What Is a Target Market?

A target market refers to a specific group of consumers that a company aims to sell its products or services to. Defining a target market allows businesses to focus their marketing efforts on customers who are most likely to be interested in what they have to offer.

How Do Target Markets Work?

Companies identify target markets by segmenting broader potential audiences into subgroups based on a handful of shared characteristics. The most common ways to segment consumer markets include:

  • Demographics: Age, income, gender, education level, occupation, etc.
  • Geographic: Country, region, city, climate, etc.
  • Psychographics: Attitudes, interests, values, and lifestyles.
  • Behavior: Purchase history, usage, loyalty, or readiness to buy.

For example, a clothing brand may define its target market as fashion-conscious women aged 18-35 living in urban areas. The more specific this target audience is, the better the company can tailor its products, messaging, advertising, and overall marketing strategy to persuade its prospective customers.

Benefits of Target Markets

Defining a target market offers several advantages:

  • Focused marketing: Companies can optimize their efforts and budgets on customers most likely to purchase.
  • Tailored offerings: Products, services and messaging can be fine-tuned to resonate with the target audience.
  • Clear branding: Companies develop a consistent brand image by associating with a defined target market.
  • Measurable campaigns: Progress and return on investment can be tracked when goals align with a specific target market.

Targeting a niche audience also enables companies to establish a strong position in a specialized segment of the overall market. However, an overly narrow focus may limit growth potential in some cases.

Examples of Target Markets

Some examples of well-defined target markets include:

  • Luxury automaker Lexus targets affluent professionals.
  • Trek Bicycle sells its high-end bikes to passionate cyclers.
  • Merrill Lynch’s financial advisors aim their marketing at powerful and wealthy investors.

In each case, the target audience is defined by demographics, interests, values, and behaviors. Companies can then craft messaging and go-to-market strategies tailored to their target’s preferences.