Exercise 2: Target Market Statement

Submit Your Target Market Statement

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The Target Market Statement describes the size and characteristics of beneficiaries of the organization (those individuals or groups that the organization’s is intended to serve). The exercise has 3 parts:  1) defining the total available market (all those beneficiaries who could possibly use your product/services), 2) defining the total addressable market (those beneficiaries you are currently targeting), and 3) defining a market segmentation table which identifies the characteristics of your beneficiaries that are relevant to the beneficiaries’ decision to use your product/services

Task Overview:
Your task is to identify the precise group of beneficiaries that you want to serve. We refer to this “group” as a “target market,” borrowing from traditional business terminology. You will need to identify the beneficiaries (“customers)” in the target market for whom your products/services create value.  Remember that there may be a distinction between those who will use your product or service (direct beneficiaries), and those who will pay-for or assist-with creating the product or service (indirect beneficiaries).  

You will need to be able to identify the attributes (needs) of your beneficiaries that make your product or service valuable to them. These attributes, if specific and descriptive, will identify a category of potential adopters (consumers) of your products or services that view them as compelling relative to these needs and relative to alternatives for meeting the needs.

To develop your target market statement, you will proceed with three steps.

2.1 Estimate the total number of possible direct beneficiaries for your organization, i.e., how many people could benefit from the value proposition.  You can use geographic boundaries (e.g. continent, nation, state) to segment this number.  This is the Total Available Market.

2.2 Identify the segment of the Total Available Market that you are currently targeting.  This is the group of potential beneficiaries you can reach with the organizational resources (financial and human) that you have (or will have) available.  Identify why these potential beneficiaries will “consume” your product or service, rather than an alternative (including “non-consumption”).  This is the Total Addressable Market.

2.3  Segment, or divide, your customers into different categories. These categories can be anything that will help you to understand specific characteristics of your beneficiaries, how to reach them, and what kind of communication and messaging will convince them to buy your product, adopt your service, or join your community. Some examples of categories are age, education level, income level, location, size of family, or group affiliation (such as an industry or village organization).  This is your Target Market Segmentation.

Once you have an idea of the segments that exist in your market, you can begin developing a more in-depth characterization of differentiating attributes and needs of your beneficiaries.  One approach to developing a deeper understanding of these segments is to interview potential beneficiaries to determine their attributes.  You may decide to focus your “marketing” efforts on one segment, multiple segments, or use the segmentation to develop multiple marketing messages. You may even decide to have different (or slightly different) products or services for each target market segment.

Background Resources:
Reference on market segmentation:

• J. Gregory Dees, Jed Emerson, and Peter Economy, Strategic Tools for Social Entrepreneurs: Enhancing the Performance of Your Enterprising Nonprofit, New York, John Wiley, 2002, Chapter 2.

• Arthur DeThomas Ph.D. and Stephanie Derammelaere, How to Write a Convincing Business Plan, Third Edition, New York: Barron’s Educational Services, 2008., chapters 6 and 7.

What is market segmentation?

• Market segmentation is not a strategy. It is a creative and analytical process that precedes the development of strategy.
• First, an enterprise needs to be creative in conceiving alternative approaches to “Market Segmentation.”
• Second, the enterprise must then be analytical in selecting the best approach or attributes on which to segment the market

Why Segment?

• To define the distinct attributes of groups that help to determine their adoption and consumption patterns.
• To define and enhance the effectiveness of  communication and marketing to the various groups or segments
• To facilitate or enable predictable results based on outreach to a specific group
• To assess the magnitude of adoption hurdles.

The basis for segmentation:

What are the criteria for effective segmentation?

Criteria:

• Substantial
• Accessible
• Measurable
• Worthwhile
• Identifiable
• Competitively advantageous
• Heterogeneous

The process of setting a target market or beneficiary group

EXERCISE 2 (3 parts):

2.1 Create an estimate of the Total Available Market which: 1) divides (segments) the potential beneficiaries for your product into major categories (segments) using geography (or other major categorization), 2) estimates the size (number of beneficiaries in each segment, and 3) specifies the key product/service needs of segment.

Example: Aravind Eye Care System: Total Available Market: Cataract Blindness
 

                                 
2.2 Create a Total Addressable Market Statement, which identifies the characteristics and size of that segment of the Total Available Market that you currently are targeting, and describes:

• Description:
• Characteristics:
• Needs:
• How needs met:
• Estimate of size:
• Basis for the estimation:
• The positioning of the product/service (compared to alternatives, including “non-consumption):

Example of a Total Available Market Statement:  Aravind Eye Care System:

• Description: masses of poor people in India, who have lost their eyesight due to cataract.
• Characteristics: Poor people who have lost their eyesight due to cataracts
• Needs: Ability to see, regain independence and ability to earn income.
• How needs met: Free for poor (subsidized by paying beneficiaries), extra capsular surgery with intraocular lens.
• Estimate the Size: 1992—30 million blind in the world. Almost 20 million reside in India and 2 million are added annually. Blindness rate in the developing world is 1.5% versus up to .25% in industrialized countries. Cataract is the major cause of blindness in developing countries. Comprise 75% of all cases. 80% are age related occurring in people over 45 years.
• Basis for the estimation: World Health Organization
• Market Positioning:
   

2.3 Create a Market Segmentation Table identifying different groups, by distinctive attributes. For each segment describe why your solution will gain adoption or why it will not. For each Segment describe why your solution will gain adoption or why it will not. Template:  

 Submit Your Target Market Statement