What is a Target Market?
A target market comprises individuals who possess common characteristics such as age, income, and lifestyle, making them the most probable customers for a product. Identifying this group is important in the decision-making process for designing, packaging, and advertising a product.
Key points:
- A target market consists of customers who share demographics and are deemed the most inclined to purchase a company’s offering.
- Recognising the target market is key in creating an effective marketing strategy for any new product.
- The target market can influence a product’s specifications, packaging, and distribution channels.
Identifying the Target Market for My Product
Part of the product development process involves envisioning the consumers who will find it desirable.
A new product often addresses a specific need or resolves a particular problem, though it’s unlikely to be universally relevant like indoor plumbing. Instead, it’s likely to cater to a niche subset of consumers, such as environmentally-conscious vegetarians, science enthusiasts, or outdoor adventurers. Its appeal may span across demographics, appealing to teenagers, middle-aged professionals, budget-conscious individuals, or those with discerning tastes.
Envisioning your probable target market is an integral aspect of product creation and refinement. It guides decisions regarding packaging, marketing strategies, and product placement.
The 4 Target Markets
Marketing experts categorise consumers into four primary segments.
Demographic
These include the fundamental characteristics that delineate your target audience. Individuals can be categorised based on age, income, gender, occupation, and educational attainment.
Geographic
This segment gains increasing significance in the age of globalisation. Regional preferences and cultural nuances must be factored into marketing strategies.
Psychographic
This segment delves deeper than demographics, considering aspects such as lifestyle, attitudes, interests, and personal values.
Behavioural
This segment relies on studying the purchasing behaviours and patterns of a company’s existing customers. Insights gleaned from past product successes inform the introduction of new offerings.
Example of a Target Market
Each of the four target markets provides insights into the potential customers for a new product or service.
For target markets, let’s look at Tourism Australia’s redefinition of its target audience as High-Yield Travellers (HYT) instead of High-Value Travellers (HVT). High-yield travel refers to people willing to pay more to gain a lot of perceived benefits at the destination. Tourism Australia broke down several areas of origin for HYTs and why they are looking to come Down Under, based on factors of friendly citizens, aquatic and coastal environments, nature and wildlife, safety and security, and dining options.
HYTs headquartered in the UK ranked Australia as the top destination across all five factors. Approximately 2.4 million out of its 7.9 million High-Value Tourists (HVTs) express a desire to visit Australia within the next four years, intending to stay an average of 13 nights and spending up to three times more than regular travellers.
Meanwhile, in closer proximity, 900,000 out of 1.2 million Kiwi HVTs contemplate flying to Australia over the same period, with an average stay of 15 nights. However, they only rank Australia at No. 1 in safety and security, as well as nature and wildlife preferences.
Why are Target Markets Important?
Very few products in today’s market are designed with universal appeal in mind.
Take soaps or body wash for men.
The Truefitt & Hill West Indian Limes Triple Soap, priced at $95 for a three-pack at the Truefitt & Hill AU website, targets men who value sustainable quality and elegance even at a higher price point. On the other end, a six-pack for 16oz Dial for Men Odour Armour body wash available for under $42 on Amazon, is recognised for its affordability and effectiveness.
Understanding the specific demographic that a product caters to and who is likely to purchase it plays a significant role in its success. Over time, a product’s user base can expand through further marketing efforts, advertising, and positive word-of-mouth.
This is precisely why businesses invest considerable resources in identifying their initial target markets and continue to engage through special promotions, social media initiatives, and tailored advertising campaigns.
What are Market Segments?
Segmenting a target market involves categorising the population based on pivotal characteristics influencing their purchasing choices. These criteria encompass gender, age, income, race, education, religion, marital status, and geographical location.
Consumers sharing similar demographics often exhibit preferences for comparable products and services, making the refinement of segments a determinant in identifying target markets.
For instance, individuals within a higher income bracket might lean toward purchasing specialty coffee from Starbucks rather than Dunkin’ Donuts. Understanding this aids the parent companies of these brands in deciding store locations, product placement, and advertising strategies.
Target Market and Product Sales
Identifying the target market is a pivotal component within a product development strategy, alongside manufacturing, distribution, pricing, and promotional planning. The target market dictates critical elements of the product itself. Companies might adjust specific facets, like sugar content in a softdrink or packaging style, to better resonate with consumers in their target demographic.
As a company experiences growth in product sales, it might venture into international markets. This expansion enables the company to access a wider subset of its target market across different global regions.
Moreover, beyond international expansion, a company might witness an expansion of its domestic target market as its products gain more traction in the industry. Broadening a product’s target market presents a lucrative revenue opportunity worthy of pursuit.
Conclusion
Identifying the target market constitutes a pivotal step in the development and enhancement of a new product.
A target market can be conceptualised as a consumer profile representing the individuals most inclined to find appeal in the product. This profile encompasses four key characteristics: demographic, geographic, psychographic, and behavioural.
DISCLAIMER: This article is for informational purposes only and is not meant as official business advice. AVANTE PARTNERS has no working relationships with any brand or company mentioned.