A target market, simply enough, is the group of people you focus on reaching with your app, product or service because you believe they are the most likely to pay for it or use it. Your target market is the cornerstone of your marketing strategy. Some clarifications and notes are appropriate as many businesses really have a hard time defining a “viable target market” – in relation to a good Product/Market Fit.
This infers an audience of end-users that:
Note that many developers relying upon in-app advertising for their revenue only need people to use their product, not necessarily pay for it.
Most companies heavily focus on only one of these points, A or B or C. Profitable and successful companies do their best to address all three A, B and C. Note that while this is written mainly for mobile app developers, it also applies to almost all small businesses, too.
Most developers, most companies, focus heavily on product – constantly striving to improve their product, always trying to improve their product’s fit to the market. Product Focus is heavy on tech focusing on improving Features, Interface, Price, and other items intrinsic to “The Product.”
Product Focus naturally comes first – it is The Idea and The Solution to a Problem that prompts starting a business in the first place. It is, equally, a natural result of looking at what someone else has done and thinking you can make it better, faster, or cheaper. Improving your product makes it more competitive, more attractive, more likely to compel people who see it to buy it or use it.
The benefit of this focus is to improve conversion rates in your target market.
This is all good, but it could be better by having a larger target market.
Most new businesses do not fail for technical reasons, but for other issues ranging from lack of preparation, funding, marketing, lack of revenue diversification and management.
Generally speaking, a poor product with great marketing will perform far, far better than a great product with poor marketing. That is why we are surrounded by fast food chains. There might be some argument there, but it is an analogy that will keep me out of too much trouble.
Good marketing engages to reach either the largest possible OR the most profitable pool of consumers while remaining true to its product. There is a lot to marketing, suffice that it comes down to maximizing either your Quantity or Quality – in both product and customer base.
Remaining true to the product is the common denominator. This is where your Unique Sales Proposition (USP) comes into play. While your USP could be product-specific, it affords you the potential to differentiate yourself beyond your product.
As long as you have a functioning product and intend to continue improving your product, then the people who could use it become the center of attention.
Let’s take the case of a utility app for accountants. It’s designed for accountants. That might be your core target market. Or not. Who else does accounting? Small business owners? Tax advisors? Moms with households on a budget?
Leastwise, if you are able to produce very sophisticated accounting apps, odds are darned good you can make simplified, watered-down accounting apps that every day mothers could use, too. Marketing, at least, can help define areas of opportunity that could fit the product.
Target market is important, it is the cornerstone of your business – but defining it too narrowly will, in most cases, reduce your revenue potential unnecessarily. Again, in most cases, if you are in business you are looking to create opportunities, not eliminate them.
There are exceptions to that rule – and they usually pertain to premium and prestigious products and brands where the minimum customer commitment is outside the average (think Golf Club Memberships and having a representative from Goldman Sachs as your personal investment advisor).
That level of premium placement is not typical for most small businesses – even if they might like to be there, the odds of starting there are slim to none. It is almost always necessary to build up to that.
This is where the REAL fun is – as it concerns You and Your Company encompassing your Products, Marketing, Networking and Making Deals. Here is where you are able to turn what you have into far more.
Revenue models are one component involved here – free (with in app advertising), freemium with upgrades or in-app store, premium, subscription sales, subscription-based distribution programs, package bundling, content partnering and more.
Which is best for you? Well, that takes some research to determine. Many online companies have switched from subscription models to free-to-play models with in-game store options. We are also seeing companies going from free-to-play back to subscription models, too.
A focus on business models could you lead to look at any one of the following possibilities to help build your business and maximize your revenue, too:
As a special recommendation, see Ash Maurya’s “10 steps to Product/Market Fit” (on Slideshare.net).