Your Target Market
Why should you go to all of the trouble of analyzing strengths, weaknesses, opportunities, and threats to your venture? The purpose of market analysis is to define your business’ target market. You want to know who your business will serve and verify that it will be profitable. Businesses with only altruistic goals don't survive.
A target market is a definition of your customers. It combines the geographic, demographic, psychographic, and behavioral characteristics of those who will most likely buy what you sell. It will include more than one group of customers and note what they have in common. The market analysis performed for this section of your business plan will help you define your target market(s).
Following is a definition of target markets for Foot Loose Shoe Store:
Active Family will be the focus of our nonrunning marketing effort. They give us the largest target, most opportunity for multiple sales, and allow us to gain further access into the community's numerous leagues. A typical active family would be described as parents in their late 30s and early 40s with two children. If the children each play two sports, that would require a minimum of two pair of shoes per year for each. If the parents are also active, that could amount to an additional two pair per year. With the need to purchase six pairs of shoes per year, we expect this family to make shoe purchases anywhere from three to six times during the year. They may visit the store an additional three to four times for accessories or simply to browse while in the center. For example, there are 12,000 participants in the Blosser City Youth Soccer Program. Every one of them needs a new pair of soccer cleats every year. Currently, they need to leave Blosser City to get a good selection of styles. This is a volume customer, but our goal is to have the entire family come along for the ride and through service and knowledgeable sales help have an additional sale consummated. This average sale will be approximately $42.00.
The next most important segment will be the participant runner. The average sale for this customer will be $75–$110. This customer should always make an additional purchase when visiting. Running socks, running apparel, running accessories, or supplements should be added to this ticket. By capturing the Runner, the less serious runner will be attracted to the store to be able to associate with their more serious counterpart.
We anticipate that 75 percent of our annual volume will come from these two classifications. The balance will be sport-specific buyers and nonfamily participants.
Your research may suggest that there is a broader or narrower market for your business. Or it may tell you that the market is already saturated and that, to be successful, your business must find another marketplace. These are important reasons to analyze your market before investing your time and money—and that of your investors—in a business that doesn't have the greatest chance of success. With careful and accurate market analysis, your business plan can then identify and seek customers, the people and businesses who will buy what you sell.