can insider trading be legal – How much do you know about your target market? Are your marketing efforts relevant to potential customers? Like it or not, your products or services will not appeal to everyone. As a tycoon, you need to know how to define your target market in order to market your products to the right people at the correct time and in the right context.
target market versus target audience
First, make sure you understand the difference between a target market and a target audience. These terms are frequently used interchangeably, but they mean slightly different things.
A target market is a well-defined group of customers who may be interested in your product or service. For example, a company may offer gym clothing for men between the ages of 20 and 40.
Your target market may consist of fitness enthusiasts who keep up with the latest fashion trends and have an above-average income. These customers are more likely to buy from your brand.
A target audience, on the extra hand, is a specific group of customers that you generally want to reach through online advertisements, promotions, and marketing campaigns. Going back to the example above, you can set up an online advertising campaign for a local store opening.
This time, he’ll try to reach fitness enthusiasts ages 20 to 40 who live within five miles of his new store, for example. Basically, a company’s target audience is a subset of its target market.
“Everyone” is not a demographic group
Whether you sell consumer electronics, clothing, or high-end products, it’s critical to define your target market. Your products or services will not please everyone, no matter how great they are.
By knowing how to define your target market, you will be able to reach them more effectively and maximize your advertising efforts through a marketing strategy. This will result in a higher return on investment and give you a competitive advantage.
Let’s say you’re offering something that everyone needs, like household cleaning products. Some customers try to spend as little as possible on these products. Some prefer popular brands and are willing to pay a higher price. Others look for specific types of household cleaning products, such as organic or multi-surface cleaners.
As a small business owner, you may not have the budget and resources to develop dozens of products in each category. If, for example, you are selling organic house cleaning supplies, then you need to focus on the customers who are most likely to buy your products.
In this case, your target market may consist of customers who care about their health and the environment, have an above-average income, and prefer quality over quantity.
Another example is organic food. According to a 2019 survey, almost 30% of those who buy organic food products are between the ages of 18 and 29. Another survey by the Pew Research Center found that consumers who bought organic food did so for health reasons (76%) or to protect the environment (33%).
As marketers, these statistics are used to create advertising campaigns that are attractive and targeted to each group of customers.
Is it necessary to have a target market?
Whether you want to start a small business or enter new markets, you must first identify your target customers.
The people who are maximum likely to buy your products are those who have similar characteristics in terms of education level, age, income, lifestyle, and more. Location is also important, especially for physical businesses.
The success of your branding and marketing efforts largely depends on your ability to get your message across to the right customers. As a small business, you strength not be able to pay thousands for large ad campaigns.
Even if you do, money spent on poorly targeted campaigns will go to waste. That is why it is vital to know how to define the target market and then create specific messages for each target audience.
By doing so, you will create the right buyer persona and determine which customers are the most valuable to your business. In addition, you will be able to fill a gap in the market and address customer needs.
Identifying your target customers can also make it easier to assess the feasibility of new products or services and validate your business idea. On top of that, you’ll allocate your resources more effectively, build customer loyalty, and get the most out of your marketing budget.
You may be interested in knowing how to create a buyer persona questionnaire.
How to define the target market correctly?
There are several ways to define your target market, such as looking for customers with similar needs and wants. Even when you’re marketing your products to millions of people, imagine you’re still talking to just one person.
Think of your target market as an individual entity with highly specific needs. Rolls-Royce, for example, attracts wealthy customers who care less about price and more about luxury and prestige.
First, think about your product and the problems it will solve.
Then try to determine who is most likely to experience those problems. Group your leads by age, gender, income, location, profession, and purchasing power.
Also, consider the following factors:
- Education Level
- Marital status
- Ethnic origin
- hobbies and interests
- attitudes and beliefs
- religious affiliation
- buying patterns
- degree of loyalty
- Bargaining power of the buyer
- alternate products
Buyers’ bargaining power, for example, is strong when several other products similar to yours are available on the market.
The same happens when customers can buy the desired products in bulk, or the number of buyers is less than the number of suppliers.
In this case, customers may pressure suppliers to offer higher quality products at lower prices.
If that applies to you, it’s important to further narrow down your target market. Try to address specific “pain points” that may have gone unnoticed before defining your audience.
Create detailed profiles for each customer group based on demographic data, as well as psychological, behavioral, and geographic factors. If possible, try to identify underserved markets or market niches.
Here are more details on how to create a customer profile.
What is market segmentation?
A target market can be further divided into small groups of prospects with common attributes. This process is called market segmentation.
For example, if you sell sports supplements, your target market consists of men and women who work regularly and care about their health. You can further divide this market into groups of people who want to lose weight, build muscle, or recover faster from training.
Each group can be divided into several other groups by gender, preferences, health goals, etc.
For example, you could market some of your products to women ages 30 to 45 who want to get in shape after pregnancy.
The goal is to identify potential customers that can generate the most profit or segments with growth potential. Consider your company’s resources and goals, as well as the size, growth, and structural attractiveness of the identified market segments.
Types of market segmentation
Most marketers use demographic segmentation because the goods consumers need and their purchasing power largely depend on where they live. You can also segment your market built on consumers’ lifestyles, interests, and personality personalities.
There are four (4) main approaches to segmentation, and choosing one depends on your budget and business goals. These include:
- Mass marketing (zero segments)
- Segmented marketing (two or more segments)
- Marketing niche (one or more specific segments)
- Micromarketing (hundreds or thousands of highly specific segments, such as customers who live in a specific neighborhood)
A less common approach is individual marketing. Companies using this strategy customize their offers and marketing campaigns for each customer.
Commercial interior designers, for example, tailor their services (and prices) for each client. Furniture stores can create custom pieces on request.
Learn more about the different types of market segmentation that you can make use of.
Primary vs. Secondary Target Market
Few companies sell their products or services to only one target market. Most companies also serve a secondary target market that shows growth potential, hence the importance of knowing how to define the target market you want to reach.
Let’s say you’re selling high-end smartphones with advanced features for business professionals – that’s your core market. However, your products may also appeal to tech enthusiasts, such as software developers, who could be your secondary market.
A library that specializes in children’s books, for example, will market its products to young children, but more often than not, parents are the ones buying books for their children and are therefore a secondary market.
As a business owner, you want to create advertisements and marketing campaigns that appeal to both children and their parents.
When it comes to advertising, you have two options.
Choosing one largely depends on your budget and the types of products you offer. You can set up marketing campaigns that target your primary and secondary markets, or create individual campaigns for each. The latter option involves higher costs, but allows you to better target each customer group and expand your market reach.