How to Define Your Target Audience - #3

In the previous post, we explored how to define the problem your startup aims to solve by answering the following questions:

• What is the person trying to achieve?

• Why does the person want to achieve this?

• Why can't they achieve this currently?

If you didn't get a chance to read it, you can find it here: [link].

In this post, following our Product Market Fit (PMF) narrative structure, we'll move on to defining our target audience.

The first mistake we make as product builders is defining a target that's too broad, thinking that the larger it is, the better. However, the reality is that it's very difficult to build a product that meets the needs of everyone. When we aim for a very large audience, we might lose focus trying to build something that solves too many things for different types of people. Unfortunately, this is a common mistake and one that often leads to startup failure.

The approach we'll take is to define a series of target segments, some of which we'll focus on in the short term and others that we might target in the long term (if it makes sense for the product strategy). We'll start by targeting the smallest and most niche audience possible, then expand to larger ones.

Though it may seem counterintuitive for a startup wanting to capture a large market, the formula of targeting a niche market, understanding it, satisfying it correctly, dominating it, and then expanding to adjacent markets is a proven strategy with a lower risk of failure. Think of Amazon, which started by selling books and then expanded into completely different markets to become the tech giant it is today.

Now, let's define our target segments. To do this, we'll first define certain attributes, then combine them to define the target segments, and finally determine which of those segments are short-term targets versus long-term targets. This helps us a lot when conducting user interviews, as we can focus on questions related to the attributes we've defined beforehand.

To define the attributes, we should separate them into B2C and B2B. For B2C, the attributes could be (for example): Age, gender, income level, hobbies, nationality, etc. For B2B, they could be position, industry, revenue, number of employees, etc.

Once we've defined the attributes, we'll proceed to group them into segments. For example, a B2B target segment could be "fintech startups with over 100 employees and more than USD 5M in funding." A B2C target could be "30-year-old men living in Santiago, Chile, who do their grocery shopping online."

Finally, once we've identified 3 or more target segments, we'll differentiate them into whether we'll focus on them in the short or long term. With this, we can move on to the next dimension of our PMF document, which is the "Value Proposition."

Weekly Tips

A new section about the content I've been reading, watching, or listening to during the week.

I wanted to create this section to add value to others. I generally read books, listen to podcasts, and watch videos related to productivity, business growth, tech startups, etc. Similar to what Tim Ferriss does in his 5-bullet Friday, I'll do it here.

Podcasts I'm Listening To

• My First Million, Episode 386: Andrew Wilkinson: The Hardest and Easiest Businesses to Start. Here, they interview a rockstar who's started, sold, and bought dozens of businesses, including the Aeropress (a coffee-making machine), Tiny, Pixel Union, etc. Some takeaways from this episode: The hardest businesses to build, BY FAR, are restaurants. On the contrary, the easiest ones they've found are job listings.

• Business Casual by Morning Brew: Click, Spend, Repeat - Taking Ecommerce to New Heights. An interview with the CEO of Bolt, Maju Kuruvilla. Bolt is a company that integrates with many e-commerce sites in the U.S., offering an "one-click checkout" experience similar to Amazon. It's interesting to hear his views on how consumers are increasingly demanding more, like same-day delivery and free shipping, and how social-selling (buying directly from TikTok, Instagram, etc.) will play a significant role in the near future.

Quotes from Books I'm Reading

• "I can't give you a sure-fire formula for success, but I can give you a formula for failure: try to please everybody all the time." — Herbert Bayard Swope, American editor and journalist; first recipient of the Pulitzer Prize (Timothy Ferriss, The 4-Hour Workweek)

• "To live one day well is the same as to live ten thousand days well. To master twenty-four hours is to master your life." — Aubrey Marcus, Own the Day, Own Your Life

Articles I'm Reading

• How Figma builds its product

• Casey's Guide to Finding Product/Market Fit

That's all for this week. Any feedback is always welcome! If you haven't subscribed yet, do it to get key takeaways on business and technology every week.

See you next week!