The Definition and Importance of Potential Markets
Find potential markets to help your small business grow
A potential market is the part of the market you can capture in the future.
Your potential market includes the demographic groups that are not currently your customers but could become customers in the future. They might become your customers because you expand your available products or services, or because you begin marketing your current products and services in a new way and to new groups of buyers.
The Importance of Potential Markets
Potential markets are an important part of a business's future growth.
Every business has a set of target customers that make up its share of the available market. While you can continue selling to these customers in the future, one of the best ways to grow your business is to identify potential markets that you can begin targeting.
Potential markets allow you to:
- Ensure the future of your business by identifying new customers.
- Think proactively about ways for your business to grow and change.
- Show the potential of your business to investors or collaborators.
- Increase your revenue.
- Create a plan B that will weather changes in the economy or market.
By identifying and pursuing potential markets, you are not increasing your market share for today; you are ensuring your market share will increase for the future.
How to Identify Your Potential Markets
Potential markets take one of three forms:
- New products that you market to your current customers.
- New products that you market to new customers.
- Current products that you market to new customers.
To identify your new potential markets, consider every target demographic that you currently sell to, as well as those you have not yet targeted. Identify what they have in common with each other, new milestones that they will encounter in their lives that will impact their buying patterns, and where they overlap or diverge from your current customers. Ask yourself:
- What other products do my customers need now?
- What related products will they need in the future?
- Who else could make use of the products I am selling now?
- What demographic information does that new group have in common with my current customers?
- What demographic information does that new group have in common with each other?
These questions will help you identify both new ways to market your current products or services, as well as new products and services that you can begin selling. For example, a business that makes baby products and markets them towards parents could identify potential markets such as:
- Toddler products marketed at parents of older children.
- Baby products marketed at grandparents.
- Toddler products marketed at grandparents.
- Baby and toddler products marketed at childcare providers.
Depending on the size and age of your company, as well as your industry, you may have a clear picture of the potential markets that are available. Other times, you may need to use research to identify the areas where your business can grow and expand.
While you may not decide to target every potential market that you identify, understanding your options will help you discover the most natural and profitable directions for your business to grow.
Reaching Your Potential Market
Once you've identified and chosen a potential market to begin targeting, you will need new marketing strategies in place to communicate with them.
Though there may be some overlap between your current customers and your potential market, you should still treat your potential market as you would your target audience by creating a customer profile. Use this profile to identify:
- The demographic information that people in this group have in common.
- The best forms of media to reach them.
- How they prefer to shop and make purchases.
- The concerns, struggles, or problems that you can help them overcome.
- What values matter to them, both in everyday life and when shopping.
- The language that resonates with them.
This information will be essential as you tailor your marketing to your new potential market, helping you craft the right messaging, plan your marketing budget, and make use of the right marketing channels and media to reach your new audience.
Even if you're not ready to begin selling to new markets, creating customer profiles and sample marketing plans will help you understand the needs of each potential market, as well as what it will take to reach them. This information will inform whether and when you decide to pursue them, helping you identify the clearest paths your business can use to continue to grow and expand.