What is Target Market? Definition, Steps, Importance, and Strategies

What is Target Market?

Target marketing is a strategy in marketing where companies split up the big market into smaller groups of people who are alike in various ways. These groups help companies create special plans to sell their products. A target market is the group of consumers who are expected to buy a certain product because they have similar traits, like age, money, and lifestyle.

Picking the target market is a really important part of when a company creates, wraps, and talks about its product. To do this, they look at the audience in pieces and make plans that will work best for those pieces.

This way, companies can do a better job reaching possible customers. Target marketing is super useful in making sure your efforts in marketing work well.

Overall, target marketing or targeting the market is all about splitting the big audience into smaller groups and making plans that match each group to sell goods. It’s like finding the right people to talk to about your product.

How To Choose A Target Market?

Choosing the right target market is a critical step in a company’s marketing strategy. It involves identifying the most promising customer group to focus your marketing efforts on. Here are four key steps to select the right target market:


Start by dividing the larger market into smaller, distinct groups based on shared characteristics. These characteristics could be demographics (like age, gender, income), geography (location), psychographics (lifestyle, values), or behavior (buying patterns).

Read More: Types of Market Segmentation


Once you have these segments, evaluate each one carefully. Look at their size – how many potential customers are in each group? Examine growth potential – is the segment likely to expand over time? Consider structural attractiveness – are there barriers to entry, intense competition, or ample opportunities?

Alignment with Objectives

Now, align the segments with your company’s goals and capabilities. Your chosen target market should match what your company aims to achieve. For instance, if you’re a small bakery specializing in vegan pastries, it makes sense to target health-conscious consumers rather than carnivorous meat lovers.

Read More: Organizational Market Segmentation

Resource Assessment

Finally, assess whether you have the necessary resources to serve your chosen target market effectively. Do you have the ingredients, ovens, and skilled bakers to meet the demand for vegan pastries, for example? Ensure that your company has the means to cater to the segment you’ve selected.

Importance of Choosing Right Target Market

Here are five vital reasons why selecting the right target market is crucial for business success:

  • Resource Efficiency: Think of your resources, such as time and money, as fishing bait. Casting your line into the right market ensures you’re more likely to catch valuable fish (customers) efficiently. You won’t waste your bait on waters where fish are scarce or uninterested.
  • Tailored Offerings: Just as you use specific bait for certain fish, knowing your target market allows you to customize your products or services to cater to their unique preferences and needs. This tailored approach increases the chances of attracting and satisfying customers.
  • Higher Conversion Rates: Imagine you’re a persuasive angler. Targeting the right market is like casting your line where the fish are already eager to bite. Your chances of hooking those fish (converting potential customers) into loyal patrons are much higher.
  • Customer Loyalty: Building customer loyalty is akin to nurturing a garden. When you consistently meet the needs of your target market, you cultivate trust and devotion. Just as well-cared-for plants thrive and bear fruit, satisfied customers keep coming back, becoming loyal supporters of your business.
  • Competitive Edge: In the vast ocean of competition, targeting the right market is like sailing where fewer boats are vying for the same fish. You face less competition and can stand out more easily, increasing your odds of success in the crowded marketplace.

Read More: 10 Examples of Behavioral Segmentation

Strategies For Market Targeting

Now, let’s explore the four main strategies for choosing the right target markets.

Undifferentiated Marketing

This approach is like using a single, versatile tool for various tasks. Here, a company creates one product or service and markets it to everyone without considering differences in customer needs. It’s like offering the same type of ice cream to people of all ages and tastes, hoping it will satisfy everyone. While it’s cost-effective due to mass production and marketing, it may not deeply connect with specific customer groups.

Differentiated Marketing

Imagine a toolkit with various specialized tools for specific tasks. Differentiated marketing involves creating distinct products or services for different customer segments. It’s like offering multiple flavors of ice cream to cater to various preferences. This approach demands more resources but often leads to higher customer satisfaction and loyalty because it acknowledges diverse needs.

Read More: Niche Marketing

Concentrated Marketing

This strategy is similar to using a highly specialized tool for a specific, niche task. It involves focusing all efforts on a narrow customer segment with unique needs. Picture offering gourmet, handcrafted ice cream to specialists who appreciate artisanal quality. While this strategy may limit the customer base, it can result in high customer loyalty and profitability within the chosen niche.


Think of micromarketing as having an array of customized tools for individual tasks. This approach is all about tailoring products and marketing to meet the needs of individual customers or local communities. It’s like crafting unique ice cream flavors for each person based on their favorite ingredients. While resource-intensive, micro-marketing can create strong customer relationships and brand loyalty by offering a highly personalized experience.

Read More: Individual Marketing

Segmentation, Targeting, and Positioning (STP)

Segmentation, Targeting, and Positioning (STP) are fundamental concepts in marketing that help businesses effectively reach their target audience and create a strong brand presence. Here’s a brief overview:

  • Segmentation: This is the process of dividing a broad and diverse market into smaller, more manageable segments based on shared characteristics like demographics, psychographics, behavior, or geographic location. It helps businesses understand their customers better and tailor marketing strategies to specific groups.
  • Targeting: After segmenting the market, businesses select one or more of these segments as their target audience. Targeting involves evaluating the attractiveness of each segment and choosing the one(s) that align best with the company’s goals and resources. It’s about focusing marketing efforts on those most likely to become customers.
  • Positioning: Once the target market is identified, positioning comes into play. This step involves creating a distinct and compelling brand image or perception in the minds of consumers within the chosen segment. Effective positioning sets a company apart from competitors and communicates the unique value it offers to customers.

Read Next: 15 Examples of Psychographic Segmentation

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