business plan

10 tips to make a target group analysis for your business plan

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New companies often have difficulty defining their target group and, therefore, often focus on a too broad target group. You can prevent this thanks to a good target group analysis. By making a target group analysis for your business plan, you know who you should focus on. But, of course, this all starts with the question: What exactly is a target group analysis? And what should you pay attention to when making this target group analysis? We share several tips to help you further!

What is a target audience analysis?

A target group analysis is an analysis that, based on various questions, gives you insight into who your target group actually is. Questions are asked about the behavior of the target group with regard to a specific issue. You can add these questions yourself. Common audience analysis questions are about demographics, interests, where to find them (online, offline, and through which channels), issues, and preferences.

1.      The first question of the target group analysis is: who would pay?

When creating an audience analysis, first try to understand the problem that your product or service can solve. Then use that information to research who might want to buy your product or service. Your potential customers will first have to be aware of the fact that they have a problem before they purchase something to solve it. To investigate this, you can use a program such as Google Adwords to see how many times per month terms related to your company are searched. In this way, you will find out whether the problem for which you offer a solution is alive with people and what the extent of this is.

2.      Research who your past consumers are

Before determining a pricing strategy for a target group, it is useful to investigate who has previously purchased a product or service. Think about the main characteristics of these people/companies and why they bought your product or service. While answering the target group analysis questions, you can gain valuable insights by, for example, first launching a new product in a test phase. This way, you find out what people would pay for your product or service. Tip: be sure to start the conversation!

3.      Don’t overestimate your reach when making an audience analysis.

It’s easy to assume that people need your product. It is important here not to make assumptions but to make contact with potential customers. Based on this, the size of the target group can be determined, and you can adjust your marketing efforts accordingly. As an entrepreneur, you may be so enthusiastic that you overestimate the market size. To get better insights while making your target group analysis, you can, for example, conduct surveys or interviews.

4.      Collect feedback for your audience analysis questions

If you’re trying to understand your audience, it can be an (expensive) challenge to get feedback from potential customers through interviews, surveys, or other means on your audience analysis questions. You can, therefore, also use your current network and collect free feedback in this way. In addition, many people in your network will be happy to participate and share their opinion or advice to further assist you in answering your target group analysis questions.

5.      Do not make assumptions based on personal knowledge and experience.

Based on your personal knowledge and experience, you may think you understand your target group well. Even before you have made your audience analysis, consider, for example, the fact that you have been busy with fitness for years and now want to start a business that deals with personal health. It goes without saying that you think you know the customer well because you would fall into this yourself. Please note that you do not make assumptions based on your own experiences. You can add this topic to your questions while making the target group analysis, and in this way, get to know your target group better, which will ultimately help you understand it better.

6.      Map out your revenue model while making your target group analysis

It can help you, before determining your target audience, to find out how you could generate income. For social enterprises, this can be tricky because, without a specific monetization plan, it can be easy to overestimate the market size. If your revenue model simply consists of selling a product, then it is easier to determine your target group and to make a targeted target group analysis.

7.      During your audience analysis, ask yourself how you sell your product or service.

Your Retail strategy can help you determine your target audience. A good question to add to your target group analysis is whether you offer your products through a physical store, webshop or both. For example, do you mainly focus on the city where you are located? Or do you focus on the national market? For example, an online shop can attract more young people, and a physical store can geographically limit your target audience. So check carefully what is the best option for you.

8.      When making your target group analysis, find out how your competitors started.

Looking at your competitors’ marketing strategies can help you determine your own target audience. Although this may contain interesting information, you do not intend to copy it 1-on-1 once you have determined your target group. Instead, put the focus on the differences between you and your competitor. Then look at where the competitor is failing and what you can capitalize on. So don’t forget to add these valuable questions to your target group analysis.

9.      Look for insightful information before drawing up your target group analysis.

If you are in the process of determining your target group, try to define right away in which ways you can reach and influence this target group. Be sure to include this in the questions of your target group analysis. You will then have to do market research to learn more about your target group’s demographics, geography, and purchasing behavior. To give an example, you can investigate how many people live near your physical store. The sooner you know where to find your customers, the more it will help build your marketing strategy.

10. Do you want to expand your target group? Then make a new target group analysis.

Always be prepared to redefine or expand your target audience. It is possible that thanks to certain developments, you suddenly see an opportunity to expand your target group. Think, for example, of offering new/adapted services, new technological developments that suddenly make reaching a larger target group a lot easier (such as the rise of social media channels), or the different use of your current product or service, which gives you a whole to attract a different target group. If you choose this option, you will have to adjust the questions for the target group analysis and create a new target group analysis.

Correctly determining your target group is an important part of your business plan. Would you like personal advice in this area? Please contact Maven Business Plans to request a quote or make an appointment without obligation.

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