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Data Basics: Identifying your target market

When you first start your business there are a number of decisions you have to make. The first of course is what the business will sell in terms of products and services. Second is who you’ll sell your products and services to. A lot of companies get this step wrong, and go on to create businesses which don’t have a market. Or perhaps they do have a market, but it’s positioned incorrectly. In either case, this is a fundamental step in any businesses journey and is called identifying your target market or market sizing.

From our perspective, we are masters in sizing a market. Why? Because each time we provide a list of businesses, the conversation starts with “Who are you trying to target?”. So, after over a decade of helping businesses answer this question, we think we’re pretty good at it. To the point where we can often suggest markets that you may not have considered.

Over the years we’ve noticed that when we ask this question, businesses tend to answer it in the same manner. And that’s to say, barring a few exceptions, they don’t really know who their target market is. There’s nothing wrong with this; nothing to be ashamed of. Usually a business was started a good number of years prior and any memory of any target market is long forgotten.

Having said that, knowing who your target market is, and how many of them there are, is kind of a crucial part of running a business! If you don’t know your target market you will never be in control of your business. This is because you’ll always be at the mercy of the market to find your business.

The reality of modern business is that you can’t allow the market to find you. Most markets are crowded. And if you’re doing something new, then most people won’t think to look for you in the first place. A much better way of doing business, is having a way to find your market yourself. And the simplest way of doing this, is a good old-fashioned list of your target market. Commonly called a list of prospects. This is exactly what we can help you with – we have over 180,000 businesses nationwide and as mentioned above, consider ourselves pretty good at sizing a market.

Now that I’ve plugged our services, let’s get into how you can easily size your market!

If you’ve ever sized a consumer market, I’m going to have to ask you to leave all of that at this paragraph. I’m afraid when it comes to sizing a business market you won’t have the luxury consumer markets offer. Business spending data simply isn’t captured well enough to use demographics data. In addition, it probably wouldn’t be particularly useful. When you’re sizing a market, it doesn’t really matter what the person in the business likes or dislikes. Right now, all you’re trying to find out is how many companies you can target with your gadget or gizmo.

We like to size the market using three criteria.

  1. Location

First is location – pretty self-explanatory really. Depending on your business you might want to target by area, city, suburb, or even street. The great thing is our data allows you to be very granular. Want to target every odd numbered building in Ponsonby? DONE. What about every business on Level 3 in the Auckland CBD? Piece of cake. What I’m trying to say is you can go really granular with our data. On the other hand, you may want to expand your search if you have a very niche product.

  • Industry

Second is industry – what does your target market produce and sell? This is probably the hardest section. And the reason it’s difficult is because the ANZSIC industry classification system used in NZ and Australia isn’t always intuitive. For example, would you consider a printing company to be a manufacturer? ANZSIC would. What about a corner Bakery? ANZSIC would.

The other stumbling block is limiting your industries too much. You really need to think of what industries could use my product/service. Even if it’s just a section of the company that would use it. Our team of data experts is well trained in this area and can really add some value.

  • Size of the Business

And last is the size of the company. Because in NZ we don’t have any legal reason to report revenue, we usually can’t use revenue as a gauge for company size. Instead we use a proxy of number of staff. Number of staff tends to be a pretty solid indicator of size of the company, as long as you keep in mind the type of industry you’re targeting.

One hot tip we have for size is to really understand that in NZ most companies are small. We classify anything between 5 and 50 employees as a medium sized business. And 50+ is really where the large businesses market starts. As a contrast, a 50-staff strong business in Europe could be considered a small family business. So, when we say NZ is a small market, we really do mean it. There are just over 2,200 businesses with 100+ employees.

And that is how you size a market. Simple enough. So, what is missing?

The number of course! And this is a bit of a sticky point. I should probably apologise. I’ve made you read 907 words as of now only for you to find out that you won’t be able to get a final number. You see businesses aren’t counted very well in NZ. Government agencies do a fairly mediocre job of it. They may have some list but wouldn’t be able to help with the size or industries.

And so, businesses must rely on list providers such as ourselves for their market sizing. The reason we excel at this compared to other companies is we simply have more data than they do. We’re on a never-ending quest to have a full list of businesses in NZ. And even though this is an unachievable goal we persevere!

You’re now armed with all the information required to size the business – if you’d like a hand please don’t hesitate to get in touch. Either myself or another of our data experts will be glad to assist you.

Artem Axenov

Operations Manager

E-ideas Limited

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