What Is A Target Market? (Definition, Importance And Tips)
By Indeed Editorial Team
Published 27 July 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
It is important for a business to identify its target markets to ensure it directs sales, marketing and advertising activities towards the right customers. Marketing professionals conduct in-depth market research, understand the requirements of target customers and determine how their product fulfils these requirements. If a career in marketing interests you, learning about target markets can help you create successful marketing campaigns. In this article, we discuss the answer to "What is a target market?", understand its importance, learn the difference between target market and audience, look at the steps for identifying a target market and discover various marketing strategies.
What Is A Target Market?
To answer to the question, "What is a target market?", this term refers to a group of people who share characteristics, including similar behaviour and product requirements. Understanding the meaning of a target market can help marketers appreciate the importance of their role in the success of a company. Identifying these groups can help a company determine the customers that are most relevant to its business.
This is an important stage in the marketing strategy of a company and may play a key role in its success and revenue generation. No matter what the size of the organisation, it is important that a company prioritises identifying its target audience and creating strategies to reach those customers.
Why Are Target Markets Important?
Identifying target markets can help marketers direct their resources and marketing efforts to those customers who are the most likely purchasers of the company's product. Target markets can help a company create marketing and communication strategies that appeal to these potential customers. Identifying the most relevant audience can help a company create products and services that focus on the requirements of their potential customers.
Knowing its target customers also helps a business determine the optimum prices for its products and maximise its sales. Once a company identifies its potential customers, it becomes easier to determine where it can find these customers and the most efficient channels to use to reach them. It can also help a company direct its promotional activities in ways that customers can relate to. Target markets can also help a business learn more about its customers and identify opportunities for developing other products and services.
Difference Between Target Market Vs. Target Audience
People often use the terms "target market" and "target audience interchangeably", but there is a difference between the two phrases. A target market is a broader term that includes all the people who are potentially interested in a company's product and is usually larger than the target audience.
The target audience comprises a subset of people who may be relevant to the company and allows it to target its marketing and advertising efforts toward these groups. For example, when a company introduces a smartwatch with an in-built heart rate tracker, pulse rate checker and fall detection settings, its target market may include distinct types of people, such as senior citizens or fitness-conscious adults.
How To Identify A Target Market?
It is important for marketers to identify their target market in the initial stages of any campaign or launch. Here are the steps that they can follow to learn about the market:
1. Learn about the product or service
The first step may be for marketers to learn about the features and benefits of the product that they are marketing to give them a better understanding of how it can help the customer. This can help identify the broad group of customers most interested in what the company is offering. For example, if a company sells pens to customers and one of its features is an improved grip, the benefit of the product for the customer is that it may enable good handwriting.
2. Define the ideal customer
After studying the company's products, it is important for marketers to determine the customers who may be most likely to have an interest in their products and services. Some questions that can help businesses define potential customers are:
What type of people face the challenge that the product solves?
What are the interests of these users?
What products do they buy now?
When do they require the product?
Why do they choose one product over a competitor's products?
Where might the customer use the product?
3. Study the market
The next step is to conduct market research and divide the market into smaller categories. This includes demographic, psychographic and behavioural segmentation. During the market research phase, marketers may talk to consumers from different segments and interview the competitor's customers. They may also interview the former customers of their competitors to understand why they left the competitor. Through this, they can study the characteristics of different customers, learn about their interests and identify those groups who may be potential customers.
4. Analyse the competitors
A key step during this process is to study competitors' actions. This can help marketers obtain valuable information, as competitors may have the same target market and audience. By studying their targeting strategies, segmentation and market characteristics, marketers can understand what worked for them and determine areas for improvement. Different tools available in the market can help marketers conduct detailed competitor research and organise their findings and data.
5. Create target personas
After studying the product, segmenting the market and analysing customers, businesses can determine their target market. They can then create personas that best represent their target market. A user persona generally includes demographic, psychographic and behavioural information. It helps them to personify and learn more about their target market.
Types Of Target Marketing Strategies
The four target marketing strategies that marketers can implement are as follows:
Often known as undifferentiated marketing, mass marketing targets the entire market instead of a particular segment or group. This type of strategy treats the whole market as one unit and pays little attention to the differences and characteristics of individual groups of people. Mass marketing can work successfully for brands with a higher appeal and relevance to different types of people. Examples of this include such essential products as toothpaste, soap and other fast-moving consumer goods (FMCG). This strategy can help businesses reach large audiences and reduce their marketing costs.
Marketers often refer to this strategy as segmented marketing, where companies divide the larger market into smaller segments. They then identify segments most relevant to their brand. After analysing the characteristics of the segments, they create marketing strategies for each segment, depending on their requirements and interests. This strategy can help them reach a wider audience and generate revenue from different segments by using the same offering but personalising their product messaging.
Businesses often refer to niche marketing as targeted marketing. It is a highly focused type of marketing where a company identifies one segment of the entire market. This segment is the company's most relevant group and is likely to yield the most successful results. It then focuses all of its marketing and communication efforts on this segment. Niche marketing can be a successful strategy for highly specialised products or services. Companies with more limited resources may find concentrated marketing a helpful solution to increase their visibility in a particular segment.
Micro marketing is more advanced than niche marketing, as it identifies and targets subsets within a niche market. This is a hyper-focused type of marketing where marketers focus on the common characteristics of people within these segments. Organisations may use this type of marketing to target a specific group of people. Some examples of micro-marketing include job role-focused, industry-based, or need-based micro-marketing.
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