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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.
Identifying the target market is a key part of the decision-making process when a company designs, packages, and advertises its product.
Part of creating a new product is envisioning the consumers who will want it.
A new product must satisfy a need or solve a problem, or both. That need or problem is probably not universal unless it reaches the level of indoor plumbing. More likely, it is needed by a subset of consumers, such as environmentally-conscious vegetarians, or science nerds, or outdoor enthusiasts. It may appeal to a teenager or a middle-aged professional, a bargain-hunter or a snob.
Envisioning your likely target market is part of the process of creating and refining a product, and informs decisions about its packaging, marketing, and placement.
Marketing professionals divide consumers into four major segments:
Demographic: These are the main characteristics that define your target market. Everyone can be identified as belonging to a specific age group, income level, gender, occupation, and education level.
Geographic: This segment is increasingly relevant in the era of globalization. Regional preferences need to be taken into account.
Psychographic: This segment goes beyond the basics of demographics to consider lifestyle, attitudes, interests, and values.
Behavioral: This is the one segment that relies on research into the decisions of a company's current customers. New products may be introduced based on research into the proven appeal of past products.
Each of the four target markets can be used to consider who the customer for a new product is.
For example, there are an estimated 100,000 Italian restaurants in the U.S. Clearly, they have enormous appeal.
But a corner pizza joint might appeal mostly, although by no means entirely, to a younger and more budget-conscious consumer, while an old-fashioned white tablecloth place might be dominated by older folks and families who live in the neighborhood. Meanwhile, a newer place down the street might cater to an upscale and trend-conscious crowd who will travel a good distance for the restaurant's innovative menu and fancy wine list.
In each successful case, a savvy business person has consciously considered the ideal target market for the restaurant and has tweaked the menu, decor, and advertising strategy to appeal to that market.
Few products today are designed to appeal to absolutely everyone. The Aveda Rosemary Mint Bath Bar, available for $23 a bar at Aveda beauty stores, is marketed to the upscale and eco-conscious woman who will pay extra for quality. Cle de Peau Beaute Synactif Soap retails for $110 a bar and is marketed to wealthy, fashion-conscious women who are willing to pay a premium for a luxury product. An eight-pack of Dial soap costs under $5 on Amazon, and it is known to get the job done.
Part of the success of selling a good or service is knowing to whom it will appeal and who will ultimately buy it. Its user base can grow over time through additional marketing, advertising, and word of mouth.
That's why businesses spend a lot of time and money in defining their initial target markets, and why they follow through with special offers, social media campaigns, and specialized advertising.
Dividing a target market into segments means grouping the population according to the key characteristics that drive their spending decisions. Some of these are gender, age, income level, race, education level, religion, marital status, and geographic location.
Consumers with the same demographics tend to value the same products and services, which is why narrowing down the segments is one of the most important factors in determining target markets.
For example, people who fall into a higher income bracket may be more likely to buy specialty coffee from Starbucks instead of Dunkin' Donuts. The parent companies of both of these brands need to know that in order to decide where to locate their stores, where to stock their products, and where to advertise their brand.
A business may have more than one target market—a primary target market, which is the main focus, and a secondary target market, which is smaller but has growth potential. Toy commercials are targeted directly to children. Their parents are the secondary market.
Identifying the target market is an essential part of a product development plan, along with manufacturing, distribution, price, and promotion planning. The target market determines significant factors about the product itself. A company may tweak certain aspects of a product, such as the amount of sugar in a soft drink or the style of the packaging, so that it appeals more to consumers in its target group.
As a company’s product sales grow, it may expand its target market internationally. International expansion allows a company to reach a broader subset of its target market in other regions of the world.
In addition to international expansion, a company may find its domestic target market expands as its products gain more traction in the marketplace. Expanding a product's target market is a revenue opportunity worth pursuing.
It depends. Broadly speaking, a product may be designed for a mass market or a niche market, and a niche market can be a very small group indeed, especially in a product's early introductory phase.
Some carbonated beverages aim for a practically universal market. Coca-Cola had to branch out to 200 markets abroad to continue growing its customer base. Gatorade is owned by Pepsi Cola, but the brand is positioned as a drink for athletes. The soda brand Poppi, which is branded as a "Healthy, Sparkling, Prebiotic Soda with Real Fruit Juice, Gut Health, and Immunity Benefits," is clearly aimed at a younger, healthier, and more trend-conscious target market.
Consider a casual apparel company that is working to build its distribution channels abroad. In order to determine where its apparel will be most successful, it conducts some research to identify its primary target market. It discovers that the people most likely to buy their products are middle-class women between the ages of 35 and 55 who live in cold climates.
It's reasonable for the company to focus its advertising efforts on northern European websites that have a strong female audience.
But first, the company may consider how its apparel can be most attractive to that target market. It may revise its styles and colors and tweak its advertising strategy to optimize its appeal to this new prospective market.
A target market defines a product as well as vice versa.
Once a target market is identified, it can influence a product's design, packaging, price, promotion, and distribution.
A product aimed at men won't be packaged in pink plastic. A luxury cosmetic won't be sold in a pharmacy. An expensive pair of shoes comes with a branded cloth drawstring bag as well as a shoebox. All of those factors are signals to the target audience that they have found the right product.
Identifying the target market is part of the process of creating and refining a new product.
A target market can be translated into a profile of the consumer to whom a product is most likely to appeal. The profile considers four main characteristics of that person: demographic, geographic, psychographic, and behavioral.
University Lab Partners. "4 Key Types of Market Segmentation: Everything You Need to Know."
National Geographic. "How Italian Cuisine Became as American as Apple Pie."
Aveda. "Rosemary Mint Bath Bar."
Cle de Peau. "Synactif Soap."
Amazon. "Dial Antibacterial Bar Soap, Gold, 4 Ounce (Pack of 8)."
Chron. "What Is a Secondary Target Audience?"
Coca-Cola Australia. "Coca-Cola: From Start-Up to Global Enterprise."
Pepsico Partners. "Gatorade."
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