What Is a Target Market?

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What Is a Target Market?

Let me tell you directly: a target market is a group of individuals I've identified as the most likely potential customers for a product, based on shared characteristics like age, income, and lifestyle. When you're designing, packaging, or advertising a product, identifying this target market is a key part of your decision-making process.

Key Takeaways

Here's what you need to know: a target market consists of customers with shared demographics who've been pinpointed as the most likely buyers of a company's product or service. These shared traits usually include lifestyle, income, and age. Identifying this market is vital for developing and implementing a successful marketing plan for any new product. It also shapes the product's specifications, packaging, and distribution.

How a Target Market Works

A new product has to satisfy a need, solve a problem, or do both, but that need or problem isn't universal—it's likely aimed at a subset of consumers, like environmentally-conscious vegetarians, science nerds, or outdoor enthusiasts. It might appeal to a teenager, a middle-aged professional, a bargain-hunter, or a snob. When you're envisioning your likely target market, it's part of creating and refining the product, and it directly informs decisions about packaging, marketing, and placement.

How Do I Define My Product's Target Market?

Market researchers use activity, interest, and opinion (AIO) surveys to build psychographic profiles of target customers. As a marketing professional, you divide consumers into four segments. Demographic segmentation covers the main characteristics that define your target market—everyone fits into a specific age group, income level, gender, occupation, and education level. Geographic segmentation is increasingly important with globalization, so consider regional preferences. Psychographic segmentation goes beyond demographics to look at lifestyle, attitudes, interests, and values. Behavioral segmentation relies on research into current customers' decisions, and new products might be introduced based on the proven appeal of past ones.

What Is an Example of a Target Market?

You can use each of the four target market segments to figure out who the customer is for a new product. Take Italian restaurants—there were about 62,091 in the U.S. in 2024. A corner pizza joint might appeal mostly to younger, budget-conscious consumers. An old-fashioned white tablecloth place could draw older individuals and neighborhood families. A newer venue might cater to an upscale, trend-conscious crowd willing to travel for an innovative menu and fancy wine list. In each successful case, the businessperson has consciously considered the ideal target market and tweaked the menu, decor, and advertising to appeal to it.

Why Are Target Markets Important?

Few products are designed to appeal to everyone. Consider the Aveda Rosemary Mint Bath Bar, sold for $19.50 per bar at Aveda stores—it's marketed to upscale, eco-conscious consumers who'll pay extra for quality. Clé de Peau Beauté Synactif Soap goes for $110 a bar, aimed at wealthy, fashion-conscious buyers seeking a luxury product. An eight-pack of Dial soap costs $9.79 at CVS and just gets the job done. Success in selling comes from knowing who it'll appeal to and who'll buy it. The user base grows through marketing, advertising, and word of mouth, which is why businesses invest time and money in defining initial target markets and following up with special offers, social media campaigns, and specialized advertising. Remember, a business might have more than one target market—a primary one as the main focus and a secondary one with growth potential, like toy commercials aimed at children with parents as the secondary market.

What Are Market Segments?

Dividing a target market into segments means grouping the population by key characteristics that drive spending decisions, including gender, age, income level, race, education level, religion, marital status, and geographic location. Consumers with similar demographics tend to value the same products and services, so narrowing these segments is one of the most important factors in determining target markets. For instance, people in higher income brackets might prefer specialty coffee from Starbucks over Dunkin' Donuts, and the parent companies need to know this to decide store locations, product stocking, and advertising.

Target Market and Product Sales

Identifying the target market is an essential part of your product development plan, alongside manufacturing, distribution, price, and promotion planning. It determines significant factors about the product itself—you might tweak aspects like sugar content in a soft drink or packaging style to appeal more to your target group. As product sales grow, you could expand the target market internationally to reach a broader subset in other regions. Domestically, the target market might expand too as products gain traction, creating revenue opportunities worth pursuing.

How Detailed Should a Target Market Be?

It depends—a product might target a mass market or a niche one, and a niche can be very small, especially in the early introductory phase. Some carbonated beverages aim for a universal market; Coca-Cola expanded to 200 markets abroad to grow its base. Gatorade, owned by Pepsi, is positioned for athletes. Poppi is branded as a healthy, sparkling prebiotic soda with real fruit juice, targeting a younger, healthier, trend-conscious market.

How Do Companies Use Target Markets?

Consider a casual apparel company building distribution channels abroad—it researches to find where its apparel will succeed and identifies its primary target market as middle-class consumers aged 35 to 55 in cold climates. It makes sense to focus advertising on northern European websites, and it might revise styles, colors, and advertising to optimize appeal to this group.

What Is the Purpose of a Target Market?

A target market defines a product, and vice versa—once identified, it influences design, packaging, price, promotion, and distribution. A luxury cosmetic won't be sold in a pharmacy; expensive shoes come with a branded cloth bag and shoebox. These factors signal to the target audience that they've found the right product.

The Bottom Line

Identifying the target market is part of creating and refining a new product. You can translate it into a profile of the consumer most likely to appeal to, considering demographic, geographic, psychographic, and behavioral characteristics. These help determine who is most likely to purchase your company's product.

What Is a Target Market?

Highlights