In business, we often hear the term target market. But, what does that mean?
A target market is a group of people that have been identified as the most likely potential customers for a product because of their shared characteristics, such as age, income, and lifestyle.
Why is defining your target market important?
Defining your target market is important because you need to know who wants your product and what would influence them to purchase your product. Secondly, knowing your target will help you appeal to them so they keep coming back and spreading the word for new customers to want your product.
In other words, if you don’t know who your target market is, then you don’t know if you will be creating a product or offering a service that is going to appeal to the right customers to make it a success for you.
You also need a clear target for your marketing activities (social media posts, direct mail, paid advertising, email campaigns, etc.) so you spend your time and money most effectively.
Grouping Customer Characteristics
When thinking about the target market for your business, there are four aspects to consider:
- Age
- Gender
- Household income
- Parental status
Many businesses make the mistake of assuming that everyone wants their product. You should be able to describe your perfect customer based on demographics.
- Global
- Country
- State/region
- City
- ZIP code
If you are selling locally, the drive-time or mile-radius trade area should be considered for targeting customers. However, if you are selling online, you should define what state(s), region(s), or country(ies) that you want to target.
- Values
- Desires
- Personality
- Interests
- Lifestyle
Pyschographic insights can help you understand customer preferences, valuable information when it comes time to customize your product or service. Knowing these tendencies can help you assess if your target market is a good fit for what you offer.
- How customers approach the purchase decision
- The complexity of the purchasing process
- The customer’s role in the purchasing process
- Barriers along the path to purchase
- Which behaviors are most and least predictive of purchase-making
Taking the behaviors of your customers into consideration can help you better tailor your products to meet their needs.
Many companies gather online data to help them segment their customers by behavior. For example, they may have interacted with your company’s website, clicked on an online ad, left a review, purchased something in the past, or abandoned an online shopping cart. When someone researches a product or service, their behavior can reveal valuable insights into which benefits, features, use cases, or problems are most applicable to them.
What is the purpose of a target market?
Once you define your target market, that can point you in the right direction for selling your product to a specific customer with specific characteristics. For your product or service to be successful, you want it to be marketed to the right group of customers. You don’t want to define your target too broadly or too narrowly.
Knowing who your target customer is can help you reach the right people at the right time with the right message.
Market research from the Arkansas Small Business and Technology Development Center can help you identify your target customer and where to find them. Contact your consultant or local center to get started.