What is a Target Market?
A target market is a group of consumers or organizations most likely to buy a company’s products or services. Because those buyers are likely to want or need a company’s offerings, it makes the most sense for the company to focus its marketing efforts on reaching them. Marketing to these buyers is the most effective and efficient approach. The alternative - marketing to everyone - is inefficient and expensive.
Finding Your Target Market
To determine who your best target market consists of, start by answering three basic questions:
- What problem does your product or service solve? Does it help soothe teething babies? Does it make men feel taller? Does it help companies garner more publicity?
- Who is most likely to have this problem? In what situations do they use it? This is where you start breaking down who you should be focusing on. Is it individuals? Businesses? Families?
- Are there different groups with different needs? You may have more than one target market, or market segment, based on how they use a product or service. For example, a bike shop may help families with young children choose a safe bike for their 5-year-old, while a 30-something athlete may want advice in choosing a professional racing bike.
Get a little more specific about what pain points your product or service addresses and then who typically feels that pain.
Zeroing in On Your Target Market
Once you are clear about who is most likely to need or want your product or service, it’s time to get even more specific about this group, or groups, of people. There are several different ways to define your target market, based on different characteristics. You should decide which approach comes closest to exactly describing your perfect customer:
- Consumer or business – Start by clarifying if you have a B2B (business-to-business) or a B2C (business-to-consumer) offering.
- Geographic – Local brick-and-mortar stores may find that their most likely customers are within a two-mile radius of their store, or within a particular zip code. This target market is defined geographically, based on where they live or work or vacation or do business.
- Demographic – Describing your best customer demographically means that you define your target market in terms of their gender, age, income level, education level, marital status, or other aspect of their life.
- Psychographic – Sometimes customers don’t fit into a particular group based on outward characteristics, but more based on internal attitudes and values. These are psychographic characteristics.
- Generation – Many companies today define their target market based on which generation they were born in, such as baby boomers or Gen Y.
- Cohort – Other companies find that their target market is better defined by looking at cohorts, or groups of people who had similar experiences during childhood, such as being raised by a single mom or attending boarding school.
- Life stage – Other target markets are more alike because of the stage of life they are in, whether it’s post-college, retirement, newly married, newly divorced, or parenting young children, for example.
- Behavioral – Another approach is simply based on frequency of use, or behavior, which could be a good choice for nail salons, car washes, or vacation rentals, for example.
Armed with a clear understanding of your target market(s), you can now begin to craft marketing messages that appeal to that particular group’s pain points and preferences.