A target market is a particular segment of the potential or current customer on which a company focuses its marketing and advertising efforts to sell a product or service. Once businesses understand the needs and preferences of specific customers, they can design and implement effective marketing strategies.
This does not imply making assumptions about the target audience but instead conducting extensive research to determine who they are, where they come from, and how they behave — understanding your target market positions you for success.
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Target Market Definition
A target market is a group of people whose shared characteristics, such as age, income, and lifestyle, make them the most likely potential customers for a product. Once you have identified your target market, it will be easier to determine where and how to market your business. It can be the key to attracting customers, boosting sales, and ensuring the success of your business.
How Do I Define My Product's Target Market?
A business must take multiple steps to attract a specific market segment. It is a crucial aspect of the marketing strategy and influences the product's unique features, price, and distribution.
- Perform market research and competitive analysis
- Understand customer requirements, preferences, and buying practises
- Examine the market competition and product pricing
- Market segmentation and effective market strategies
What Are the 4 Target Markets?
There are four market segmentation types in business, although dozens of subcategories and characteristics can be used to identify different markets. The objective of dividing the market into four types of segments is to allow businesses to more precisely achieve similarity within each segment.
You should be aware of the following four types of market segmentation:
Demographic
The sole focus of the demographic market segmentation is on the customer. Whether you operate a business-to-business (B2B) or a business-to-consumer (B2C) enterprise will determine the demographic market segment's characteristics.
If you operate a B2B business, you would most likely include industry type, company size, tenure in the position, and job title in this segment. A B2C company, on the other hand, would include demographic characteristics such as age, education, gender, occupation, family status, and income.
Geographic
The geographic market segmentation will help effectively divide your entire audience based on their location, which is useful when the customers' location influences their overall purchase decision. Region, continent, country, city, and district are the core characteristics and segments that can be applied to geographic segmentation.
Psychographic
The purpose of psychographic market segmentation is to divide the audience based on their individual personalities. This segmentation's various characteristics include lifestyle, attitudes, interests, and values. Nonetheless, extensive research will be required for this type of segmentation, as identifying demographics based on personality is subjective if you discover that your primary audience values quality and energy efficiency, you can adapt your marketing platform to reflect these core values.
Behavioural
Behavioural market segmentation divides your entire audience according to their past interactions with your brand. This segmentation type's primary characteristics include product knowledge, purchasing behaviour, purchasing patterns, awareness of your business, and product ratings.
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What Is an Example of a Target Market?
Here are examples to help you understand target markets:
Example No 1. Outdoor enthusiasts are the target market for a hiking supply shop.
A hiking supply shop located in a city known for its outdoor activities might target outdoor enthusiasts as their target market. This includes men and women between the ages of 18-40 who are passionate about hiking, camping, and other outdoor activities. They take pride in their equipment and appreciate high-quality gear that can withstand the demands of nature.
To appeal to this target market, the shop might use various strategies such as:
- Offering a wide range of high-quality hiking and camping gear, including backpacks, tents, sleeping bags, and other accessories.
- Providing expert advice and customer recommendations on which products would best suit their needs.
- Hosting workshops and events that teach customers about outdoor skills and safety.
- Building a strong online presence by regularly posting photos and videos of customers and employees using the shop's products in nature.
- Creating a community by hosting meetups, hikes, and other outdoor activities that bring together like-minded individuals who share a passion for the outdoors.
- Creating a loyalty program that rewards customers with discounts, special promotions, and other perks.
- Partnering with local outdoor organisations, clubs, and groups to increase brand awareness and find new customers.
Example No 2. On-the-go travellers are a target market for a sandwich shop.
Speedy Subs, a sandwich shop adjacent to a gas station in a suburban town, might target on-the-go travellers as their target market. This includes adults with low to moderate incomes who are looking for a fast but filling meal while they are on the move. They are often in a hurry and looking for a quick meal option that won't break the bank.
To appeal to this target market, the sandwich shop might use various strategies such as:
- Offering a wide range of sandwiches, subs, and other quick meals at affordable prices.
- Using their location close to the highway to advertise to passing travellers with a large billboard that emphasises their low prices and package deals.
- Emphasising their quick service by using imagery of race cars in their marketing and ensuring their staff is trained to make sandwiches quickly.
- Offering convenient options like drive-thru or take-out services.
- Building a strong online presence by regularly posting photos and videos of customers and employees enjoying their sandwiches on the go.
Why Are Target Markets Important?
Target markets are important for many reasons:
- Allocate resources: By identifying a specific target market, a business can focus its resources and efforts on reaching and appealing to that particular group of customers. This can lead to more efficient and effective use of resources, such as marketing budget and time.
- Develop effective marketing strategies: By understanding the characteristics, needs, and preferences of a target market, a business can develop marketing and communication strategies that resonate with potential customers.
- Create tailored products and services: Understanding the needs and preferences of a target market allows businesses to create products and services that cater to the specific needs of that group of customers.
- Determine appropriate pricing: Knowing the target market can help a business determine the optimum prices for its products and maximise sales.
- Identify the most effective channels to reach customers: Identifying a target market can reveal the most effective channels to reach and communicate with customers.
- Focus promotional activities: Targeting specific market segments allows businesses to focus their promotional efforts in ways that are most relevant to their target audience.
- Gather valuable customer insights: Targeting specific market segments can provide valuable insights into customer behaviour, preferences and trends, enabling the company to identify opportunities for expanding its product and service offerings.
Why is Market Segmentation Important?
Market segmentation helps you understand that not all customers have the same purchasing power, interests, or consumer needs. Market segmentation is essential specially for B2B because it aims to make a company's marketing efforts more strategic and refined instead of catering to all potential customers in a general way. A company can improve its sales prospects and resource utilisation by developing specific plans for specific products with target audiences in mind.
Target Market and Product Sales
Target market identification is a critical component of a comprehensive product development strategy. Alongside manufacturing, distribution, pricing, and promotion planning, target market identification plays a crucial role in shaping the product itself. By understanding the target market, companies can tailor their products to better align with consumer preferences and needs, from modifying ingredient composition in a beverage to adjusting packaging design.
As a product gains popularity, companies may explore expanding their target market both domestically and internationally. Reaching a broader customer base in other regions of the world can open up new revenue opportunities for the company. Similarly, expanding the target market within the domestic market can be a valuable opportunity for growth and revenue as the product gains more traction in the marketplace.
How Detailed Should a Target Market Be?
The level of detail in a target market will depend, based on the needs of the business and the nature of the product or service being offered. The more specific the target market, the more effective the marketing and sales efforts will be. However, a target market that is too specific may limit the potential customer base and sales opportunities.
A good target market should be detailed enough to provide a clear picture of the specific group of customers a business is trying to reach. For example, a company that sells high-end outdoor gear for camping and hiking might define its target market as:
- Men and women ages 25-45
- Active outdoor enthusiasts who enjoy camping and hiking
- Have a household income of £25,000 or more
- Live in urban areas within a certain radius of the store
- Value high-quality gear and are willing to pay more for it
gigCMO Key Takeaways
- A target market is a defined segment of consumers composed primarily of distinct groups of individuals, households, and organisations with particular product preferences and budgets, to whom a business intends to sell its products or services.
- It allows businesses to develop and implement effective marketing strategies, acquire new clients, and expand into new markets, resulting in increased sales revenue and brand market share.
- Before launching, brands frequently utilise surveys, market research, competition analysis, and limited product offerings to evaluate the market and consumer behaviour.
- Geographic, demographic, psychological, and purchasing habits are examples of market segmentation for target audiences.
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