Question

What is a target market? Why do most start-ups start in target markets rather than broader markets that have more customers

Answer 1

Target market is a market with such particular group of consumers that could be targeted specifically for positioning and selling of products, thereby aiming all the marketing efforts towards that group in order to generate business successfully.

Startups, at an initial stage, have limited resources and higher investments owing to its set up cost. In such a case, aiming at the Target market is highly pragmatic. Hence theStart-ups are rather at an advantage stage, especially in the case where they lack the marketing research resources unlike that in case of the large companies, owing to the initially limited scale of operations that the startup could be engaged in. They don’t require a large-scale market research to spread their horizons to a wider market area since they suffer from limitations of mainly the financial sources for larger investment. Borrowing of loan is also a risk from both the ends. Startups cannot be sure that their products will be surely approved by the consumers while the lender may also not be sure to what extent advancing the finance would be feasible. In fact, in such a case, Start ups can avail the advantage of Niche marketing to the extent that these businesses would have created a dedicated customer profile for itself because of the Target market. Moreover, it could have also penetrated in the area where the reach of the larger Companies are restricted by way of pricing or customized offering to the local people, advantage of which could be sought by the Startup owners in their favors. Therefore they most start-ups start in target markets rather than broader markets that have more customers. All that they need to do is to keep studying their target market demands in the local area and accordingly persistently strive to add value to the expectations of their customers.