How Do Startups Identify a Target Demographic?
One of the most important steps for starting a business is choosing an audience and understanding who that audience is. If your business’s target demographic is “everyone,” you’re likely going to fail; targeting “everyone” makes it nearly impossible to create effective advertising, opens the floodgates of competition, and generally means your business will exist without direction.
Still, it can be hard to select a target demographic if you’ve never been through the process before, or if your business idea is truly general enough that you aren’t sure who it could appeal to. So how do you go through this process?
Step One: Brainstorm
First, you’ll need to brainstorm possibilities. Demographics can be defined in many ways, including:
- Geographic location
- Education and background
- Family status
- Religion, philosophy, or political belief
Try to think of each of these categories, and more, when interacting with your core business product or service. Is one more likely to enjoy it than another? For example, is someone with higher education more likely to use your product than someone who dropped out of high school?
You can also come up with better ideas by looking at companies like yours that are already in existence. Are there companies in your industry that are already targeting certain demographics? You could take this as a direct cue; obviously, there’s value to be found in these target demographics, so you might do well to intentionally target them. However, you might also deviate from this approach; if you intentionally choose a different target demographic, you might be able to differentiate your business and capitalize on a wholly untapped market.
Throughout this process, you should be jotting down some ideas for who you might target, based on the dimensions above (and other factors you might consider).
Step Two: Research
Once you have a handful of potential demographics to target, you can flesh out your ideas by conducting market research. This phase of the process is meant to help you better understand how your hypothetical demographics are represented, how they think, what they’re buying, and what might prompt them to buy from you in the future. In short, it’s a way to test whether your demographics are a viable target.
The two approaches to consider here are primary and secondary research. Primary research involves digging into your demographics with surveys, interviews, and test groups; you’ll get to know your demographics specifically, asking questions about your products and their previous buying habits as you see fit. It’s a bit more time-consuming and can be more expensive, but if you use a survey tool and make sure you’re working with a quality sample size, you should be able to get the answers you need.
Secondary research involves looking up information that’s already been gathered by other sources, like the United States Census Bureau or Pew Research Center. This is usually convenient and inexpensive, if not free. It may not offer specific information on how your demographics might respond to your products, but it can give you representational statistics and help you understand consumer purchasing habits.
Neither primary nor secondary research is enough to, individually, make you truly “understand’ your demographic. You’ll need both if you want to be successful.
Step Three: Solidify
Once you’ve collected ample data on your hypothetical target demographics, you can start making decisions. If it doesn’t look like your demographics would like or support your company, you can move onto another option. Either start brainstorming another target demographic that might like your product, or consider tweaks to your product that could spark interest in your now-better-understood target audience.
If and when things look promising, you can move to flesh out customer personas. Using the data you collected via primary and secondary research, you’ll create representative characters who embody the audiences you’re trying to reach. It’s much easier (and more fun) to come up with advertising ideas and new products using customer personas than empty pieces of data.
Step Four: Branch Out
The final step is an optional one and one that will only come into play after you’ve developed a strong foundation for your business. If you find that your business has a greater appeal elsewhere, or if you think you can offer a different product to appeal to a different niche, you can always expand to a new demographic. If you decide to do this, you’ll need to go through the above steps for each new demographic you want to add to your customer base.
There’s no right or wrong demographic to target in your business, but some will inevitably be more valuable than others. The important thing is to make sure you’re doing your research proactively, and thoroughly understanding your competitive landscape before you make a final decision.