How To Find The Real Target Market
In A Small Town


by Tom Egelhoff

Author Tom Egelhoff

I have talked to countless businesses over the years about their business ideas and products.

Rarely do I find a new business owner who has really taken the time to look at the community in which they expect to be successful.

"Of course I know the community -- I live here."

Well, I've lived in Bozeman, Montana for nearly twenty fiive years and I've witnessed many businesses that thought they knew this community and are now empty storefronts.

Several were well established businesses.



Why Did They Fail?

I'm not privy to the inside information for most, but the ones I do know about failed partly because they didn't correctly identify the "Real Target Market" of the community.

Communities are constantly changing. For regular readers, you've heard my fish tank analogy. The bigger the fish tank the more mistakes you can make without losing fish. The smaller the tank the fewer mistakes.

It's the same with towns. The bigger the town, the larger the population base, the more mistakes you can make without sinking your business.

By contrast, in a smaller community you are allowed fewer mistakes because the customer base is smaller.

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Start With The Basics

If you are planning a new business or the relocation of an existing business there are some elements that are often overlooked by even the most savvy business folks.

The biggest one is identifying exactly where the real customers are located. Where is the real market of a small town?

There are many places in Montana, for example, where it's 200 miles to the nearest town.

If you know someone in a major city and you ask them how far they live from the airport, chances are they will answer you in amounts of time, not miles.

Even in small towns some city dwellers are not as willing to drive as far as rural folks are.

Before Bozeman got a Costco®, Target® and Wal-Mart®, Bozeman residents had to drive to those stores in Billings, MT -- 140 miles away.

Did they do it? Yes, they did.

So, what does this Montana travelogue have to do with finding the real target market?

Let me show you.

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Don't Fall For The Big City Theories

Most marketing books will insist that your sales area is like ripples in a pool.

Your business is in the center and the first ripple accounts for 75% of your business. (x number of miles customers are willing to travel to your business)

The next ripple, 15-20%, the next 5% and so on. That's great in theory but we live in the real world. These authors worked mainly in large cities. It may work like that there but it's different in small towns. Here's why:

To find the real target market in small towns you need to consider two elements.

1.) How close are you to a major city? and

2.) What are the other "draws" in your town? Let's take each one separately and I'll explain what I mean.

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1. How Close Are You To A Major City?

This may have a direct bearing on your business because some customers who don't mind the distance may bypass your business and go to the large city for selection or the lure of a sale.

TV and radio advertising from the large city are going to blanket your sales area.

If you're a shoe store owner seventy-five miles out of St. Louis, MO, are you going to buy TV time equal to the 20 or so Foot Locker outlets?

No, you don't have that kind of advertising clout.

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Location, Location, Location

OK, this gets a little complicated so stay with me. You might want to grab a map of Missouri if you have one.

Let's say you are 75 miles due west of St Louis.

About an hours drive for you big city folks. People living 37.5 miles east of you have the choice of going to your store or to St. Louis.

It's the same distance. Which one would you go to for selection, service, operating hours, etc? Most people in this area would probably drive due east to St. Louis.

Now, what about the people on the western side of you? They are over 75 miles from St. Louis.

Going to St. Louis for these folks will be a challenge. If they can save a trip to St. Louis by buying what they need at your business they are very happy customers.

You have saved them a major drive. (Well, not by Montana standards.)

If the people 75 miles north or south come to you it will probably be based on the highway system.

Is going through your town the shortest way to St. Louis or will they bypass your town altogether?

Or, where is the next major city from them. You probably have a 60-40 chance of getting some of these folks.

So as you can see, instead of a 75 mile circle we have two to three elliptical target markets.

Even though there is more population in the 75 miles due east of us, very few people are going to drive to a small town when the selection will be more in a big town.

Instead of this area being 75% of our market they may only be the 5%.

The real 75% of our market is actually west of town. The remaining 15-20% is going to be north and south and at least 60-70 miles from St. Louis.

Whew! Have you got all that?

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2. What Are The "Draws" In Your Town

Before considering any city for your business you should be aware of what each city does to "draw" visitors to it.

These may be tourists, or the local community supporting a local event. Fourth of July Parade, Rodeo or craft fair.

All small towns have traditional events that draw large amounts of people to your area.

Sturgis, South Dakota has a population of 5330 people. Once a year well over 100,000 Harley-Davidson® owners, wannabes and site seers show up for their yearly festival.

For a few days each year it's one of the largest towns in South Dakota.

Many state universities have football or basketball rivalries that draw supporting crowds from both cities twice a year.

These may even draw some customers from St. Louis to your business. That's really sweet revenge when it happens.

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The Last Word On The "Real Target Market"

As you can see, each town, based on location and proximity can have a vastly different marketplace.

Customers don't always come from large population clusters. They travel as they need to. They come from everywhere. Know your town and you will know your customers.

In order to be successful in small towns, knowing where the real market is can put you in a big tank or a little tank. It's the size you make it.

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