A great business and a great marketing strategy still need to fit together to reach the people who are going to pay for the product service. If they don't, neither really works. You can have the greatest product in the world, if you aren't putting it in front of the right people you won't sell. The right market(ing) strategy is about more than product though, it should be built from your business's overall plan - your products should speak to the people your business markets to.
The traditional idea of audience based "target markets" is somewhat limiting. It constrains the ways a business can sell and limits its ability to be dynamic. Looking at markets as larger entities, which are made up of "target markets" (or simply people) with similar traits and behaviours. It might seem like a small difference, but it can change the way you approach everything about your business - you can pioneer and dominate a market, but you can't really do the same if you're looking at individual people.
Your market needs to be a place your business and the people working in it feel comfortable. The customers in that market should be passionate about what you do, and your business and your customers have to want to interact. This lowers the barriers to sales and increases the likelihood of repeat, loyal customers.
It is important to remember that markets are living things, just as your business is. They change, grow, shrink and merge. Your business needs to respond to them and make sure they are still right for what you do.
Marketing can't be an afterthought, it needs to guide features and design. It should be falling under the more broad "communication" umbrella, bringing the public relations, marketing, advertising and promotional activities you undertake together in an effective and efficient way, it should be part of every stage of your business. Being strategic about the way you present your business gives you the power and opportunity to make the most of what you're doing.
The right market should make selling come easily. If you are in the right place your customers will be looking for you, searching for what you're offering. If you're in the wrong place you can be pumping more and more into your marketing and not seeing returns. You need to learn from what you do, if you aren't making headway you need to know why. Analysing your activities, returns and sentiment towards you from your market is the only way to learn what to do next.
When you do analyse, it's important to be critical. Just because there are small increases or growth from previous numbers doesn't mean everything is going as well as it should be. It is possible to survive and even grow (to some degree) in the wrong market. You'll likely be spending more than you need to be to do it though, and the return on that investment will limit your growth.
There are a few simple questions I always consider when it comes to markets. Put yourself in the consumer's shoes and ask yourself for your business - where would I expect to find me? The answer won't always be the place you initially think you will make the most sales in, it might be somewhere you can compliment other needs. Once you know where you should be, ask how you should look. Consumers, your customers, make their purchasing decisions based on the way they perceive themselves and the products that fit with them. As a business, it is up to you to put yourself in front of these consumers, and to do it in the way they want you to.
Finally, ask yourself what it will cost to put you at the top of the market. If you don't know that before you set your pricing structures any forecasts and estimates you make will be inaccurate.