Identify your Startup's Target Market
"Entrepreneurs don't have the luxury of resources. Take your resources and apply them to a narrow, carefully defined target market that you can dominate." - Disciplined Entrepreneurship by Bill Aulet
Some of the world’s largest companies started with a niche focus on their target customer. Jeff Bezos began with an initial focus on online book sales, Mark Zuckerberg initially launched Facebook for Harvard students only and Elon Musk’s initial focus for Tesla was premium electric sports cars in California.
Identifying your target customer starts with market segmentation to identify potential market opportunities and your end user.
Market segmentation is a process to identify a specific market with the following features: same product, same sales process and word-of-mouth.
Check out our highlights on 'Why you should start with the end user?' by Trish Cotter, who was previously Director of MIT Delta V Accelerator.
Then, we conduct primary market research for our most promising market segments. Primary market research is essentially the process of directly interacting with users to understand their challenges and key priorities.
Trish Cotter, Senior Lecturer at MIT, explains to an audience of social entrepreneurs why you should start your primary market research with the end user.
Customer Discovery, also known as primary market research, is essentially the process of directly interacting with users to understand their challenges, key priorities and buying triggers. Let's conduct customer interviews for your most promising market segment.
Katelyn Bourgoin, CEO at Customer Camp, shares why and how startups should conduct customer interviews. Companies who conduct customer interviews grow up to 3 times faster. Katelyn quotes Harvard Business School professor Clayton Christensen: "Customers don't buy products or services; they "hire" them to do a job. According to the "Jobs to be done" theory, there's something blocking us from making progress in the way that we want to make progress. And we essentially hire products or service providers to help us get our jobs done. And when those things work well, we will keep using them and we'll be happy. When they don't work well, we will fire them and look for something new to hire."
Hence, the goal of customer interviews is not about pitching your product, but is really about understanding the customer’s jobs to be done. Katelyn recommends doing this by understanding the buyer journey. You want to understand what led customers to begin pursuing a solution in the first place because there's so much valuable insight there that can go into product design and marketing.
Check out our highlights on 'How to conduct primary market research' by Trish Cotter, previously Director of the MIT Delta V Accelerator and 'Customer Discovery' by Katelyn Bourgoin, CEO at Customer Camp.
Trish Cotter, Senior Lecturer at MIT, teaches Disciplined Entrepreneurship and outlines a primary market research process for innovation driven enterprises.
Katelyn Bourgoin, CEO at Customer Camp, shares her journey from founding four companies to starting Customer Camp to help startups understand their customers and why they buy.
Katelyn Bourgoin helps teams understand why customer research is a critical part in understanding who their customers are.
Katelyn Bourgoin explains why the goal of customer interviews is not about pitching your product, but is really about understanding the customer buying journey.
Katelyn Bourgoin conducts a mock customer interview with Vedant Kanoi about his experience buying a knife set.
Katelyn Bourgoin helps teams understand why they should perform customer research. She shares that companies who conduct research grow up to 3 times faster!
Beachhead Market, TAM and User Persona
Next, let's identify your initial target market or beachhead market. A beachhead market refers to the market opportunity that your team can capture and dominate with limited resources before expanding into related market opportunities. 🏖️
Ideally, you want your startup's initial TAM (Target Addressable Market) to be in the $100 million range to focus on a specific opportunity, with follow-on markets providing a multi billion dollar market. Your TAM is computed as the revenue earned if you had 100% market share in your beachhead.
Finally, let's create your user persona to ensure we fully understand our customer.
According to HubSpot, a good persona includes the user's demographics and psychographics, and showcases their story, typical week, goals, pain points, information search process, objections to existing solutions and type of experience desired. 🦸🏼♀️
Check out our YouTube highlights:
Trish Cotter from the Martin Trust Center for MIT Entrepreneurship discusses what makes a good persona and why it’s important.
John Breslin, Senior Lecturer at National University of Ireland Galway, discusses profiling the persona and shares examples.