How Entrepreneurs Select a Target Market

A start-up could target a broad or focused market:

  • Broad. The terms broad and focused are of course relative terms. However, in general, large companies tend to aim for either broad or focused mar­kets, while start-ups tend to aim for either (a) small vertical mar­kets, or (b) well-defined, narrow segments of broader markets. Both are gen­e­rally considered to be focused. Porter [POR80] was one of the first to document differences between broad and focused markets in business strategy.
  • Focused. A focused market is one in which members have very specific (and similar) buying characteristics, well-defined and well-understood needs, and can be easily identified. Fundamental to success of most start-ups is the demonstration of successful penetration in one target market. This requires you to have proper alignment between the distinct pains felt by members of this focused market, the pains addressed by your products or services, and the messages conveyed by your marketing materials. Once accomplished, brand recognition begins in the market and confidence grows among inves­­tors. With both of these, the company can take more dramatic steps toward adjacent and perhaps larger target markets. Because of limited resources and need to demonstrate success quickly, start-ups usually aim for a focused market as their initial target. Porter [POR80] de­scribes the general approach as focused. Miles and Snow’s [MIL78] identifies some companies as pros­pectors; these are the ones constantly on the lookout for previously unidentified market segments and ways to target their unique needs; they are also focused. Meanwhile, when attacking competitors using Ries and Trout’s [RIE93] guer­rilla or flanking strategies, companies are also focusing on narrow market oppor­tunities that are not being adequately defended by competition.

The above extracted from my latest book, Will Your New Start Up Make Money? Buy your copy in Kindle or paperback formats at