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Target marketing can be your key to increasing sales
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Updated on October 14, 2022
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Reviewed byThomas J. Catalano
Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018.Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
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In This Article
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In This Article
- How Target Marketing Works
- Example
- Target Marketing FAQs
Definition
Target marketing is a marketing strategy that breaks a market into segments and then concentrates your marketing efforts on one or a few key segments consisting of the customers whose needs and desires most closely match your product or service offerings. It can be the key to attracting new business, increasing sales, and making your businessa success.
Key Takeaways
- Successful target marketing improves the efficiency of marketing efforts.
- Target marketing is easier than ever thanks to social media, email, and other technological advances.
- The three most common types of target marketing fall into demographic, geographic, or psychographic categories.
How Target Marketing Works
The beauty of target marketing is that aiming your marketing efforts at specific groups of consumers makes the promotion, pricing, and distribution of your products and/or services easier and more cost-effective, and it provides a focus to all of your marketing activities.
For instance, suppose a catering business offers catering services in the client’s home. Instead of advertising via a newspaper insert that goes out to everyone, the caterer would firstidentifythe target market for its services. It couldthen target the desired market with a direct mail campaign, flyer delivery in a particular residential area, or a Facebook ad aimed at customers in a specific area, thereby increasing itsreturn on investmentin marketing and bringing in more customers.
Social media platforms, such as Facebook, LinkedIn, Twitter, and Instagram, have sophisticated options to allow businesses to target users based on marketsegments. A bed-and-breakfast business, for example, could target married Facebook followers with an ad for a romantic weekend getaway package. LinkedIn, on the other hand, is more B2B (Business to Business) oriented, so you can target businesses using a variety of criteria such as the number of employees, industry, geographic location, and so on.
Although you can approach market segmentation in many differentways, depending on how you want to slice up the pie, three of the most common types are demographic segmentation, geographic segmentation, and psychographic segmentation.
Demographic Segmentation
Demographic grouping is based on measurable statistics, such as:
- Gender
- Age
- Income level
- Marital status
- Education
- Race
- Religion
Demographic segmentation is usually the most important criterionfor identifying target markets, which means that knowledge of demographicinformation is crucial for many businesses. A liquor vendor, for instance, might want to target its marketing efforts based on the results of Gallup polls, which indicate that beer is the beverage of choice for people under the age of 55—particularly in the 18 to 34 range—whereas those aged 55 and older prefer wine.
Geographic Segmentation
Geographic segmentation involves segmenting the market based on location.Home addresses are one example, but depending on the scope of your business, you could also use:
- Neighborhood
- Postal or ZIPcode
- Area code
- City
- Province or state
- Region
- Country (if your business is international)
Geographic segmentation relies on the notion that groups of consumers in a particular geographic area may have specific product or service needs.For example, a lawn care service may want to focus its marketing efforts on a particular town or subdivision inhabited by a high percentage of older residents.
Psychographic Segmentation
Psychographic segmentation divides the target market based on socioeconomic classor lifestyle preferences.The socioeconomic scale ranges from the affluent and highly educated at the top to the uneducated and unskilled at the bottom. The UK-based National Readership Survey segregates social class into six categories:
| Social Grade | Social Status | Occupation |
| A | Upper class | Higher managerial, administrative, or professional |
| B | Middle class | Intermediate managerial, administrative, or professional |
| C1 | Lower middle class | Supervisory, clerical, junior managerial, administrative, or professional |
| C2 | Skilled working class | Skilled manual labor |
| D | Working class | Semi- and unskilled manual labor |
| E | Subsistence class | Unemployed, seasonal, or casual |
The lifestyle-preferences classification involves values, beliefs, interests, and the like.Examples include people who prefer an urban lifestyle as opposed to a rural or suburban lifestyle, people who are pet lovers, or people with a keen interest in environmental issues.
Psychographic segmentation is based on the premise that the choices people make when purchasing goods andservices reflect their lifestyle preferences or socioeconomic class.
An Example of Target Marketing
According to QSR magazine's 2021 QRS 50, McDonald'sis the largest fast-food chain in the U.S. ranked by sales. It's also one of the most successful examples of demographictarget marketing, aiming its products at children, teenagers, and young urban-dwellingfamilies by offering PlayPlaces & Parties, the Arch Card (reloadable cash card),free wifi, Happy Meals that include toys such as Marvel Studios characters, special promotions, and clever ad campaigns. Targeted advertising andaggressive pricing have enabled McDonald's to capture nearly 29% of the fast-food market share in the U.S. as of the second quarter of 2022.
However, around the time millennials surpassed baby boomers in 2016 to become the largest generation in the U.S. workforce, McDonald's revenue saw a sharp decline as fast-food menu items, such as the ubiquitous Big Mac and fries, have lessappeal to millennials. In response, McDonald's has altered its marketing strategy to target the millennial generation by advertising fresher, healthier menu options and upscale coffee products such as espressos.
What Is the Target Marketing Concept?
The target marketing concept believes that your marketing can be highly effective when you focus your marketing on certain segments of the population.
How Many Target Markets Are There?
The number of target markets that exist varies depending on who you ask. 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 Are the Main Types of Target Markets?
The main types of market segmentation are demographic, psychographic, behavioral and geographic segmentation.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
Gallup. "Liquor Ties Wine as Second-Favorite Adult Beverage in U.S."
National Readership Survey. "Social Grade."
Qualtrics. "What Is Psychographic Segmentation?"
QSR. "The QSR 50: The Fast-Food Industry's Leading Annual Report."
CSIMarket. "MCD's Competition by Segment and Its Market Share."
Macrotrends. "McDonald's Revenue 2010-2022 | MCD."
Pew Research Center. "Millennials Are the Largest Generation in the U.S. Labor Force."
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As someone deeply immersed in the field of marketing, I bring a wealth of practical experience and knowledge to the discussion. With a background in running an IT consulting firm and designing courses on promoting small businesses, I have navigated the dynamic landscape of marketing for nearly two decades. My expertise extends to various areas, including digital marketing, target marketing, and the integration of technology in marketing strategies.
Now, delving into the article on "Building Your Business: Target Marketing Can Be Your Key to Increasing Sales" by Susan Ward, I'll provide a comprehensive breakdown of the concepts discussed.
Target Marketing Overview: Target marketing is a strategic approach that involves dividing a market into segments and concentrating marketing efforts on specific groups whose needs align closely with the product or service offerings. The article underscores that successful target marketing is crucial for improving the efficiency of marketing endeavors, ultimately leading to increased sales and business success.
Key Components of Target Marketing:
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Efficiency Benefits: Target marketing streamlines promotion, pricing, and distribution efforts, making them more cost-effective.
-
Channels for Target Marketing: The article highlights the role of social media platforms like Facebook, LinkedIn, Twitter, and Instagram in facilitating target marketing. These platforms offer sophisticated options to target users based on market segments.
Types of Target Marketing: The article categorizes target marketing into three main types:
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Demographic Segmentation: Based on measurable statistics such as gender, age, income level, marital status, education, race, and religion. The example provided involves a liquor vendor using Gallup polls to target marketing efforts based on age groups' beverage preferences.
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Geographic Segmentation: Involves segmenting the market based on location, including factors like home addresses, postal or ZIP codes, area codes, city, province or state, region, and country.
-
Psychographic Segmentation: Divides the target market based on socioeconomic class or lifestyle preferences. The socioeconomic scale includes categories like social grade, social status, occupation, and lifestyle preferences encompass values, beliefs, and interests.
Example of Target Marketing: The article cites McDonald's as a successful example of demographic target marketing. McDonald's targets children, teenagers, and young urban-dwelling families through offerings like PlayPlaces & Parties, Happy Meals with toys, free wifi, and special promotions. It also discusses how McDonald's adapted its marketing strategy to target millennials by promoting fresher, healthier menu options and upscale coffee products.
Target Marketing Concept: The target marketing concept posits that marketing is most effective when focused on specific population segments that align with the product or service.
Number of Target Markets: The article notes that the number of target markets can vary, but they generally fall into one of three segments: demographic, geographic, and psychographic. Additionally, firmographic and behavioral segments are mentioned.
Main Types of Target Markets: The main types of market segmentation, as outlined in the article, include demographic, psychographic, behavioral, and geographic segmentation.
This breakdown provides a comprehensive understanding of the key concepts presented in the article, offering insights into the importance and practical application of target marketing in business growth.
