you think you would like to buy a cardigan. You go to the shop, try on a couple, and suddenly you look at the price. What does your brain say?

It says: “oh my God, this is so expensive!” or “this is the right price”, but you did not wake up thinking “I’m going to pay 12.95 for a cardigan”.

This is an example to reflect on that explains price resistance.

The next point is sizes.

People forget that we come in all shapes and sizes, and I think a lot of business is lost because the right sizes are not known. Here too, strategy is fundamental.

The last thing I want to talk to you about is the overall image of your shop.

Let me give you this example: everyone goes to Whole Foods and feels good about themselves, thinking they are buying organic products, right? But did you know that Walmart (the largest mass-market retail chain in the world) is also the largest retailer of organic products?

But when you are inside Walmart you do not have that feeling of doing the right thing that you have at Whole Foods. Understanding image and understanding consumer behaviour is very important to really understand who is in that target market.

I want to leave you with one last piece of advice: how many of you know about anthropology?

How many of you know how anthropology is applied to retail?

You know that great feeling we get when we walk into a shop looking for that cardigan, and we walk out with a lampshade?

These companies know their target market so well that they understand you and sell you a lampshade, a beautifully presented tea and that cardigan.

It is people who give meaning to places, and it is their experiences that make your store an unforgettable place to come back to as often as possible for experiences and purchases.