What Is a Target Market?
A target market refers to a group of potential customers to whom a company wants to sell its products and services. This group also includes specific customers to whom a company directs its marketing efforts. A target market is one part of the total market for a good or service.
Consumers who make up a target market share similar characteristics including buying geography, buying power, demographics, and incomes.
Identifying the target market is an essential step for any company in the development of a marketing plan. Not knowing who the target market is could cost a lot of money and time for a company.
- A target market refers to a group of customers to whom a company wants to sell its products and services, and to whom it directs its marketing efforts.
- Consumers who make up a target market share similar characteristics including geography, buying power, demographics, and incomes.
- Identifying the target market is important for any company in the development of a marketing plan.
- Not knowing who the target market is could cost a lot of money and time for a company.
Understanding Target Markets
Part of the success of selling a good or service is knowing to whom it will appeal and who will ultimately buy it. That's why businesses spend a lot of time and money to define and monitor its target market. That's because not all products and services are meant for every consumer, who are generally cautious with their money.
Target markets are generally categorized by age, location, income, and lifestyle. Defining a specific target market allows a company to home in on specific market factors to reach and connect with customers through sales and marketing efforts.
Testing a target market often occurs well before a product is released. During the testing phase, a company may use limited product rollouts and focus groups, allowing the product managers to get a feel for which aspects of the product are the strongest. Once a product is released, the company can continue to monitor the demographics of its target market through sales tracking, customer surveys, and various other activities that allow the company to understand what its customers demand.
Defining a target market is important for any business because it means the difference between selling a product or service and sitting on the sidelines while the competition boosts its revenue.
Not knowing its target can be a big mistake for a business. Trying to rustle new clients or customers without knowing who it will target can cost the business a lot of time and money.
Segmenting the Market
Dividing a target market into various segments is as simple as dividing the population into groups that can be measured by key characteristics. These include gender, age, income levels, race, education, religion, marital status, and geographic location.
Consumers that fall into these groups tend to value the same products and services, which is why narrowing down these segments is one of the most important factors to determine target markets. For example, people who fall into a higher income bracket may be more likely to buy specialty coffee from Starbucks instead of Dunkin' Donuts.
A business may have more than one target market—a primary target market, which is the main focus, and a secondary target market, which is not as large but still has growth potential.
Target Market and Product Sales
The target market is a central focus within a marketing plan that determines other essential factors for the product, such as distribution, price, and promotion efforts. The target market also determines significant factors about the product itself. In fact, a company may tweak certain aspects of a product, such as the amount of sugar in a soft drink, so that it is more likely to be purchased by consumers with varying tastes.
As a company’s product sales grow, it may also expand its target market internationally. International expansion allows a company to reach a broader subset of its target market in different regions of the world.
In addition to international expansion, a company may also find its domestic target market expands as its products gain more traction in the marketplace. Expanding and growing target markets are all the more reason for companies to monitor their sales and customer preferences for evolving revenue opportunities.