As you run your business, maybe you have a vague idea of your target market. However, a vague idea is not enough to compete in today’s killer business environment. Without a good understanding of your target market, you’ll probably be losing business to your competitors or missing out on opportunities to increase
What Is a Target Market?
To put it simply, a target market is a specific group of people most likely to buy a company’s products or services. It could be a smaller niche market or a larger market.
Sounds simple enough, right? Well, the whole idea of target markets suddenly becomes much more complicated if you offer a product or service with wide appeal, or you have a varied customer base. So, think about it, if you sell to “everybody,” then how are you supposed to narrow down your target market?
Not THAT type of market!
How Can You Identify a Target Market?
Start with Your Existing Customer Base
One of the very first things you do when identifying your target market should be to take a long, hard look at the people who already purchase from you. Even if your think your current customers are all over the map when it comes to ‘type’, chances are pretty good that they’ll share at least one or two common characteristics. If not, then maybe a shared interest is the common thread.
Once you begin identifying what the common factors are between your regular customers, you can start to use this information and refine your current customers into a target market.
When you start researching target markets, it’s really important that you don’t start with a narrow focus. Start broad, and become increasingly more specific as you go. For example, you might start by identifying auto mechanics as a potential demographic, but then start drilling down and find out that mechanics who service Mercedes, with a certain annual income who work in a particular area of town are your best customers. This amount of focus makes it much easier to tailor your messaging to appeal to these folks, even if your customer base is actually much wider.
Refining Market Segmentation
So, if your selected target market doesn’t cover all types of prospective customers, what can you do? Refine and segment that target market!
Market segmentation can help you figure out how your products attract individuals that belong to several different demographics within your target market.
Market segmentation will typically fall into four distinct categories:
Let’s take a look at each of these categories...
You probably know this one already, but indulge me. Geographic segments mean you can use specific areas to target people living there. This could be as large as an entire continent (North America, Asia, etc.), or as specific as a specific traffic corner.
Geographic segmentation usually includes at least one or two of the following:
- Country region
- Cities/towns of a specific population density
- Areas with specific population thresholds
- Localized areas (neighborhoods, specific retail outlets)
I know, we’ve been talking about demographics throughout this post, you get it. But demographic targeting is a really important part of market segmentation. Since you already know what a demographic is, let’s look at the most commonly used demographics:
- Family size
- Household income
- Level of education
Psychographic segmentation breaks people into categories by their personality, interest, values, etc. This is a powerful way of marketing the same product to groups of people that are from what seems radically different demographics.
Psychographic segmentation can focus on:
- Personal values
- Social class
- Activities, Interests, Opinions
Can you guess what behavioral segmentation refers to? Bet you got this one right... it’s how people behave. But take note, this type of segmentation will refer specifically to what your potential customers expect from your product, and how their real-life experiences influence their behavior.
Segmentation by behavioral attributes includes:
- Benefits sought
- Buyer readiness
- Degree of loyalty to a brand/product
- User status
Hitting your Target (Market)
Here’s hoping that this information has actually been useful to you. Just because your product appeals to a wide variety of people doesn’t mean you can’t learn more about them and market your business more effectively as a result.
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