Investors do not like to hear that your target market is “everybody” – even if it’s true. Concepts sometimes evolve, and as they do, target markets can either shift from one segment to another or grow to encompass additional market segments. That’s perfectly fine, but from the outset you must have a clearly defined target market. When you try to be everything to everybody, you succeed at nothing. If you do not clearly define a specific target customer base for your product, service, or technology, then you cannot fully understand the specific features and benefits that will be of interest to potential customers.
Whose needs are you meeting?
Regardless of whether you are targeting business-to-business (B2B) or business-to-consumer (B2C) markets, different customer groups have different interests and needs. What is important to one group can be meaningless to another. The fact is that different groups of customers do not share the same set of problems. Teen girls have different problems and priorities than middle-aged homemakers. Likewise, the challenges faced by small businesses are not the same as those faced by large corporations. Each of these different customer groups will make buying decisions based on criteria that are unique and specific.
When customers have specific problems, they seek out products, services, or technologies that can resolve their particular issue. Moreover, the higher the level of confidence they have in the solution, the greater the likelihood that they will purchase that solution. Think about your medical care – if you are in need of a general checkup, you go to a generalist, but when you have a specific medical issue, you seek out a professional with expertise in your particular area of concern.
Who is your core customer?
Trying to be everything to everybody is an ineffective strategy that only serves to weaken your position and destroy your credibility. Not even Wal-Mart, the world’s largest corporation, can successfully tackle that approach. A number of years ago, Wal-Mart endeavored to expand its customer base beyond its value-conscious core to a somewhat more upscale customer, similar to those that shop at Target or Kohl’s. Essentially, Wal-Mart wanted to be the low-priced leader and be hip and fashion forward. The company even moved its fashion buyers from its headquarters in Bentonville, Arkansas, to shiny new offices on Broadway in New York City. Unfortunately for
Wal-Mart, shoppers were not impressed, and the company soon retreated from that strategy, relocating the buyers to their home base in Bentonville. The problem was that these two cultures clashed mightily and neither consumer base (value conscious or somewhat upscale) was happy.
Wal-Mart’s strategy of trying to adapt to meet the wants and needs of customers outside of its value-conscious core did not turn out well. Existing customers were displeased because many of their low-cost favorites were replaced with hipper, costlier goods. Meanwhile, the more upscale customers were not interested in shopping at Wal-Mart. They never believed that Wal-Mart products could actually be either hip enough or fashion forward enough to entice them to change their shopping habits. Other Wal-Mart transformations to meet shifts in market tastes have been much more successful. Some of these changes include adding more products that are manufactured or assembled in the United States and increasing the variety of organic fruit and vegetable offerings.
How do you reach a new market?
As you grow, you may find that your product (or service or technology) can readily be adapted to meet an entirely new market segment. If so, you may want to consider launching it as a separate product or brand. For instance, several years ago I helped a woman land her specialty skincare cream on the shelves of Wal-Mart, Walgreens, and other major national and international retailers. Along the way, we found that the product could be especially appealing to new moms and dads because the cream was particularly effective at alleviating some common skin conditions that irritate babies and toddlers. But rather than try to be “everything to everybody,” we decided that the best approach to reaching the new market segment was to launch the product under a separate brand with its own marketing campaign. The original product brand already had a relatively long list of benefits, and we were concerned that simply adding to the list would be ineffective and even potentially damaging to the brand. Looking back, it is clear, at least in our case, that we made the right decision.
If you want to launch a successful, sustainable startup, the lesson here is three-fold:
1) you must first identify a specific customer base with a pressing problem that your product, service, or technology can solve at a price those customers are willing to pay;
2) you must understand your customers, their changing needs, and the pressing needs of additional customer segments that may benefit from your product, service, or technology; and
3) you must adapt your product (or service or technology) to meet the changing needs of existing customers as well as those of broader customer segments.
This is, of course, an overly simple explanation for a very complex topic, but nonetheless, the underlying message is clear – know your customers (current and future) and provide features and benefits that meet those customers’ needs or desires.