"Target Audience Decoded: A Comprehensive Exploration into Retail Success"

A Deep Dive into Finding Your Retail Target Audience

Stockpiling up inventory for an audience who will never come. 

This is an exercise in absurdity that ranks among the greatest experiments in financial ruin in the history of the world. 

As a retail professional,  you may own a retail business, or work for one. And nothing is more important to you and your business than its location. 

Paraphrasing the adage, the business goes where the customer lives.

Unless you have a magic lamp to relocate your entire business every time there is a micro shift in the demographics of your customers, it might be worth considering a more permanent solution. 

Who Is Your Target Audience?

A target audience consists of customers meeting specific industry-defined parameters. These parameters are demographics linked to living standards and established differentiators. 

A business has to understand its target audience to build profitable products and services. A successful definition of a Target Audience helps create a positive feedback loop of loyal and repeat customers. 

Businesses have always relied on defining target audiences for their operations. A few decades ago, armed only with addresses, businesses would send out promotional letter blasts to everyone in specific neighborhoods. 

Now with improvements in data collection, businesses have access to refined datasets. The entirety of human existence can now be viewed as quantifiable data and with that comes the trouble of how much is too much. 

Determining the relevant data while eliminating the irrelevant statistics requires critical business intelligence. Data engineers use business insights to create models predicting optimal outcomes. 

Understanding Your Current Customers

The data generated by your existing customers is a treasure trove of information. Leveraging this data can help you define the initial persona of your ideal customer. Your customer data serves as a proof of concept helping differentiate your locations into either good or bad stores. 

Customer data can help you understand the basic interactions of your target audience. This data helps interpret the behavior of your customers and develop a comprehensive analysis of their habits. 

Before we can define your target audience you should understand its difference from the broader target market.

Understanding Target Audience vs Target Market

Role of Business Intelligence in Target Market Definition

Data is only useful in the context of its application. Data scientists need nuanced business intelligence to convert data into useful customer information. All variables that map to user benchmarks might not generate the solutions required for the business to thrive. Ie, there is a hierarchy to the importance of data used to draw business intelligence. And, not everything has the same value. 

Consider this, you are the business owner of a kitchen appliance store and you have two data points. 

One, which defines the average cost for two at a restaurant, and the other which records the average cost of area per square feet. 

Which one would you choose to help you get the coordinates for the opening of your next store?

Drawing on your rich business experience will help you distinguish between the importance of the parameters that define the success of your store.  One of the easiest ways to understand the differing parameters is to have a comprehensive understanding of your core target market. 

Understanding Your Target Market

A target market is a group of people who are interested in your product and might want to register a purchase. Thus, a target market is a group of people who share a few overarching common interests between them. To define a target market, it is helpful to collect data about the following parameters:

  • Age
  • Location
  • Sex
  • Annual Income

These parameters help define a general persona of the ideal consumer of the product. Businesses can interpret the affluence of their target market and price their products accordingly. 

However, a target audience is a nuanced categorization of the parameters that define the target market. For example, using the target market helps us define the cities that we want to consider for expansion. But target audience data helps us shortlist the street-level addresses we need to consider for our expansion.

Put another way, we can only define our target audience after understanding our target market. We cannot expand into a new city without first considering the top-down view of the geography into which we want to expand. 

Now that we have defined the parameters to establish our target market. The next step in our process is to determine our target audience. 

Understanding Your Target Audience

Representative demand map for a store compared to realized orders

With the data collected from the exercise to define your target market, you should have a structured view of your potential audience. Now, you will have to ask questions whose answers will help peel away the layers of mystery surrounding your target audience. The problem has never been with the number of questions, of which there are many, but asking the correct one. 

For example, let’s say that you are opening a sweet store in an upscale neighborhood. You will need to know if business will peak only during festivals or if it will be steady all year around. 

Data from multiple sources can help you determine the persona of your customer. Collecting and applying relevant parameters refines the solution for an accurate customer profile.

Understanding who isn’t a part of your target audience

After completing the second step you should have a large pool of potential customers and a rough understanding of where to place your next store. 

But, you will have to first weed out the datasets that do not match your specific business intent. 

For example, your data might reflect that most of your customers seem to come from the high street. 

But, you know that your customers are not from the high street. To build a precise model, you have to exclude the entries that correspond to these variables. Defining the parameters of your ideal customer will help you build a target audience to boost your revenue. 

Understanding Your Competitor’s Target Audience

Re-engineering the wheel is both difficult and unnecessary. The first step in gauging any interest in your product anywhere is to identify the presence of your target audience. 

And your target audience will likely overlap with the audience of your competing brands or other product categories that your audience buys. Since you will want to consider locations frequented by your target audience, it stands to reason that these locations are best suited for setting up your store. 

For example, if you are opening a new jewelry store, you will scout and consider locations with the presence of other jewelry stores. Since a cluster of similar stores indicates a high purchase intent for customers in that product. 

Understanding Points of Interest 

A POI is a geographical location represented by its latitude and longitude. A POI is important because it defines the demographic features of an area. The presence of a POI can help quantify the probability of the success of a business based on its location. Applying Point of Interest data enables retailers to understand their target market and design location-specific inventories. 

Companies that analyze geospatial data overlay POI information over known metrics of income differentiators like monthly income, average restaurant cost per two, etc. 

The companies use this result to define a comprehensive view of the business potential at any given geographic location. 

Understanding Target Audience Differentiators

Your target audience will fit into more than one key demographic segment. Your target customers could be of different age groups or have different levels of disposable income. 

Would you use a single parameter to define everyone and risk losing potential business? 

Understanding customer differentiators boosts sales and expands your business to a new audience.

For example, Nike segments products for genders and age groups, enhancing its market appeal.

A granular understanding of your target audience will help you build robust inventories and reduce spoilage. 

Leveraging geographic data helps you identify locations with a high density of your preferred segmentation of customers. 

Did you also know that geographic location data will help you identify the exact location where you can maximize your potential sales? But, that is for another blog. 

Why should Brands Consider Retail Location Analytics?

Location is the keyword that makes or breaks a retail business. The associated parameters defined by location also play a considerable role in determining the success of a business. The traditional method of developing intelligence about a target location involves boots-on-ground executives who sweep through the area, marking sites of importance. 

They learn about the spending patterns of the residents, their footfall and mobility, the presence of competitors and complementary brands, real estate possibilities, and more. 

What was once a tedious and time-consuming process can now be completed in a fraction of the time due to the ability of the ML engine of retail location analytics operators like GeoIQ. 

What Is RetailIQ

RetailIQ is a cutting-edge AI solution revolutionizing the retail sector by seamlessly integrating location data. It serves as a powerful tool for site recommendation and analysis, helping brands maximize revenue, minimize store closure risk, identify market potential, and refine target audiences. With custom models for individual brands and complementary brand analysis, RetailIQ provides tailored insights. Beyond recommendations, it offers comprehensive site analysis, giving retailers a competitive edge for profitable expansion and sustainable growth through informed, data-driven decisions.

Key Takeaway

In essence, retail success centers around grasping your target audience. Recognizing the significance of location and distinguishing between the target market and the audience is vital to the success of any retail business.

Steps to find your target audience in 2023

  1. Comprehending existing customer data
  2. Identifying indicators of key differences from the established market
  3. Filtering out irrelevant data 
  4. Drawing insights from competitors
  5. Identifying Points of Interest
  6. Screening audience differentiator.

The pivotal role of location intelligence comes to the forefront, providing insights into customer behavior and potential expansion zones. 

RetailIQ, armed with AI capability, enables retailers to make informed, data-driven decisions for sustainable growth. 

In a data-driven era, the ability to pinpoint the pertinent elements defines success. Those equipped with insights into their audience and location intelligence are poised for success in the dynamic retail landscape.

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