Target Market

REVIEWED BY WILL KENTON Updated Apr 15, 2019

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.

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 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.

[Important: 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.]

Key Takeaways

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.

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.

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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.
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.

The more clearly you define your target group, the better you can understand how and where to reach
your best prospects. You can start with broad categories like millennials or single dads, but you need to
get much more detailed to achieve the best possible conversion rates.

Don’t be afraid to get highly specific. This is all about targeting your marketing efforts effectively, not
stopping people from buying your product. People who are not included in your target market can still
buy from you—they’re just not your top focus when it comes to crafting your marketing strategy.

You can’t target everyone, but you can sell to everyone.

Your target market should be based on audience research, not a gut feeling. You need to be willing to
learn as you go, adapt on the fly, and go after the people who really want to buy from you, even if
they’re not the customers you originally set out to reach.

How to conduct audience research: 7 tips

1. Compile data on your current customers

A great first step in figuring out who most wants to buy from you is to identify who is already using your
products or services.

Once you understand the defining characteristics of your existing customer base, you can go after more
people who fit the same mold.

Depending on how someone connects with your business, you might have only a little information about
them, or a lot. Don’t add a lot of questions to your order or opt-in process just for audience research
purposes. This can annoy customers and result in abandoned shopping carts.

But gather whatever information you do have about your existing customers into a database you can
use to track trends and averages. Some data points you might want to consider are:
Age: You don’t need to get too specific here. It won’t likely make a difference whether your average
customer is 24 or 27. But knowing which decade of life your customers are in, or their generation, can
be very useful.

Location (and time zone): Where in the world do your existing customers live? In addition to
understanding which geographic areas to target, this helps you figure out what hours are most
important for your customer service and sales reps to be online, and when you should schedule your
social ads and posts to ensure best visibility.

Language: Don’t assume your customers speak the same language you do. And don’t assume they speak
the dominant language of their (or your) current physical location.

Spending power and patterns: How much money do your current customers have to spend? How do
they approach purchases in your price category? Do they have specific financial concerns or preferences
you need to address?

Interests: What do your customers like to do, besides using your products or services? What TV shows
do they watch? What other businesses do they interact with?

Stage of life: Are your customers likely to be college students? New parents? Parents of teens? Retirees?

If you’re selling B2B products, your categories will look a little different. You might want to collect
information about the size of businesses that buy from you, and information about the titles of the
people who tend to make the buying decisions. Are you marketing to the CEO? The CTO? The social
marketing manager? Understanding who within the company you need to speak to is a critical first step
in crafting your brand voice.

2. Look to website and social media analytics

So, where do you get all of this audience research information? Social media analytics can be a great
way of filling in the gaps in your customer analysis. They can also help you understand who’s interacting
with your social accounts, even if those people are not yet customers.

We’ve got full guides on how to use analytics on all of the major social networks:

Facebook analytics guide

Twitter analytics guide

Pinterest analytics guide

Instagram analytics guide

LinkedIn Analytics guide

YouTube analytics guide

Snapchat analytics guide

We’ve also got a guide on how to use Facebook Audience Insights, which can provide some really in-
depth information about your existing Facebook audience, including what other Facebook Pages they
like and what kinds of devices they use.

3. Check out the competition

Now that you know who’s already interacting with your business and buying your products or services,
it’s time to see who’s engaging with the competition.

Taking a look at what your competitors are up to can help you answer some key questions: Are your
competitors going after the same market segments as you are? Are they reaching segments you hadn’t
thought to consider? How are they positioning themselves?

We’ve compiled a step-by-step guide on how to do competitor research on social media that walks you
through the best ways to use social tools to gather competitor insights.

You won’t be able to get detailed audience research about the people interacting with your competitors,
but you’ll be able to get a general sense of the approach they’re taking and whether it’s allowing them
to create engagement online. This analysis will help you understand which markets they’re targeting and
whether their efforts appear to be effective.

4. Be clear about the value of your product or service

This comes down to the key distinction all marketers must understand between features and benefits.
You can list the features of your product all day long, but no one will be convinced to buy from you
unless you can explain the benefits.

Features are what your product is or does. The benefits are the results. How does your product make
someone’s life easier, or better, or just more interesting?

For example, in this IKEA ad, features of the advertised furniture might be that it is small, inexpensive,
and multi-purpose. But the benefit is that it can help you make a small, temporary living space feel like
home.
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Notice how defining the benefits also helps you define your target audience—in this case, college
students moving into a new rental home.

If you don’t already have a clear list of the benefits of your product, it’s time to start brainstorming now.
As you create your benefit statements, you’ll also automatically be stating some basic information about
your target demographic.

For example, if your service helps customers connect with qualified pet-sitters, you can be pretty
confident that your audience will mainly be made up of pet owners (and likely ones who travel). If your
product allows people to back up their mobile photos remotely, you know you’re targeting people who
own mobile devices and use them to take a lot of photos.

If you’re not sure exactly how customers benefit from using your products, why not ask them? You
might find that people are getting creative and using your products or services for purposes you haven’t
even thought of. That might, in turn, change how you perceive your target audience for future sales. An
email customer survey can turn up all kinds of great insights, as can asking a quick question on your
social channels.

5. Create a target market statement

Now it’s time to boil everything you’ve discovered so far into one simple statement that defines your
target audience. This is actually the first step in creating a brand positioning statement, but that’s a
project for another day.
For now, let’s stick to creating a statement that clearly defines your target market.

For example, here’s Zipcar’s brand positioning statement, as cited in the classic marketing text Kellogg
on Marketing. We’re interested in the first part of the statement, which defines the target market:

“To urban-dwelling, educated, techno-savvy consumers who worry about the environment that future
generations will inherit, Zipcar is the car-sharing service that lets you save money and reduce your
carbon footprint, making you feel you’ve made a smart, responsible choice that demonstrates your
commitment to protecting the environment.”

Zipcar is not targeting all residents of a particular city. They’re not even targeting all the people in a
given city who don’t own a car. They’re specifically targeting people who:

live in an urban area

have a certain degree of education

are comfortable will technology

are concerned about the environment

These are all interests and behaviors that Zipcar can specifically target using social ads. They also help to
guide the company’s overall approach to its service, as evidenced by the rest of the positioning
statement.

When crafting your target market statement, try to incorporate the most important demographic and
behavior characteristics you’ve identified. For example:

Our target market is [gender] aged [age range], who live in [place or type of place], and like to [activity].

Don’t feel like you need to stick to these particular identifiers. Maybe gender is irrelevant for your target
customer, but you have three or four key behaviors to incorporate in your statement. The key is boil all
of your research down into one simple statement that can guide your marketing efforts.

If you offer multiple products or services, you might need to create a target market statement for each
product, or each product category.
6. Test social ads on your target market

Now it’s time to have some fun and see how you can put your target audience research to work.

The first step is to create social ads specifically targeted to the exact market you have just defined. You
might already have appropriate ad creative from a previous campaign, or from your organic social posts,
but be honest about whether the material is really as precisely targeted as it should be.

Does the language speak exactly to the market you have defined in an appropriate voice? Do the visuals
make sense in the context of your target market?

Going back to the Zipcar example, take a look at how the company speaks to the target market it has
identified. Remember, Zipcar’s target market is “urban-dwelling, educated, techno-savvy consumers
who worry about the environment.”

Customer Requirements

Characteristics or specifications that should be present in a product for it to be deemed desirable by the
consumer

There can be two types of customer requirements:

1. Service Requirement
2. Output Requirement

Service Requirements: Intangible aspects of purchasing a product that a customer expects

to be fulfilled. It consists of elements like on-time delivery, service with a smile, easy-
payment etc. It encompasses all aspects of how a customer expects to be treated while
purchasing a product and how smooth his buying process goes.

Output Requirements: These are mostly the tangible characteristics, features or

specifications that a consumer expects to be fulfilled in the product. If a consumer is
availing a service as a product, then various service requirements can take the form of
output requirements. For example, if the consumer is hailing a metro cab, then on-time
arrival becomes an output requirement. For other products such as gadgets, the product
specifications like the loudness and clarity of a pair of speakers becomes its output
requirements.

Moreover, there are 3 levels of customer requirements:

1. Must Haves
2. Satisfiers
3. Delighters
 

Must Haves: These are the bare minimum requirements expected by the customers; if
fulfilled customers will be not show any exceptional appreciation but if not fulfilled, the
customer will show dissatisfaction. The customers do not explicitly express their desire for
these but expect it to be understood. For example, a washroom in a restaurant; the
customer will feel that it is imperative to have a washroom in a decent restaurant where
families or people from business organisations come to dine.

Satisfiers: There are the requirements that customers express their desire for, explicitly. If
you offer better or more of these satisfiers, then the customers will appreciate it more and
will be more satisfied. For example, the assortment of desserts in a buffet; the customers
might feel that they’re entitled to at least two as they’ve paid heavily for the buffet and will
be happier if they get four.

Delighters: These are the extras or the add ons. Absence of these will not leave the
customer dissatisfied; in fact, the absence of these characteristics might not even be
noticed. But adding these would increase the customer’s satisfaction greatly and will leave
them delighted. For example, you order a-la-carte in a restaurant and get complimentary
wine.
 
Hence, this concludes the definition of Customer Requirements along with its overview.