What is Target Market? definition

Can you describe your ideal customer?

Is it someone in the business landscape? Maybe it’s a supervisor who needs to invest in new technology to make their team more productive? Is it an everyday consumer? It could be a mother or a father looking for a way to solve a problem without spending too much cash?

One of the biggest mistakes that any business owner can make is to try to be everything to everyone. No matter how far-reaching the benefits of your products or service might be, every solution has an ideal customer. That’s your target market.

A target audience, or “target market,” is a group of consumers that are most likely to need whatever you’re selling. These people are perfectly attuned to your business. They have the problem that your service or product addresses, and they’re looking to buy.

Knowing your target market means that you can customize your sales and marketing strategies to suit that specific group. When you concentrate your marketing efforts and the people most likely to buy from your company, you waste less money, and get better results.

Understanding the Appeal of Target Marketing

Imagine you’re a business selling accounting software.

Your software helps accountants to get more work done in a shorter amount of time while reducing the risk of inaccuracies.

Your target market in that case would be accountants looking for new software.

There are other people that you might attract too. For instance, a business leader might buy your software to support its financial team. A freelancer might invest in your tools so that they have more control over their cash flow. However, of all the possible market segments you can reach, there’s one that delivers the most value.

Learning how to focus your marketing efforts on the right target market is a powerful tool for any small business, or large enterprise. It means that instead of throwing your metaphorical net into the ocean where it may eventually catch something, you cast it into a pool of hungry fish.

When you know who your target customers are, you don’t spend as much money on people who will probably never convert.

Target marketing simplifies everything from your social media advertising campaigns, to your decisions of where and when to sell your products.

Why Do Companies Need a Target Market?

Understanding your customer base, or the group of people you’re most likely to appeal to, is essential in any holistic marketing strategy. When your company has a marketing plan that’s based on a specific selection of potential customers, you can:

Speak your customer’s language: Knowing who your niche market is means you can research and understand your customers. This does wonders for your marketing plan. Remember, the kind of language you use with millennials will be different to the language you use for baby boomers and business leaders. Speaking your customer’s language means you’re more likely to earn their attention and interest.
Improve conversions: Because you know what matters to your audience based on your market research, you can more easily convert your niche market. You’ll know which offers are most likely to appeal to current customers and future leads. That means more sales, and more repeat clients too.
Differentiate your brand: A target market is part of what makes you unique. You want to set your company aside as the go-to choice for your preferred market. To do that, you need to understand who you can serve best. Knowing your target audience means you can also focus on building a brand around the unique elements that matter most to them.
Build customer loyalty: The more you get to know your specific target market, the more you’ll discover what it takes to make customers loyal. As clients begin to identify with your brand, they’ll transform into advocates for your company. This opens the door for things like referrals and loyalty programs.
Enhance products and services: Knowing your audience intimately also helps you to look at your products and services in the right way. You can put yourself in the shoes of the people you’re selling to, and therefore deliver better results.
Spend less: A target market means that you save money on pointless ad campaigns and sales strategies that appeal to the wrong people. When you’re building your company, keeping costs low is crucial. Knowing your target market ensures that you don’t spend too much on marketing campaigns that aren’t right for your brand.

How Do Companies Define a Target Market?

So, what defines a target market?

As your business grows and evolves, you’ll learn more about your target audience. This will make it easier to build user personas based on your ideal clients. However, during the initial stages of targeting, you’ll often use some basic market segmentation techniques.

For instance, you might begin by looking at some of the common characteristics that your existing customers share. What kind of education level do they have, for instance? What’s their marital status, or their family status?

One of the first decisions you’ll need to make is whether you’re a B2B or B2C company. In other words, do you sell to consumers, or other businesses?

Usually, there are four main kinds of segmenting used in choosing a target market. These are:

Demographic segmentation: Usually, demographic segmentation focuses on things like marital status, religion, education, gender, and age.
Psychographic segmentation: Here, you look at a person’s personality, as well as their lifestyle, interests, beliefs, and values.
Behavioral segmentation: This involves things like spending habits, user status, or brand interactions – the things that people do with your company.
Geographic areas: Finally, you might segment your audience based on their country, region, or just the areas that you can ship to.

If you’re in the B2B landscape, then you might also use segmentation elements to decide what kind of company you’re going to target. For instance, you might choose a business with a specific annual revenue, or a brand in a certain industry.

Often, the user persona for your ideal customer will include information from a lot of different segmenting elements. For instance, you might pick married women who live in a certain part of New York, and frequently spend more than $200 a week on clothes.

The chances are, you’ll even discover a few “target market” options that all have value for your company. You can target different people, but you’ll need to make sure that you maintain your brand consistency, while speaking the language of different clients.

How to Find Your Target Market

Finding your target market is often the first step in discovering your position in your industry. It’s how you develop a good idea of the kind of “market share” you want to have in your space, and who you want to cater for.

Before you can start thinking about the income level of your ideal customer, or what kind of marketing messages you’re going to use to attract your ideal client, you need to ask some basic questions about your own business. For instance:

What problem does your company solve? The best businesses succeed because they offer solutions to existing problems. Hopefully, when you began building your business plan, you designed your company around a specific solution. For instance, maybe you design shoes for men that are shorter who want to have more confidence. Perhaps you’re a B2B brand that helps to connect companies with Instagram influencers. What do you do to help people?
Who has the problem that you solve? When you know what kind of problems you can overcome for your customers, you can decide who’s most likely to have that problem. For instance, in the example above of the B2B brand, companies seeking Instagram influencers will probably be those looking to improve their brand reach. These companies might have a young target audience that spends a lot of time on social media.
Are there subsections in your target audience? Depending on what you have to offer, there might be more than one sub-section to your audience. For instance, if you sell social media marketing tools, you could appeal to small, mid-sized, and large businesses with different numbers of followers.

Don’t be afraid to get specific about the pain points that you’re going to solve, and the different kind of customers that might have those issues. You might even find that it’s useful to create a list of people who wouldn’t fit into your target audience.

For instance, if you’re a company that helps bigger businesses to grow their brand reach by providing them with demographic information on their clients, or in-depth market analysis, then you wouldn’t want to attract small companies or freelancers.

Getting to Know Your Target Market

Most companies learn more about their target market and audience as they evolve. Everything from your social media marketing campaigns to your email newsletters will give you insights into your audience. Initially, you might start off by knowing which generation your audience belongs to, and which stage they’re in from a life development perspective.

However, as you continue to interact with your audience, you might discover more about how your audience behaves, and what you need to do to support them in their buying journeys.

If you’re launching a new product, or a new business, then you’ll have limited information to work with. The good news is that you can begin to home in on your ideal buyer persona in a few ways. For instance, start by looking at any existing customers you might have. Even if you only have a couple, you can get an insight into why they buy from you through surveys and polls.

If you have no customers at all:

Check out the competition: Get online and use your favorite search engine to find a company with a product like yours. What do the customers for this business look like? What kind of conversion rates do they get by targeting that audience? Is there a niche that your competitors are overlooking?
Get to know your product or service: List all the features or capabilities of your product or service. Next to those features and capabilities, make a list of the benefits that they provide for the right customer. For instance, if you’re a graphic design company offering design services, a benefit could be a more professional company image. It makes sense that a freelancer or new business would want that benefit.
Research your industry: As well as looking at your competition, it might make sense to look at any reports on your industry and what kind of customers are drawn to it. For instance, it’s safe to say that Gen Z and millennials are often more comfortable with things like video conferencing tools and artificial intelligence than their older counterparts.

Designing a Buyer Persona

With a market analysis and some extra information, you can begin to create a more detailed document describing your target audience. This is your buyer persona. Your persona tells you everything you need to know about the people with similar characteristics that might respond to your marketing activities. A buyer persona needs to cover all of the following information:

Age or age range
Location (geographic)
Gender (or identity)
Income level
Education level
Family or marital status
Occupation or business type
Psychographics (personality, values, interests, and attitudes)
Hobbies and lifestyle requirements
Behavioral characteristics (impulse buyer, or frugal person, for instance)

Your buyer persona gives you a map that you can use to determine how your product or service will fit into the specific lifestyle of a person or customer. For instance, is your target customer a single bachelor who wants to have more fun in his free time? If he’s the kind of person who prefers to save money than spend, are you choosing the right price point to sell your product at?

How easy is it going to be for your customer to get your product based on their location, will they understand how it works, or will they need further guidance?

Your buyer persona will also give you an insight into how you can reach your target audience. For instance, are they more likely to see an item advertised on TV, or hear about it on the radio? Are they comfortable searching online or using social media?

Evaluating Your Target Market

Once you have a basic decision of what your target market is going to look like, make sure that you test your idea. It sometimes takes a little trial and error to track down the audience that’s right for you. Before you start pursuing your new customers, ask yourself:

Is your audience too niche, or not niche enough? Are there enough people out there who match your description of the perfect customer? If not, then you might need a broader audience. On the other hand, if you know that millions of people could fall into your target market, should you try narrowing your focus more?
Why will my audience want to buy from me? Once you know there’s an audience for your product, make sure that they have a reason to purchase from you. After all, there may be other businesses out there similar to yours. What is it that makes your company special?
How will I connect with my audience? How are you going to reach your target audience and learn more about their journey? Is your audience easily accessible? Where do they usually spend their time? For instance, can you reach them through search or social media?
How much competition is there? Are you in a market where there are dozens of other companies competing for the same customers as you? If so, you might struggle to get your business off the ground.
Do I need to target other markets too? Remember, you can have more than one focus audience. For instance, a company selling toys for children would be targeting both the children who see the toys, and their parents, and other family members.

When you’re breaking your audience down into different segments, don’t go too far. If you can reach two groups with the same message, this is a sign that you’re going too deep. Stick with focusing on target customers that are unique. For instance, a bakery store might have one target audience of people shopping for birthday cakes. Another target audience could be people shopping for treats who want to stick to their diet.

Commit to Constant Learning

One of the reasons that people struggle so much with choosing their target audience, is that they approach targeting as a set-it-and-forget-it strategy. However, the truth is that you should be constantly learning about your customers and discovering new things about their experiences with your brand.

Human beings are constantly changing. New trends and shopping experiences could make a huge difference to the way that you reach your audience over the years. With that in mind, make sure that you’re committed to constantly learning and developing your knowledge.

Marketing automation tools and website analytics will help you to challenge what you know about your customers as your business evolves. You can use these services to A/B test different segments, learn about how different people engage with your content and more.

Good luck tracking down your target market.