Entrepreneurs and sales teams should be aware of their customers. That includes knowing their priorities and interests to analyze who’s most likely to buy. It sets up an organization to prioritize deals that they’re most likely to win. Effectively, it means that small organizations can compete with large businesses by targeting a niche market. However, targeting specific groups doesn’t necessarily mean excluding the rest. It’s a way of focusing on the brand message and taking it to people who will buy it as they find value in it. It’s a great way to generate business and make operations more affordable, effective and efficient. Organizations can reach out to potential clients who’re more likely to buy and come back. That’s why organizations spend a lot of money and time defining their initial target markets and follow through with specialized advertisements, social media campaigns and special offers.
Target market is a phrase that’s often used in business and considered a part of strategy implementation but what’s the meaning of target market?
Here we’ll discuss what is a target market, the meaning of target audience, tips to define a target market and some examples to further illustrate what a target customer means.
What Is A Target Market?
The target market represents a group of people who’re identified by an organization as potential buyers of their products and/or services. They’re identified based on certain characteristics that they share, which are most likely to attract them to a particular product/service. Establishing a target market early on allows organizations to tailor their products to trends. This ensures they spend their precious budget on marketing and advertising to people who’ll buy the product and may even stick to the brand.
Target Market Definition
A target market can be defined using multiple approaches of market segmentation. Depending on how a business wants to sell or how it wants to improve, these are a few ways to define the target market:
Defining By Demography
Probably the most important segmentation to define a target market is through demography. Knowledge related to demography is crucial for most businesses. The demographic definition is based on certain measurable statistics such as age, gender, income, education, race, religion and marital status. For instance, a liquor manufacturer will look at demography before launching an alcoholic beverage in a region. Different age groups prefer different beverages and their income level determines how likely they are to buy them.
Defining By Geography
When organizations define consumers based on location, it means segmenting based on geography. An organization has to look at the scope of business and use data such as home addresses, postal codes, city, province, state and country. Groups of people in particular geographic areas may need specific products and services. Geographic segmentation works on this principle. For example, a business offering lawn care services may want to direct its marketing efforts in towns or localities inhabited by older residents in high percentages.
Defining By Psychographics
Psychographic grouping of the target customer means dividing the market based on lifestyle preferences or socioeconomic conditions. Socioeconomic groups range from the highly educated and affluent at the top to the unskilled and uneducated at the bottom. Classification based on lifestyle preferences involves people’s likes, values, beliefs and interests. Businesses can look at whether people prefer urban fashion or suburban lifestyle, whether they’re pet lovers or if they’re keen on environmental issues. This segmentation is defined by the idea that what people choose to buy reflects their socioeconomic class or lifestyle preference.
Checking Out The Competition
It’s a great step to identify who the competitors are targeting and who their current customers are. This lets an organization either identify a group they should’ve previously targeted or find a niche that they and their rivals are overlooking.
Analyzing The Product
It’s good to go back and do the research again. Going over the features of a product or service can identify areas that could boost their versatility with a slight modification or rectification. Organizations must try to link common preferences between different target groups and analyze the possibilities of incorporating all of them into an existing product. It can open up avenues to tap a bigger target market.
It’s unwise to break down the target too far. There’s always scope to Make Smarter Decisions like tapping into multiple niche markets. The marketing message makes the difference; therefore it’s smart to analyze if the same message effectively reaches all.
What Is Target Audience?
Target market and target audience meaning frequently get overlapped and confused, but there’s a clear distinction between the two. For a business, the target market is the end customer that buys from them whereas the target audience are people that the brand’s advertising will be focusing on. If an organization knows who to show it to, they’ll know who to sell it to.
Take McDonald’s for example; the Happy Meals are made for kids but they need to convince the adults to buy them. The kids are the target market but the responsible adults are the target audience. By clearly defining their target market and target audience, McDonald’s makes advertisements with a focus on aspects like nutritional value and quality of meat, things that kids won’t be interested in; they’re targeted with images of mouth-watering treats.
Another popular example of a target audience is Old Spice customers. They successfully defined their target audience when they realized that more than 50% of men’s deodorants and body washes are bought by women. They soon started focusing on women by bringing in famous women celebrities as brand faces and using a tagline that said, “The man your man could smell like”.
So what is a target group? A target group is a group of people that a campaign or policy is trying to influence through various strategies. It could be the target market or target audience.
Importance Of Target Market Definition
It’s not unusual to wonder why we would want to target a specific group instead of a larger mass. Surely, marketing to more people will generate more sales. However, while a wider net may get a couple of valuable catches, it may also end up with a barrel of fish that nobody wants. Fishing needs the right equipment, the right bait and the right place to fish at.
By aspiring to make everyone a potential customer, organizations can focus less on people who actually need and can benefit from their product. This means losing their attention and a potential end-customer. By focusing marketing and advertising efforts on clearly defined sections of the market, organizations can attract more customers who’ll value the brand and help the business grow. In addition to customer attraction and value addition, target marketing is also important for:
- Developing the product line after solving a specific need
- Setting the right prices
- Determining channels for flawless marketing
- Finding and highlighting the best features
- Determining SEO criteria and choosing correct keywords
A specific and narrow target market ensures that organizations don’t spend too much time and/or money to cast a wide net. This enables them to work with considerably lower overhead and convert greater numbers of potential customers.
Examples To Explain The Meaning Of Target Market
Let’s look at these famous examples to better understand the meaning of target market:
Nike offers apparel, shoes, accessories and equipment to athletes and consumers who exercise regularly. They work with a fitness-minded audience and athletes—a well-defined target market. They mainly classify their segments into young athletes and runners. A segment of their products targets children who exercise and play frequently. These can be kids who have taken up a hobby or those playing in sports leagues. They have a similar, broad collection of apparel and shoes for avid runners.
Starbucks has evolved and remodeled to cater to both the new generation and classic customers. They have distinctly defined their target market into three categories:
- Tech-savvy adults who fall under the forward-thinking crowd and make use of the Starbucks mobile app to the fullest.
- 25- to 40 year-olds who form their largest demographic base. Locations have been remodeled to accommodate their needs and preferences.
- Working professionals who have an urban lifestyle and specific preferences, including the coffee they drink and where they buy it from.
Executives need to have a firm grip on their target market if they are to develop effective, pointed value propositions. The viability and success of the entire process of sales and the effort that goes behind it rest on the knowledge of who’s buying the product and what influences them to do so. Target markets offer sales teams the necessary information for strategy development required to breach the market and make sales efficiently. Not being on top of emerging markets can halt growth and make us lose lucrative business opportunities.
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