Module 3: Target Market & Marketing Plan
🎯 Our goal in this module is to accurately describe your Target Market and create your Marketing Plan. Then, you’ll be able to write up this section of your Business Plan.
Let’s start with describing your Target Market.
- Who are your potential customers and where are they?
- What problems are they struggling with?
- What circumstances or factors are causing them to struggle?
- Are your potential customers businesses or individuals?
Depending on the type of product/service you are trying to build, you can also describe your potential customers in the following terms:
- Age range
- Income range
- Where they live or work
- Level of education
- Any other characteristics that help provide a clear customer description
You probably have most of the information you need to accurately describe your Target Market from the Secondary and Primary Research you conducted in Phase 1. Now for your Business Plan, you just need to summarize what you have in a paragraph or two, painting a “portrait” of your Target Customer.
So, how will you convert these “potential” customers into actual “paying” customers for your business? What is your Marketing Plan?
Here are the kinds of questions to consider as you think through and create your Marketing Plan:
- How will your potential customers learn about you and your product/service?
- How will you get their attention?
- Will you have a website? A mobile app?
- Will you advertise on social media?
- Where do your potential customers look for products/services like what you are offering?
- Do they go to trade shows?
- Are they professionals who attend conventions where you can set up a booth to talk face-to-face?
- Do they read trade journals where you can reach them through ads?
- Will you go “door-to-door” or “office-to-office” and make your presentation face-to-face?
- Will you need to “demonstrate” your product/service?
- How are your competitors finding and acquiring their customers?
- How will you price your product/service?
- How will you deliver your product/service?
- How will you receive payment—electronic or other?
- When will you receive payment—at time of transaction, before, or later?
- What happens if you have a customer complaint or problem—how will you deal with that?
- Will you have a return policy or a money-back guarantee?
- Will you need a customer service department?
- How will you stay in touch with your customers and keep them happy and loyal?
Describe your Target Market & create your Marketing Plan
Review your notes from Phase 1, plus any additional research you have done to address the target market questions above, and then write a paragraph or two about your Target Market—your target customers.
The more precise and specific you can be, the clearer the picture you can create for your target customer, and the better able you will be to design a powerful Marketing Plan.
One popular and very effective approach here is to create a Target Customer Avatar.
Your Avatar is a fictional character that represents your ideal customer.
Just take all that you know about your target customer from the research that you have done (who they are, where they are, what circumstances or factors are causing them to struggle with the problem that you are going to solve for them, etc.) and write a short description of that “person”.
Give your Avatar a name. You can even add a photo or a caricature of your Avatar. A short paragraph is all you need here. This should help you focus your marketing efforts more precisely and effectively.
Next, based on all that you know about your Target Market and your competitors, plus the additional research that you have done to answer the Marketing Plan questions above, create your own strategy outlining how you plan to get customers for your product/service.
You might need to spend a day or two on this, and you will probably need to devote a couple of pages in your Business Plan to presenting your Marketing Plan adequately.
Now, go to the Target Market & Marketing Plan section in our Business Plan Core Template. Assemble your narrative describing both your Target Market and your Marketing Plan.
Okay, before moving on to Operations, let’s take a minute for a “reality check” to see how well you have done with your Target Market & Marketing Plan section.
When you created your Marketing Plan, you gave some thought to how you will price your product/service.
Question 1: How many customers will you need in order to reach a million dollars in sales at the price that you have chosen for your product/service?
For example: If you will charge $100 for your product/service, then divide $1,000,000 by $100.
In this case, you would need to sell 10,000 units of your product/service in order to reach a million dollars.
If you will only sell one product/service to each customer, then you will need 10,000 customers to reach $1,000,000 in sales.
However, if you will have “repeat customers” who will purchase over and over again from you, then you will need fewer than 10,000 customers to reach $1,000,000.
Question 2: How long do you think it will take you to acquire enough customers to sell 10,000 units of your product/service?
Continuing with the same example from above, if your price is $100, you will need to sell 10,000 units of your product/service to reach one million dollars.
This math problem can be a little more challenging to solve and will require you to take a very close look at the Marketing Plan that you have just created in order to get the correct answer.
Here are a couple examples:
Example 1: Let’s say you are selling a digital product (maybe an online course) for $100 each, and you have an email list of 500,000 fans (already following your Blog, Instagram, Podcast, YouTube channel, etc.) some of whom have expressed serious interest in what you are creating. Then, you could potentially acquire 10,000 customers and reach a million dollars within the first 24-48 hours of going live with your offer.
Example 2: Alternatively, let’s say you are creating a restaurant that offers home and office delivery, and you expect your average order per customer to be $100. If this is your first business and you don’t have any “fans” following you yet on any social platform, then it may take you “a while” to acquire enough customers to sell 10,000 meals. You will need to allow time to find customers, persuade them to give you a try, make sure they are satisfied, coming back again, and telling their friends, etc.
It might take a couple of months to get your business up and running and to acquire your first 500 customers (some of whom may be regular customers spreading word of your restaurant to their family and friends).
Maybe your average customer will eventually purchase 4 meals a month from you, which would mean that instead of 10,000 customers, you will only need 2,500 customers to reach one million dollars in sales.
Maybe you will accumulate 2,500 customers within the first 6 months after opening your restaurant? Or maybe it will take you longer.
Whatever your business model, you can see how important it is to really think through the process of acquiring paying customers and creating a plan that will work for your business.
That’s enough math for now. This was just a primer to get you more comfortable thinking in terms of numbers and predicting the future (or at least plotting out possible future scenarios).
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