When it comes to creating a profitable and scalable business, one choice overshadows all others: the market you choose to serve.

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For years, there’s been a widespread push to narrow down and niche until you’ve carved out your perfect spot.

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But even with all the advice available, many entrepreneurs struggle to apply this to their own businesses, unsure of whether they’re really making the right choice.

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In this guide, we’re going to tackle market selection head-on.

We’ll move from understanding high-level desires (health, wealth, relationships) to identifying a specific niche, avatar, and audience—all designed to streamline your business and make sure your marketing is targeted, relevant, and impactful.

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This model will bring clarity to every level of your market, helping you avoid costly mistakes that come from over-niching or focusing on too narrow an audience.

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Part 1: Understanding Market Segmentation

Core Desires – The Foundation of Market Selection

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Every customer’s motivation boils down to one of three fundamental desires:

• health
• wealth
• or relationships.

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These are what drive customer decisions and behaviors and ultimately set the “destination” that your product or service will help them reach.

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Why Desires Aren't Markets

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It’s easy to confuse a desire with a market, but these are distinct concepts.

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Desires are what customers want to feel or achieve. By keeping the distinction clear, you can see how their primary desire fuels their buying decisions and gives you a compass for aligning your brand’s messaging.

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The Three Core Desires:

1. Health – physical fitness, mental well-being, longevity, overall wellness.
2. Wealth – financial independence, investment growth, career advancement, increased revenue.
3. Relationships – family bonds, friendships, romantic partnerships, professional networks.

Exercise: Take a moment to identify which core desire your product or service aligns with most closely. This is the “destination” your ideal customer wants to reach.

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Part 2: The Market Model Breakdown – From Desires to Niches

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With a core desire in mind, the next step is breaking it down into more specific segments that represent how your customer sees their path to achieving this goal.

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Step 1: Identifying Desires as Destinations

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For this model, desires are not the market itself but a “destination” for your customer.

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Think of it as the vision they hold for themselves when they decide to make a purchase, whether that’s becoming fit and energetic (health), financially secure (wealth), or deeply connected with others (relationships).

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Step 2: Market – Choosing the Right Path

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The next level is identifying the market, or the “path” customers see as their way to fulfill that desire.

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Each of these paths contains hundreds of millions of people who share the same broad interest in achieving a similar goal.

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Example:

• Desire: Wealth
• Market (Path): Investing, Entrepreneurship, Career Development

At this point, your market is still broad, covering many sub-markets and interests, but it’s a valuable directional choice. Customers choose this path based on their beliefs and past experiences, seeing it as their best way forward.

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Step 3: Sub-Market – Narrowing Your Vehicle

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A sub-market is more specific than the market level, adding one or two defining characteristics.

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It becomes a more targeted segment, giving you the option to tailor your message for relevance and clarity.

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The sub-market is like the “vehicle” your customer chooses based on their lifestyle, skills, or preferences.

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Example:

• Desire: Wealth
• Market: Investing
• Sub-Market (Vehicle): Real Estate Investing, Stock Market Trading, Crypto Investments

Each sub-market narrows the scope further while still offering broad appeal.

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Think of it as the difference between a sedan and an SUV—both are vehicles, but each serves a different purpose.

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Exercise: Evaluate your product’s alignment with a specific sub-market and its primary appeal. What specific language or terms are unique to this sub-market?

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Part 3: The Niche – Going Three Levels Deep for Competitive Positioning

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In the next level, we reach the niche. Niching down means going three levels deep to capture a unique positioning in the market. This is where real differentiation begins. Niche markets still encompass millions to tens of millions of people, but they’re defined by specific needs and preferences that make your product or service stand out.

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Step 4: Niche – The Make or Model of Your Customer’s Choice

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A niche is like the “make or model” of the vehicle that customers choose to navigate the path. Each decision about the niche should connect to the customer’s circumstances, resources, and preferred outcomes.

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A good niche is large enough to allow substantial market share but narrow enough to avoid saturated competition.

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Example:

• Desire: Wealth
• Market: Investing
• Sub-Market: Real Estate Investing
• Niche (Make/Model): Fix-and-Flip Real Estate, Multi-Family Housing Investment, Vacation Rentals

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Your niche represents a detailed choice within the sub-market that meets the precise needs of a segment. The people in this niche share more specific motivations and pain points, making it easier to craft marketing messages that resonate deeply.

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Part 4: Avatar & Audience – Building a Customer Profile

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Once you have a defined niche, you’ll need to focus on your avatar and audience, which is where the market model comes down to a personal level.

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Step 5: Avatar – Defining Your Ideal Customer

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An avatar is the “driver” behind the wheel.

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This customer persona has specific demographics, goals, challenges, and preferences that make them your perfect customer.

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You might have more than one avatar within your niche, but to start, focus on one that aligns well with your offer. A well-defined avatar makes it easy to speak directly to the motivations and needs of your target market.

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Example:

• Niche: Vacation Rentals
• Avatar: A Millennial couple with disposable income, interested in earning side income from a vacation home.

Building an Avatar

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Define key characteristics such as:

• Age and lifestyle: What age range do they fall into? What hobbies or values do they have?
• Pain points: What specific problems does your solution address for them?
• Goals: What results or transformation do they seek?

Step 6: Audience – Refining Your Marketing Reach

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Audiences are smaller, segmented groups within the avatar category, categorized by demographic or behavior.

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While your avatar is the ideal customer, audiences contain sub-groups within that ideal. Knowing your audience helps in fine-tuning your marketing and optimizing ad spend.

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Example:For the “Vacation Rentals” niche, a possible audience segment could be:

• Audience: Couples in their 30s-40s, who frequently travel and are active on Airbnb.

Audiences add specificity to the avatar by helping you locate them on specific platforms, target interests and preferences, and hone in on messaging that feels familiar and relevant to them.

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Part 5: Common Pitfalls & Solutions in Market Selection

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When defining a market, business owners frequently make a few common mistakes.

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Here’s how to avoid them:

1. Over-niching: Avoid narrowing your focus too much by basing your business on an avatar or audience level. This limits market potential and can lead to stagnation. Instead, keep your niche large enough to encompass millions of potential buyers, allowing room for growth.
2. Confusing Avatars with Audiences: A major point of confusion arises when avatars (your ideal customer) and audiences (sub-groups within your ideal customer base) get mixed up. When you clearly define each level, your messaging and targeting stay consistent.
3. Market Size Misjudgment: Make sure your niche has at least millions or tens of millions of potential customers. This ensures you can reach enough people while converting the few who are actively interested in buying today.

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Practical Solution: Determine Market Size

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Assess your market size with tools like Facebook Audience Insights, LinkedIn Ads Audience, or Google’s Keyword Planner.

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This can give you a general idea of audience size and advertising cost.

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Practical Solution: Evaluate Competitors

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See how competitors are positioned in the market and how many serve the same niche.

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Understand if they’re addressing different avatars or audiences and if there’s a gap in your niche that can be leveraged.

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Conclusion

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Selecting and defining your market isn’t just about picking a niche—it’s about building a structure that allows your business to grow with a clear understanding of your customer’s desires, market paths, sub-markets, and niche-specific needs.

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By following this framework, you gain clarity in your market messaging, reach, and long-term potential.

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In review:

1. Start with a desire (Health, Wealth, Relationships).
2. Choose a market path that aligns with your offer.
3. Narrow it down to a sub-market that suits your brand and audience.
4. Define a niche where you can stand out and grow.
5. Identify your avatar and audience to make your marketing targeted and effective.

With this model, you can confidently create a business that resonates with your ideal customers, backed by a market foundation that scales.

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This clarity will make it easier to create content, ads, and offers that attract and convert consistently, ensuring that your business is built to last.

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