Understanding who you intend to sell to will allow you to clearly define what your business is about, who you intend to deal with, what you will offer, and how you plan to be profitable. The key to understanding your market is research, so make sure that you do this thoroughly and make use of reliable information sources.

Even when your research indicates a high demand for what you plan to offer, a clear focus should always be kept on whether your ideas are financially viable. All markets can be separated into multiple segments, categorizing buyers who share common characteristics. In terms of pricing, this often translates to the three general categories of budget, standard, and premium buyers; each needing to be tackled in a unique way to guarantee that your services or products can be delivered in a way that meets their quality expectations and is financially viable. It's important to identify what can be offered for the market segment(s) you target from the start so that you can avoid lower paying buyers negotiating extras that make your offer unprofitable.

With an understanding of factors relating to positioning yourself in the market, the next chapter will cover issues related to building a business model; a key part to identifying how your business can operate profitably with the types of people you are selling your services and products to.