Experience has shown that the more focused you are about your target market, the greater your chances of success. You must identify as precisely as possible WHO will buy from you and WHY. Any target market is broken down into smaller groups or segments known as market segments. The most common market segments are based on age, income, ethnic background, geographic location and education.

Buying habits and tastes differ from one age group to another. Each of these age groups has different needs and wants. For example teenager will spend money on entertainment and clothing, people in family years will spend most of their money on shelter, food, clothing and education for their children. You need to know what age groups your product or service will appeal to. Use the following groups as a guide:

The amount of money a person earns is an important factor in his or her spending patterns. Discretionary income is the amount of money left over after all necessities have been paid for, it is money available to spend on luxury items.

Our country is mosaic, made up of people from many cultural and religious backgrounds and they preserve their cultural heritage by maintaining the customs and traditions of their ancestors. It will be wise to investigate these customs and traditions if your market includes people from various ethnic background.

Geographic location also has a large influence on buying patterns. People living in rural area have different needs, and wants than people living in a large urban centers.

Education gives people the knowledge to be selective. Today people achieving higher levels of education and becoming better-informed consumers. They know good value for their money and, as result, demand better quality products.

Market research helps you answer many questions:
1. Who are your customers? (age, sex, income bracket, level of education)
2. Where do potential customers live, play, shop?
3. What are their household compositions?
4. What are their current buying habits?
5. What motivates them to buy your products?
6. Do they have specific needs or wants that aren't being fulfilled?
7. How often do they buy? Seasonal?
8. What do they like and not like about the products/service of your potential competitors?
9. What price would they be willing to pay for your service?
10. What are the key criteria in making the buying decision?
11. Who makes the buying decisions?
12. How they will pay for your product or service? Cash or credit?
13. Can you afford to carry accounts receivable?
14. If you are selling to other businesses you need to know how many employees they have?
15. What are their main products or services?

Tips & Traps When Buying a Franchise - Mary E. Tomzack is a noted franchise expert. She is President of FranchiseHelp, Inc., an information and research company which services prospective franchisees, multi-unit franchisees, franchise lending companies, investors and independent businesses seeking to become franchises. Ms. Tomzack is also the author of Going Global: Strategies and Techniques for New Multi Nationals (published by the Economist Intelligence Unit). She has been part-owner of two franchised businesses and previously founded and managed a company which manufactured and marketed women’s fragrances. If you have time to read only one book about franchising, make it this one. Tips & Traps is a fast read with all the information you need to make a good decision. Insider Secrets Revealed · How to select the best franchise for your personal finances and lifestyle · The hottest franchise opportunities to take you into the 21st Century · Sources of financing-- why it’s never been better · How to navigate the legal maze, understand the fine points of the franchise agreement · How to avoid last-minute deal breakers · Why co-branding makes sense · How the franchisor’s financials affect your business · How to build a business empire with franchises · And much, much more...

Franchising 101: The Complete Guide to Evaluating, Buying & Growing Franchise Business - This guide provides clear, concise explanations for finding, buying, operating & growing a successful franchised business from top experts from the ASBDC and the American Association of Franchisees and Dealers (AAFD). Checklists, forms, worksheets, and easy to follow strategies along with a sample franchise business plan and contract allow readers to discover how to: evaluate a franchise opportunity, develop forecasts and budgets, estimate start up costs, and get financing.