Understanding Your Target Group: Who Will Buy Your Offer?

As an entrepreneur, you have to describe and specify the target group for your business idea. The central question is who should buy your offer – product or service – in the future? By delimiting the target group, it will then be easier for you to record the size of the market later in the business plan. The direction of your marketing also depends on the definition of the target group.

In the first step, you can divide the target group into private customers (B2C) and business customers (companies, B2B). This is followed by a detailed definition of the target group.

Why define the target group?

When you have written down your business idea and thus the service and/or your product range, you should describe your target customers or target group. Your main question is: Who should buy your product?

If you know and have defined your target group, you will be able to address your target customers precisely. This not only saves you time but also prevents you from spending a lot of money on unnecessary advertising campaigns, for example. Ultimately, you will also be able to determine the size of the target group and thus calculate the market potential.

How to define your target group

No matter how great the product or service is that you want to sell, due to the different needs of people, you always only serve a part (segment) of the overall market. 

The target group definition is about working out the characteristics of your target group. Characteristics such as gender, age, income, or place of residence are just as important as the question of what wishes, problems, or needs your target group has. In addition, you can also create personas in which you give your target customers a face and develop fictitious sample customers based on character traits.

Since the target group definition is not that easy, it is best to proceed step-by-step and first differentiate between the following two customer groups:

Private customers (consumers):

There are millions of consumers out there, the only question is: which ones are suitable for your product? By defining your target group, you limit your potential buyers and can thus proceed in a targeted manner. 

Companies (business customers):

If you want to address companies with your product, the industry or company size are usually important characteristics of your target group.

In the business plan, you can describe your target group based on the respective criteria. Only in this way can you realistically assess the market and draw up sensible financial planning. The precise characterization of the target group will also help you later when creating the marketing concept and addressing customers.

With the help of the positioning, you can find niches and thus a target group that has not yet been considered. Positioning in the market is a particular marketing challenge for start-ups. You have to define the customer benefits of your offer and thus determine your position in the competition. Product positioning plays a decisive role, because only with the right positioning can you have long-term success with your business start-up in the market.

When it comes to product positioning, price and performance are frequent categories for positioning in the market and in comparison to the competition. Based on your product positioning, you can see relatively easily in the coordinate system where you are compared to the competition. You can see whether your product positioning is more of an advantage or a disadvantage compared to the competition – or whether you are within the market average. From this, you can then draw conclusions for your marketing.

Attention: who is the buyer and who is the influencer?

The person who is supposed to buy your product (obvious target group) does not necessarily have to be the one who makes the purchase (effective target group). Mum buys the surprise egg, but is usually influenced to a large extent by the child when making a purchase decision – your target group is therefore much more likely to be the children than the parents! 

Above all, you should identify and pay attention to the “influencer” if your target group is a company: This is how the department manager decides that a new coffee machine is to be bought. The secretary usually decides which one this should be. Take this factor into account when defining your target group!

Find a new target group

You may also find a new target group for your product that the market has not yet noticed. For example, Bosch, the market leader in high-quality cordless screwdrivers, has discovered a new, lucrative target group. Through market analysis, Bosch has found that the classic semi-professional do-it-yourselfer who buys high-quality cordless screwdrivers is increasingly being replaced by the “IKEA generation”. 

The analysis of this possible target group showed that the large number of predominantly young people (men and women) who are not that technically savvy need a small, easy-to-use cordless screwdriver. Bosch has developed a new product for this special target group – the Bosch IXO. The Bosch IXO is one of the most successful products from Bosch.

Final note:

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