Target Markets Analysis

By definition, your ‘target market’ is a group of consumers (individuals or organizations), to which your company intends to sell your products and services. Target markets are defined by demographics, geography, industry/occupation and other variables. Typically, a company has not just one, but several target markets. In other words, a portfolio of target markets.

As I stated earlier, your fundamental business objective is to create and monetize the maximum possible amount of financial value for your shareholders. Therefore, you will need to assemble such a portfolio of target markets that will generate the highest amount of financial value for your company.

Obviously, your target markets must match your key external factors, your corporate vision
statement, your corporate strategies, your strategic objectives and your strategic plans. And, as with any portfolio, you need to make sure that you maximize the synergy between target markets in your portfolio. It goes without saying that your actual target markets must be identical to your declared ones (you will be surprised how often this is not the case).

You need to start by building a comprehensive knowledge base on your target markets - especially the key success factors for each market. This knowledge base clearly must be accurate and up-to-date at all times.

Then you must estimate financial value of each target market and of the whole target markets portfolio – and how much of that value you do and can realistically capture. To accomplish this objective, you will need to develop financial valuation models for each of your target markets and for your whole portfolio.

In order to generate the highest possible amount of financial value from your target markets, you need to be able to satisfy – with your products & services – the needs and desires of your target markets to the fullest and definitely better than your competition. At all times. 

Therefore, you will need a highly competent target market monitoring and analysis team that will follow an optimally structured and highly efficient corporate process and a solid target market monitoring and analysis methodology. Obviously, this team must use optimal and highly efficient tools – either stand-alone or the corresponding components of your ERP system.

Like any other corporate document, your target markets knowledge base by itself is useless. To be useful and valuable to your company it must be tightly integrated into your strategic and operational management process. In other words, you need to develop and deploy a highly efficient corporate process of using your strategic plans in your strategic and operational management.

Your KPI for your target markets are (1) free cash flows – revenues minus expenses minus the necessary investments in working capital – generated by each market and by the whole portfolio; (2) financial value generated by each market; (3) return on investment – ROI – into each target market as each target market is essentially an investment project; (4) your share of each market in monetary and unit terms and (5) your aggregate competitiveness index for each target market. 

You perform the analysis of your corporate strategies in much the same way as you analyze your KEF function and your corporate vision statement (see above). You use APS for each target market and for your whole target markets portfolio, find answers to CBA questions (supporting them with linked relevant documents), complete the corresponding ACRC sections, assign scores to individual questions and develop and implement financial and operational plans for optimizing your corporate strategies and maximizing their value for your company. 

The only difference is that in this case, you will need to use another scorecard – object KPI scorecard – for each target market and for your whole target markets portfolio. 

You will analyze benchmark, planned and actual KPI values, complete the corresponding ACRC sections, assign scores to individual KPI and develop and implement financial and operational plans for optimizing your KPI values