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Target markets

Part 1 - What are they?

A target market is a group of customers or client who will purchase a specific product or service. 

This group of people will often have something in common e.g., age, gender, hobbies or location.

Your target market is the people who will buy your product or service.

These people can be motivated to do one of three things:

  • Fulfill a need
  • Solve a problem
  • Satisfy a desire

To grow and maintain your business, you need to identify:

  • Who you potential customers are?
  • What they do?
  • What they like?
  • Why they would buy your product or service?

Not taking the time to get this right means that it will cost you time, money and potentially business success.

You may have assumptions, but research is critical as you need to confirm your assumptions.

Once you understand who your target market is, you need to keep up with your market research. 

The motivators and drivers are likely to change over time. 

This will help you anticipate changes in your business and how your business evolves.

Types of Markets

  • Consumer: People who buy products or services for personal use
    • You or I shopping for clothes, groceries and other goods and services
  • Institutional: This services Society i.e., it provides products and services for the benefit of Society
    • Hospitals, non-profit organisations, government organisations, schools and universities
  • B2B (Business to Business): Business that purchase products off other businesses to run their operations
    • Raw or technical products needed for daily operations e.g., office supplies or services
  • Reseller (Intermediary): Businesses that act as channels for goods and services between other markets
    • Wholesalers, retailers, resellers and distributors

 

Part 2 - Determining yours

When determining your target market it is wise to consider the following:

  • What product or service are you offering?
  • What is your average customer's motivation for purchasing it?
  • Does your offering...
    • Meet a basic need?
    • Serve a particular want?
    • Fulfill a desire?
  • What is the...
    • Lifecycle of your product/service?
    • Availability of the product/service?
    • Cost of the average customer's purchase?
  • How many times or how often will customers purchase your product/service?
  • Do you foresee any upcoming changes in your industry/region (either positive or negative) that will affect the sale of your product/service?

Investigating the market where you product/service will be offered is also essential. 

If you wanted to open a coffee shop in a particular area, it would be wise to:

  • Visit the locality to see what other businesses/shops are there
  • Who would be your competitors (if any)?
  • Research online for the demographics of the area
  • Talk to local people in the area
  • Consider who your product/service would want to target in that area?

All this information should give you a clearer understanding of a realistic target market.

It sounds a lot of work but it can save you a lot of time and expenditure in the long term.

 

Part 3 - Market segments

Market segments are groups within your target market.

They are generally broken down into four categories:

  • Demographics
  • Psychographics
  • Geographics
  • Behaviours

This allows you to fine-tune your marketing and specifically position your product and service. 

You may even wish to divide your ad campaign into four sections and target specific markets with messages that will be applicable to those audiences.

An example of this would be a store that sells baby clothing may target females aged between 25 - 45 with children under the age of five who have a household income of $100,000.

This target market could be broken down even further by targeting the following lifestyle segments:

  • Fitness-orientated mothers
  • Career-orientated mothers
  • New mothers

You could create unique marketing messages that speak to the 'pain points' of each segment. 

A 'pain point' is a problem or frustration that your target customer has that motivates them to purchase your product or service.

The more specific and accurate you can communicate to your target market, the greater impact and success you will have.

 

Part 4 - Understanding your target market

Once you have determined who your target market is, your next goal is to find out everything you can about them, for example:

  • Who they are?
  • What they like?
  • Where they shop?
  • Why they buy?
  • How they spend their time?

Markets change, just like people. 

Regular market research is vital part of any successful business.

This will develop into a beneficial habit if you start this early on in your business journey.

Types of Market Research

Surveys: 

  • Anonymous surveys will often garner the best results since names are not attached.
  • Telephone: As this is time-consuming, it is better to have a third-party business conduct this for you.
  • Online: There are many web-based services that can assist you here.
  • Consider hiring a professional market research business to lead or assist with the process, if your budget can accommodate it.

Website Analysis: 

  • Tracking your website traffic is an excellent way to research your existing and potential customer's interests and behaviour. This can also assist with ensuring your website (design, structure and content) is catering to the people who are using and your prospective clients
  • User-friendly website traffic analytics programs can be of great assistance in showing you who is visiting your site, where they are from and what pages of your site they are viewing

Customer Purchase Data (Consumer Behaviour):

  • If you don't have the budget to hire a professional market research business, data is available online that you could utilise, although it may not be specific to your business
  • A customer loyalty system or Point of Sale system may also assist in tracking customer behaviour and spending habits