Market Share and the Competition You Can't Ignore

Part 2 of a 2-part look at defining and sizing your target market.

Knowing exactly who you're selling to is only half the battle. You can have the most precisely defined target market in your industry and still capture none of it, because a defined market isn't a claimed market – it's just the field you've chosen to compete on. Somebody else may already be standing on it.

That's the piece most owners skip. If you've been following along in this 2-part series, you've already done the work of narrowing the whole world down to a real, defined target market – not "everyone who needs what we do," but rather a specific group of people you can actually reach, using real filters instead of wishful thinking. If this is the first you're hearing of that process: the short version is that you take the total theoretical market for what you offer, filter it down by what your organization can actually deliver, and narrow it again to the specific people most likely to want it. From this point forward, the rest of this post picks up with the assumption that the target market is already defined and in hand.

Now comes the part most owners want to skip, because it requires being honest about two uncomfortable things: how much of that market you can realistically win, and who's going to fight you for it.

Estimating Your Market Share

Once your target market is defined, you need to estimate how much of it you can actually capture. What percentage of share can you gain and hold before competition pushes back? What's the forecasted growth in this market over the next few years? What's the expected annual revenue your target market represents?

Be prepared to explain the logic behind every number here. "I think we can get 10%" isn't an estimate; it's a guess wearing a percentage sign. Go back to the same market research resources you used to define your TAM and SAM, and then build numbers you could credibly defend in a room full of skeptics.

Primary vs. Secondary Market

Once you know the size of your target market, break it into primary and secondary. Your primary market gets your primary focus and the bulk of your marketing dollars. Your secondary market still gets cultivated, just at a lower intensity.

You can extrapolate primary versus secondary from your market share estimates, or you can ask a much more practical question: who can you realistically afford to advertise to effectively, right now, within your real budget? That second approach isn't a compromise, it's discipline. A primary market that matches your actual resources beats an aspirational one that matches your ego.

Competitive Analysis: Know Who's In the Room

This is where the real analysis kicks in. You've studied the behavior of your customers. Now you study the behavior of your competition, because you share the same market with them whether you like it or not.

At minimum, assess your competition on these characteristics:

• Who currently holds the market share, and how big are they?
• What are their strengths and weaknesses?
• How important is that market share to them? Will they fight hard to keep it?
• What are the barriers to entering this market?
• Is there an actual window of opportunity for you to get in?

Now, answering these questions isn't the finish line. The real goal of Competitive Analysis is identifying the strategy that gets you into the market, gets you your share, and holds that share for as long as possible. That means you circle back with what you found and adjust your offering – price, size, variations, frequency, whatever it takes – to optimize your penetration into the market. Sometimes the findings will tell you to adjust the offer. Sometimes they'll tell you to adjust the target market itself.

Why This Never Gets Easier, and Why That's Fine

Target Market Analysis is not easy, and it doesn't get easier just because your organization matures. What changes is your budget for better market studies and better tests. But even with a bigger budget, better data doesn't get you out of doing the work. It just makes the results more fruitful once you do it.

One more thing worth remembering: it's not unusual for an organization to adjust its products and services to fit its target market, rather than the other way around. There's an old saying that it's easier to develop a new product than to find a new customer. If you've already got a niche and real relationships with your existing customers, you may find more value pouring resources into innovating what you already offer than chasing an entirely new demographic.

The Coach's Play Call

"We're already serving customers" isn't a substitute for genuinely knowing your market share, your primary versus secondary market, and exactly who you're up against. Make this analysis an annual habit, at minimum. Heck, put it on your calendar so you don’t forget. Just know that the businesses that treat this as a one-time exercise from their founding days are the ones blindsided when a competitor they never assessed eats their lunch.

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