target market, niche market, market segments
What is a Target Market
In its most basic description, a target market is the specific audience, or group of people, a business seeks as prospective customers for its products or services. A market is broken into segments (called market segmentation) and businesses will evaluate the segments to establish who their customer is. It is critical to understand your target market, especially when kicking off an advertising campaign as part of a new product release. Without knowing who you are advertising to will lead to an epic failure, and waste of precious business resources. For example, you don't want to advertise a new style of soccer cleats to a senior citizen community. While you may have a few sales, your efforts would be far more valuable to advertise to a specific age range and gender (if applicable) within a market segment that is likely to purchase these new cleats. This is a very broad and basic explanation of what a target market is.
Marketing professionals can drive to very narrow and specific groups of people based on a variety of factors. Often these factors are determined through a lot of marketing research and statistical analysis to draw correlations between variables of the research. With all the available technology today, marketing professionals can even follow a prospective customer from the time they click an ad to the time they purchase a product (called purchasing funnel). There is a lot of data that can be gathered between that time. They can evaluate color preferences, make assumptions on gender, age, other products you may like, and on and on - they can get very detailed information and all of that data is consolidated for analytical purposes.
Target Market Segments
Markets are broken into three segments; geographic, demographic, and psychographic. Each segment contains attributes associated with a particular audience to help provide focus on who a business should market their product or service to.
1. Geographic: This is the physical location in which the customer resides. This includes country, state, city, and street address. For example, a political campaign office may use this type of data to ensure they are marketing to geographic areas that have historically been known to vote for a particular party.
2. Demographic: Features such as age, race, gender, and education are types of attributes that make up this segment. For example, a business that sells golf shirts may want to focus on men 30 years of age or older as this would be their primary customer.
3. Pychographic: These are the interesting details that make up the people within the geographic and demographic segments. These attributes involve attitudes, values, interests, personalities, and lifestyle. This is where the "real" work of market analysis comes in; finding relationships between people in geographic areas and demographic make up, then analyzing what "makes" these people.
Understanding Your Target Market Is Important
It is critical to understand your target market for many reasons. Having a solid understanding of who your customer is will ensure you produce effective marketing campaigns that focus on the "right" customer base. Businesses have limited resources (money and time) and we need to allocate these resources in the most efficient and effective way possible to ensure our business not only survives, but that it thrives. It's important to note that a business may have several markets for their product or service, so it's important that each market is recognized and that a specific message is conveyed for each market.
A classic example of this is the weight loss industry, there are a lot of different groups of people that want to lose weight, but their reason may be different; for example health issues, pregnancy weight, or just lacking motivation to name a few. You wouldn't want to advertise your weight loss pitch for health reasons to a woman that is just trying to lose weight after pregnancy- these are two very different messages.