The Key to Business Success: Selecting the Right Target Market
Don’t Waste Marketing Resources, Be Spot-On with Your Target Market
Often times when I teach a workshop, I ask the question, “Who is your target market?” More than once I have received the answer, “everybody”. Business owners like to believe that everyone in the world will buy their product or service. However, this is not the case, which can result in using valuable marketing resources to pursue the wrong customers. In order to increase sales, it is critical to understand your target market and determine the most effective ways to reach it.
What is a Target Market?
Defining the term, target market, is the first step to determine the right customers for your product or service. Simply stated, a target market is a specific group of people with shared characteristics to whom a business markets its product or service. Certain products or services appeal to a more encompassing target market while others fit into a niche market. A niche market is a subset of a larger market with specific needs or preferences. Niche markets may be based on categories such as price points (luxury vs. discount) or particular interests such as health and wellness (examples include alternative medicines or a particular type of milk, such as goat’s milk).
How to Identify Your Target Market
Market segmentation is key to identifying your target market. It is defined as the process of dividing a broad consumer or business market, which usually includes a mix of existing and potential customers, into sub-groups based on shared characteristics. These characteristics can be based on needs, interests, and personalities. However, there are a few different types of market segmentation, which are covered below. Marketers often use a combination of them. By doing so, they achieve a deeper level of granularity. This deeper dive is critical to developing proper messaging and marketing materials that resonate with your target market.
1. Behavioral Segmentation
Behavioral segmentation is based on a customer’s behavior. This may include how he/she buys a product or service (online vs. in a store) and then how that customer uses it. Also, it includes a customer’s expectations from a product or service. Behavioral segmentation includes:
- Brand loyalty
- Buyer readiness
- Expected benefits
- Usage frequency
2. Demographic Segmentation
You are probably familiar with the term, demographics. Often at the end of a survey, you will be asked about certain demographics, such as your age and education level. This type of segmentation is used by companies targeting consumers as their customers. The usual attributes targeted by demographic segmentation are:
- Annual household income
- Education level
- Geographical location
- Household size
3. Firmographic Segmentation
Firmographic segmentation is similar to demographic segmentation except it is used for classifying companies. This data is critical for business-to-business (B2B) companies when defining their target market. Firmographic segmentation includes:
- Annual revenue
- Business type
- Company size
4. Psychographic Segmentation
The final type of market segmentation is psychographic. This type of segmentation classifies consumers according to their psychological and personal traits, such as values, beliefs, and attitudes. With psychographic segmentation, marketers learn about why a customer buys a product or service. For example, a customer may buy Aveda hair care products because they are labeled as cruelty free, which means using non-animal approaches to testing the safety of its products and ingredients. However, B2C as well as B2B marketers use this approach when targeting customers. Psychographic segmentation covers:
- Personal values
- Religious beliefs
Use Your Marketing Resources Wisely
Without knowing your target market, it is difficult to properly direct your marketing efforts. However, once your target market is determined, then marketers can develop messages that will resonate. They should lead to an action, such as buying or recommending a product or service. Also, marketers will know the most effective ways to deliver these messages, whether it be an email, text, or a direct mail piece.
By properly identifying your target market, you will be able to use your resources more efficiently. As a result, business success will more likely follow.
Learn More About Your Target Market
As you have read, there is much to consider when determining your target market. Even though your product or service may appeal to a broader base of customers, it is still key to learn as much as possible about them. This is an ongoing process. As a result, astute business owners continually monitor market conditions. And, in order to maintain profitability, they make appropriate adjustments over time.
If you are interested in learning more about target markets, check out “Target Marketing and Research”, the second session in the Mastery Workshop Series hosted by the University of Georgia Small Business Development Center. This workshop occurs on Thursday, July 21, 2022, from 9 AM to noon. We look forward to seeing you there!
August 10, 2023
September 26, 2022