A target market is a defined group of customers that a business wants to sells its products or services to. It’s important to note that having a target market doesn’t preclude others from buying from your business. Instead, you are simply choosing to focus most of your efforts on a group that represents your “ideal customer”.
Effectively identifying your target market is one of the most important steps towards business success. Getting it right will enable you to direct business resources to those customers with high potential for sales growth, interest in your products or services, and loyalty to your brand.
Although target market and demographic are closely related terms, they are not interchangeable.
A demographic represents a specific subset of people that share the same criteria. This could be age, gender, ethnicity, location or income, to name a few. A target market, on the other hand, is generally more broad.
A target market can be broken down into specific customer segments based on demographical data however, as a whole, your target market will likely encompass a wider range of individuals. This is because target markets can be affected by things like buying cycles and product shelf life, which don’t affect demographics. For example, if a person's car’s wiper blades just broke, they’re going to search for replacement blades — because they drive a car and need new wipers, not because of their age or gender.
For this reason, target markets are an example of big-picture thinking within the realm of marketing.
When it comes to defining your own unique target market, the first step is analysing your existing customers. What do they have in common? Chances are, no matter how diverse they seem, there will be a common thread that ties them together.
If it’s not immediately obvious — such as busy working mothers or high-income sports car owners — then it could be that they share a specific interest, such as sustainability. Of these common threads, which one is bringing in the most sales? Identifying your customers' commonalities is a great place to start defining your target market.
As in all areas of business, it pays to assess the competiton. Who are your competitors targeting? What kinds of people are walking through their doors? Who’s interacting with similar businesses online? Although this exercise may help you identify potential customers, the real value lies in identifying opportunities to give your product or service a point of differentiation and find a niche market opportunity the competition may be overlooking.
Depending on your business, this may be an easy exercise. In fact, identifying a hole in the market is how many merchants decide to take the leap into business ownership.
Stephanie Gough, owner of The Boho Camping Co, had been checking out the competition for years without even realising it.
“Most of the gear on the market is targeted at men — you see the same old blue, black and grey items in every camping store. There was nothing targeted at women, except the odd token pink or purple sleeping bag," she says.
"As an avid camper myself, I am part of my own target market. So, I started by thinking: what would I want to purchase? Bright, eye-catching products that are also functional — because at the end of the day, you still need to be kept warm and dry. Then I spoke with manufacturers and came up with the beautiful designs we have today.”
Now that you've identified some commonalities in your customer base, you can begin carving out your target market. When you know exactly who your ideal customer is, it’s far easier to tailor your messaging — making it more relevant and impactful to your audience than it would be if you took a broad marketing approach.
How your product or service will fit into your target's lifestyle? How and when will your target use the product? What features are most appealing to your target market?
The trick is to start broad. You don’t want to exclude any potential customers right off the bat. Instead, drill down as you go, becoming increasingly granular at each level.
For example, you might initially identify drivers as your main market. However, by digging into the numbers you may discover manual drivers make the bulk of your sales. Drilling further down, you might then notice it’s female drivers of European cars who make the most purchasers. These are your most lucrative customers, and the ones you should be investing the most time in attracting to your business.
An important part of profiling your customer base, whether existing or future, is to identify which websites and social media platforms they spend time on. This will help you to understand where your marketing funds are best spent.
For Stephanie, that's Instagram.
"Shipping bulky items overseas is expensive, so I’ve needed to hone my marketing to target Australian customers only," she says.
"I look at a healthy mix of popular hashtags and less trafficked hashtags, and boost my Instagram posts to my target audience — women interested in camping, the outdoors, hiking, travel photography, and similar categories.”
To determine the value you bring to your target market, start by compiling a list of your products or services and their features. Note what benefits each item provides, and the added value brought on by those benefits, and so on.
For example, if you own a mobile dog washing business, one of the main benefits for your customers is saved time. Your offering allows customers to invest the time they save into other important jobs or errands. Ultimately, you may determine the benefit of your mobile service is saving customers' time — a valuable resource that can't be bought. Other benefits include saving money on dog-washing products, and convenience.
Once you know the benefits of your offering, make a list of the types of people who would pay to receive those benefits. While this in itself is a broad audience, it’s a good base to start from.
Many marketers and business owners alike make the mistake of assuming everyone fits into neat and narrow boxes. This simply isn’t case. For example, relationships and families take many different forms in modern society — so if you decide your target market is the typical nuclear family with 2.5 children, you risk alienating potential customers that could feel excluded from your brand or product. For this reason, always take an inclusive approach to establishing and communicating with your target market – particularly in terms of the imagery and language you use.
At this point, you’ll hopefully have come to realise that not everyone can be a prospective customer — no matter how much of a crowd-pleaser your product or service is. However, by unearthing your niche market and its various segments, you can make your product and brand messaging more targeted and relevant, increasing the likelihood of making a sale.
Now that you understand the power of identifying your target market, it’s time to learn how to leverage that knowledge into a successful business strategy. Sign up to our Business Blog to cash in on valuable insights sent straight to your inbox.