Target Market Analysis: Steps + Template

What is Target Market Analysis?

Target market analysis is a structured evaluation of the specific segment most likely to buy your product, focusing on who they are, what they need, how to reach them, and whether they’re worth pursuing.

Key difference: Target audience = people. Target market = people + economics + reachability.

Step 1: Define Market Boundaries

Identify Your Category

What problem category are you in?

• Project management
• Customer communication
• Data analytics
• Team collaboration

Who else is in this category?

• Direct competitors
• Adjacent solutions
• Manual/status quo alternatives

Estimate Total Market Size

TAM (Total Addressable Market):

• All potential customers globally
• Example: “200M knowledge workers worldwide”

SAM (Serviceable Available Market):

• Customers you can realistically serve
• Example: “50M knowledge workers in English-speaking countries”

SOM (Serviceable Obtainable Market):

• Customers you can capture in 3-5 years
• Example: “500K users (1% of SAM)“

Step 2: Segment the Market

Segmentation Approaches

Demographic Segmentation (B2C)

• Age, income, education, location, family status
• Example: “Urban millennials, $75K+ income”

Firmographic Segmentation (B2B)

• Company size, revenue, industry, geography
• Example: “50-200 employee SaaS companies, $5M-$50M ARR”

Behavioral Segmentation

• Usage patterns, buying behavior, brand loyalty
• Example: “Early adopters who switch tools frequently”

Needs-Based Segmentation

• Specific problems and desired outcomes
• Example: “Teams struggling with remote collaboration”

Create Segment Profiles

For each potential segment, document:

Size: How many companies/people? Growth: Growing, stable, or declining? Needs: What problems do they have? Budget: What can they afford? Access: How do you reach them?

Step 3: Analyze Segment Attractiveness

Score Each Segment (1-10)

Market factors:

• Size: Large enough to support your business?
• Growth rate: Market expanding or contracting?
• Urgency: Do they need this now or eventually?

Competitive factors:

• Competition intensity: How crowded is this space?
• Differentiation opportunity: Can you stand out?
• Switching costs: Easy or hard to win customers?

Business factors:

• Willingness to pay: Will they pay what you need?
• CAC: Can you acquire them profitably?
• LTV potential: Will they stick around and expand?

Prioritization Matrix

Segment	Size	Growth	Competition	Willingness to Pay	Total Score
Startups (1-10)	8	9	7	6	30
SMB (11-50)	9	7	6	8	30
Mid-market (51-500)	7	6	5	9	27
Enterprise (500+)	6	5	4	10	25

Focus on highest-scoring segments that align with your capabilities.

Step 4: Customer Profile Deep Dive

For your top 1-2 segments, go deeper:

Buyer Persona Details

Who makes the decision?

• Decision maker (signs contract)
• Influencer (recommends solution)
• End user (uses product)
• Economic buyer (controls budget)

Example: Marketing automation tool

• Decision maker: VP Marketing
• Influencer: Marketing Operations Manager
• End user: Marketing team members
• Economic buyer: CFO (for large deals)

Buying Process

Typical journey:

1. Awareness: How do they discover solutions? (Google, referral, content)
2. Consideration: What do they evaluate? (features, pricing, reviews)
3. Decision: What seals the deal? (trial, demo, case studies)
4. Timeline: How long from awareness to purchase? (1 week to 6 months)

Budget Dynamics

Budget range: $X - $Y per month/year Budget holder: Who controls this budget? Budget cycle: When do they have budget? (Q1, annually) Competing priorities: What else competes for this budget?

Step 5: Channel & GTM Fit

Where Do They Spend Time?

Digital channels:

• LinkedIn, Twitter, Reddit (which communities?)
• Industry publications (which ones?)
• Search (what keywords?)
• Review sites (G2, Capterra)

Offline channels:

• Conferences and events
• Trade shows
• Industry associations
• Local meetups

How to Reach Them

Acquisition channels ranked by segment fit:

Channel	Cost/Customer	Conversion Rate	Time to Scale	Fit Score
Content SEO	$50	2%	6-12 mo	8/10
Paid search	$200	5%	1-2 mo	7/10
LinkedIn ads	$300	3%	1 mo	6/10
Partnerships	$100	8%	3-6 mo	9/10

Choose 2-3 channels where your segment is active and economics work.

Step 6: Economic Viability Analysis

Unit Economics

Customer Acquisition Cost (CAC):

• Target: $_____
• Current estimate: $_____
• Based on: [channel costs + sales costs]

Lifetime Value (LTV):

• Average revenue per customer: $_____/month
• Average retention: _____ months
• LTV = ARPC × Retention = $_____

LTV:CAC Ratio:

• Target: 3:1 or better
• Your ratio: _____:1
• Viable? ☐ Yes ☐ No ☐ Needs work

Break-Even Analysis

Per customer:

• CAC: $_____
• Monthly revenue: $_____
• Payback period: _____ months (CAC ÷ monthly revenue)

Target: Payback < 12 months for sustainable growth

Step 7: Competitive Landscape

Who Else is Targeting This Market?

Direct competitors:

1. [Competitor]: Market share ___%, positioning _____
2. [Competitor]: Market share ___%, positioning _____
3. [Competitor]: Market share ___%, positioning _____

Market leader advantages:

• Brand recognition
• Large customer base
• Network effects
• Deep pockets

Your wedge:

• What do they do poorly?
• What segment do they ignore?
• What’s your unique angle?

Market Saturation

Signals of saturation:

• Many established players
• Decreasing growth rates
• High CAC across the board
• Difficulty differentiating

Signals of opportunity:

• Underserved segments
• Customer dissatisfaction
• New technology enables better solution
• Behavioral shifts create new needs

Step 8: Risk Assessment

Market Risks

Regulatory risk:

• Compliance requirements: _____
• Pending regulations: _____
• Impact: ☐ Low ☐ Medium ☐ High

Economic risk:

• Economic sensitivity: _____
• Recession impact: _____
• Impact: ☐ Low ☐ Medium ☐ High

Technology risk:

• Technology shifts: _____
• Platform dependencies: _____
• Impact: ☐ Low ☐ Medium ☐ High

Assumptions to Validate

Critical assumptions:

1. _____ (must be true for this to work)
2. _____ (must be true for this to work)
3. _____ (must be true for this to work)

Validation plan:

• How will you test these?
• What’s the timeline?
• What’s your kill criteria?

Red Flags vs. Green Lights

Red Flags (Reconsider)

❌ Market shrinking year-over-year ❌ Can’t identify a segment willing to pay ❌ Dominated by one player (90%+ share) ❌ Your CAC exceeds customer LTV ❌ Can’t reach target customers affordably ❌ Segment too small (< $10M TAM)

Green Lights (Proceed)

✅ Growing market (10%+ annually) ✅ Clear segment with urgent needs ✅ Fragmented competition or underserved niche ✅ LTV:CAC of 3:1 or better ✅ Clear, affordable channels to customers ✅ Large enough to build $10M+ business

Example: Target Market Analysis

Product: Team collaboration tool for remote teams

TAM: 50M knowledge workers in companies with remote teams SAM: 10M workers in 200K companies (50-500 employees, primarily remote) SOM: 500K users (100K companies) in 5 years

Target segment: Growing startups (20-100 employees, Series A-B)

• Size: 50K companies globally
• Growth: 15% YoY
• Needs: Async communication, project visibility
• Budget: $10-50/user/month
• Channels: Product Hunt, Y Combinator network, startup communities

Economics:

• CAC: $150 (content + paid ads)
• ARPC: $500/month (10 users × $50)
• LTV: $18,000 (36 months avg retention)
• LTV:CAC: 120:1 ✅
• Payback: < 1 month ✅

Competition: Slack (too expensive), Basecamp (outdated), Discord (not work-focused) Wedge: Built specifically for remote async work with better pricing

Decision: Strong target market. Proceed with MVP.

Target Market Analysis Template

Use this structure to document:

1. Market Definition - TAM/SAM/SOM with sources
2. Segmentation - 3-5 potential segments with profiles
3. Prioritization - Scoring framework and top choice
4. Customer Profile - Detailed buyer persona and journey
5. GTM Fit - Channels, positioning, messaging approach
6. Economics - CAC, LTV, unit economics viability
7. Competitive - Landscape, positioning, differentiation
8. Risks - Key assumptions and validation plan
9. Recommendation - Go/no-go with rationale

Rock-n-Roll synthesizes target market research into strategic briefs with sizing, segmentation, positioning, and go-to-market recommendations.

Try Rock-n-Roll

Skip blank pages. Rock-n-Roll turns your target market analysis research into a complete product planning bundle in minutes.

What you get:

• Product Strategy Brief with market research, personas, and competitor insights
• Solution Blueprint covering requirements, user journeys, and UX flows
• Implementation Plan sequencing milestones, dependency callouts, and engineering-ready prompts
• Builder handoff kits that push to Loveable, Bolt, or V0 plus prompt bundles for Cursor, Claude Code, or Codex

Try Rock-n-Roll Free →