What Is a Target Market?
A target market is a group of people that have been identified as the most likely potential customers for a product because of their shared characteristics such as age, income, and lifestyle.
Identifying the target market is a key part of the decision-making process when a company designs, packages, and advertises its product.
Key Takeaways
- A target market is a group of customers with shared demographics who have been identified as the most likely buyers of a company's product or service.
- Identifying the target market is important in the development and implementation of a successful marketing plan for any new product.
- The target market also can inform a product's specifications, packaging, and distribution.
How Do I Define My Product's Target Market?
Part of creating a new product is envisioning the consumers who will want it.
A new product must satisfy a need or solve a problem, or both. That need or problem is probably not universal unless it reaches the level of indoor plumbing. More likely, it is needed by a subset of consumers, such as environmentally-conscious vegetarians, or science nerds, or outdoor enthusiasts. It may appeal to a teenager or a middle-aged professional, a bargain-hunter or a snob.
Envisioning your likely target market is part of the process of creating and refining a product, and informs decisions about its packaging, marketing, and placement.
What Are the 4 Target Markets?
Marketing professionals divide consumers into four major segments:
Demographic: These are the main characteristics that define your target market. Everyone can be identified as belonging to a specific age group, income level, gender, occupation, and education level.
Geographic: This segment is increasingly relevant in the era of globalization. Regional preferences need to be taken into account.
Psychographic: This segment goes beyond the basics of demographics to consider lifestyle, attitudes, interests, and values.
Behavioral: This is the one segment that relies on research into the decisions of a company's current customers. New products may be introduced based on research into the proven appeal of past products.
What Is an Example of a Target Market?
Each of the four target markets can be used to consider who the customer for a new product is.
For example, there are an estimated 100,000 Italian restaurants in the U.S. Clearly, they have enormous appeal.
But a corner pizza joint might appeal mostly, although by no means entirely, to a younger and more budget-conscious consumer, while an old-fashioned white tablecloth place might be dominated by older folks and families who live in the neighborhood. Meanwhile, a newer place down the street might cater to an upscale and trend-conscious crowd who will travel a good distance for the restaurant's innovative menu and fancy wine list.
In each successful case, a savvy business person has consciously considered the ideal target market for the restaurant and has tweaked the menu, decor, and advertising strategy to appeal to that market.
Why Are Target Markets Important?
Few products today are designed to appeal to absolutely everyone. The Aveda Rosemary Mint Bath Bar, available for $23 a bar at Aveda beauty stores, is marketed to the upscale and eco-conscious woman who will pay extra for quality. Cle de Peau Beaute Synactif Soap retails for $110 a bar and is marketed to wealthy, fashion-conscious women who are willing to pay a premium for a luxury product. An eight-pack of Dial soap costs under $5 on Amazon, and it is known to get the job done.
Part of the success of selling a good or service is knowing to whom it will appeal and who will ultimately buy it. Its user base can grow over time through additional marketing, advertising, and word of mouth.
That's why businesses spend a lot of time and money in defining their initial target markets, and why they follow through with special offers, social media campaigns, and specialized advertising.
What Are Market Segments?
Dividing a target market into segments means grouping the population according to the key characteristics that drive their spending decisions. Some of these are gender, age, income level, race, education level, religion, marital status, and geographic location.
Consumers with the same demographics tend to value the same products and services, which is why narrowing down the segments is one of the most important factors in determining 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. The parent companies of both of these brands need to know that in order to decide where to locate their stores, where to stock their products, and where to advertise their brand.
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 smaller but has growth potential. Toy commercials are targeted directly to children. Their parents are the secondary market.
Target Market and Product Sales
Identifying the target market is an essential part of a product development plan, along with manufacturing, distribution, price, and promotion planning. The target market determines significant factors about the product itself. A company may tweak certain aspects of a product, such as the amount of sugar in a soft drink or the style of the packaging, so that it appeals more to consumers in its target group.
As a company’s product sales grow, it may expand its target market internationally. International expansion allows a company to reach a broader subset of its target market in other regions of the world.
In addition to international expansion, a company may find its domestic target market expands as its products gain more traction in the marketplace. Expanding a product's target market is a revenue opportunity worth pursuing.
How Detailed Should a Target Market Be?
It depends. Broadly speaking, a product may be designed for a mass market or a niche market, and a niche market can be a very small group indeed, especially in a product's early introductory phase.
Some carbonated beverages aim for a practically universal market. Coca-Cola had to branch out to 200 markets abroad to continue growing its customer base. Gatorade is owned by Pepsi Cola, but the brand is positioned as a drink for athletes. The soda brand Poppi, which is branded as a "Healthy, Sparkling, Prebiotic Soda with Real Fruit Juice, Gut Health, and Immunity Benefits," is clearly aimed at a younger, healthier, and more trend-conscious target market.
What Is an Example of a Target Market?
Consider a casual apparel company that is working to build its distribution channels abroad. In order to determine where its apparel will be most successful, it conducts some research to identify its primary target market. It discovers that the people most likely to buy their products are middle-class women between the ages of 35 and 55 who live in cold climates.
It's reasonable for the company to focus its advertising efforts on northern European websites that have a strong female audience.
But first, the company may consider how its apparel can be most attractive to that target market. It may revise its styles and colors and tweak its advertising strategy to optimize its appeal to this new prospective market.
What Is the Purpose of a Target Market?
A target market defines a product as well as vice versa.
Once a target market is identified, it can influence a product's design, packaging, price, promotion, and distribution.
A product aimed at men won't be packaged in pink plastic. A luxury cosmetic won't be sold in a pharmacy. An expensive pair of shoes comes with a branded cloth drawstring bag as well as a shoebox. All of those factors are signals to the target audience that they have found the right product.
The Bottom Line
Identifying the target market is part of the process of creating and refining a new product.
A target market can be translated into a profile of the consumer to whom a product is most likely to appeal. The profile considers four main characteristics of that person: demographic, geographic, psychographic, and behavioral.
FAQs
For example, a company that makes insoles for shoes might conduct market segmentation and decide to focus on a target audience of recreational runners and joggers. Through market research into the target audience, the product development team might learn about certain foot and ankle conditions that affect runners.
What is an example of target market and market segment? ›
For example, a company that makes insoles for shoes might conduct market segmentation and decide to focus on a target audience of recreational runners and joggers. Through market research into the target audience, the product development team might learn about certain foot and ankle conditions that affect runners.
What are the 3 main types of target markets market segments? ›
Generally speaking, target markets usually fall into one of three segments: demographic, geographic, and psychographic. You may also hear about firmographic and behavioral segments, too.
What is the purpose of target market segmentation? ›
Target marketing segmentation is where you divide your potential customers into segments. You'll then focus on a few segments (or groups of people) that align most with your product or services. Doing so helps you tap into their needs and desires to attract new sales and increase longevity.
What is a target market example? ›
A target customer is an individual that's most likely to buy your product. And it's a subset of the broader target market. For example, if your target market is female athletes between the ages of 13 to 25, a target customer could be female athletes in the specific age range of 13 to 16.
What are the 5 market segments? ›
Five ways to segment markets include demographic, psychographic, behavioral, geographic, and firmographic segmentation.
What are 5 examples of market type? ›
The five major market system types are Perfect Competition, Monopoly, Oligopoly, Monopolistic Competition and Monopsony.
What are the 4 major market segments? ›
The 4 main types of market segmentation include demographic, geographic, psychographic, and behavioral–which we'll cover more in depth in the next section. An example of a marketing segmentation variable would be age.
What is a real life example of market segmentation? ›
One example of market segmentation in action is Victoria's Secret and their teenage-targeting brand PINK. Victoria's Secret primarily targets women, while their brand PINK is targeted more toward teenage girls and women.
What are 4 ways to define target market? ›
There are many ways to define a target market, including demographics, psychographics, firmographics, and customer behavior. Research suggests that thoroughly preparing a market strategy, which includes identifying a target market, could lead to marketing success.
3. Define your target customers
- Are your target customers male or female?
- How old are they?
- Where do they live?
- What is their marital status?
- Do they have children? How old are their children?
- What is their education level?
- What do they do for a living?
- What is their average income?
A target market is the specific group of people you want to reach with your marketing message. They are the people who are most likely to buy your products or services, and they are united by some common characteristics, like demographics and behaviors.
What are the 3 strategies in selecting a target market? ›
The three strategies for selecting target markets are pursuing entire markets with one marketing mix, concentrating on one segment, or pursuing multiple market segments with multiple marketing mixes.
What are the 8 types of market segmentation? ›
Read this article to learn about the eight important bases for segmentation of market, i.e., (1) Geographic Segmentation, (2) Demographic Segment, (3) Economic Segmentation, (4) Psychological/Psychographic Segmentation, (5) Sociocultural Segmentation, (6) Use Related Segmentation, (7) Benefits Segmentation, and (8) ...
What are the 6 main types of market segmentation? ›
This is everything you need to know about the 6 types of market segmentation: demographic, geographic, psychographic, behavioural, needs-based and transactional.
What are two examples of a market? ›
Markets can be physical like a retail outlet, or virtual like an e-retailer. Other examples include illegal markets, auction markets, and financial markets. Markets establish the prices of goods and services that are determined by supply and demand.
What is the best example of a market? ›
1. Farmers' markets: The average farmers' market is perhaps the closest real-life example to perfect competition. Small producers sell nearly identical products for very similar prices.
What are 4 examples of market research? ›
Four common types of market research techniques include surveys, interviews, focus groups, and customer observation.
What are the three basic types of customers? ›
Understanding The 3 Main Types of Customers
- Your Current Customers. These are the most important because they've already made a commitment to you. ...
- Brand New Customers. These are the people who are currently purchasing products and services from your competitors. ...
- Lost Customers.
The four target markets are geographic, demographic, psychographic, and behavioral.
Market segmentation is a marketing strategy that uses well-defined criteria to divide a brand's total addressable market share into smaller groups. Each group, or segment, shares common characteristics that enable the brand to create focused and targeted products, offers and experiences.
What is an example of a product market segment? ›
Car manufacturers are another great example of product segmentation. Nearly every model from every manufacturer comes in a dizzying array of trim packages, each with its own set of options for customers to choose from. In addition to that, different brand names under the same banner offer an even larger segmentation.
What is an example of a behavioral market segment? ›
An important example of behavioral segmentation is customer loyalty. As a brand, you shouldn't overlook the customers who exhibit loyal behavior to your business. A popular method marketers leverage to spread loyalty among customers is establishing a rewards program.
What is an example of a business segment? ›
Example of a Segment
If the company successfully produces widgets and gets them on store shelves for retail consumption, the widget division may be viewed as its own business segment because it generates its own revenue and incurs its own expenses.
What are the 5 ways to define target market? ›
Top 5 ways to define your target market.
- Demographics. Demographics are important because we can only start to understand how people think by first knowing who they are.
- Psychographics. ...
- Wants and Desires. ...
- Fears and Frustrations. ...
- Key Purchasing Decisions.
A market worth targeting has the following characteristics: (1) It's sizeable enough to be profitable, given your operating costs; (2) it's growing; (3) it's not already swamped by competitors, or you have found a way to stand out in the crowd; (4) it's accessible, or you can find a way to reach it; (5) you have the ...
What are the 5 C's definition of a target market? ›
The 5Cs are Company, Collaborators, Customers, Competitors, and Context.
How do you write a target market? ›
You can segment your target market along four key characteristics:
- Demographic: Who are your customers? Include information such as:
- Geographic: Where do they live? Include information such as:
- Psychographic: Why do they buy? Include information such as:
- Behaviouristic: How do they buy? Include information such as:
Targeting is when you focus your marketing efforts on a specific group of people that you think are likely to buy your product or service. Segmentation is when you divide your market into groups based on characteristics like age, gender, income level, etc.
What company is an example of market segment? ›
Kellogg's utilizes market segmentation to identify different groups based on demographics, behaviors, and psychographic segmentation. The brand even uses geographic segmentation to ensure each breakfast item matches customers' appetites based in different areas.
One example of market segmentation in action is Victoria's Secret and their teenage-targeting brand PINK. Victoria's Secret primarily targets women, while their brand PINK is targeted more toward teenage girls and women.
How do you identify target segments? ›
3. Define your target customers
- Are your target customers male or female?
- How old are they?
- Where do they live?
- What is their marital status?
- Do they have children? How old are their children?
- What is their education level?
- What do they do for a living?
- What is their average income?
Segmentation variables refer to the factors marketers use to categorize their audience into different groups. The 4 main types of segmentation variables include demographic, geographic, psychographic, and behavioral traits.
What is an example of a segmentation? ›
Common characteristics of a market segment include interests, lifestyle, age, gender, etc. Common examples of market segmentation include geographic, demographic, psychographic, and behavioral.
What is Nike's market segment? ›
The Nike target audience tends to be from the higher-income socio-economic group, reflected in the premium brand image and pricing of Nike products. The average Nike customer is a sports enthusiast, interested in leading an active and healthy lifestyle.
What is an example of segmented customer market? ›
Marital status
Marital status is another practical customer segmentation example. Brands can target customers based on whether they are single, married, engaged, involved in a serious relationship, or divorced. An individual's family situation will directly impact their spending habits and total disposable income.
What is Coca Cola target market? ›
Age. Firstly, the company targets young people between 10 and 35. They use celebrities in their advertisem*nts to attract them and arrange campaigns in universities, schools, and colleges.
What are the 6 different market segments? ›
This is everything you need to know about the 6 types of market segmentation: demographic, geographic, psychographic, behavioural, needs-based and transactional.
