When starting a business, or formulating a business model, marketing is a hugely important aspect of the planning. Marketing is defined as the process by which a company communicates the value of its products to its customers; the end goal of marketing is, of course, an increase in sales, and consequently, an increase in profits. Marketing most often takes the form of advertisements, via a variety of media, such as television and Internet advertising. In order to most accurately and successfully market a product or line of products, companies and businesses formulate marketing strategies.
Marketing research culminates in the identification of a target market. This guide will teach you about marketing research, illustrate how to identify a target market for a specific business or product, and provide examples of target markets for well-known businesses.
The purpose of marketing is to increase a business’s competitive advantage. A competitive advantage allows a business to appeal to customers in a more memorable and effective way than businesses that offer a similar product. Marketing strategies are developed by examining the current situation within a company, and deciding how best to increase the company’s success in terms of sales. One of the most common marketing strategies revolves around the concept of market dominance. Market dominance is the ability of a company or business to dominate the particular industry in which they’re involved. Market dominance strategies are designed to increase a company’s dominance, or ability to beat out its competitors, in its particular field.
An important component of marketing strategy is the concept of market segmentation. Market segmentation’s job is to segment the broad population of consumers into smaller and more specific groups, in order to design strategies that will appeal to those groups more effectively. Market segmentation organizes consumers based on those who have similar values, lifestyles, priorities, and needs. The practice of market segmentation leads to the creation of target markets for companies and businesses.
The success of a marketing strategy relies a great deal on the ability of marketing strategists to identify a company’s target market. A target market refers to the group of potential customers at whom a company’s marketing is being directed. The target market is the group of customers that a company will try to reach out to in the form of advertising, because they are the people most likely to buy the kind of products the company sells. The way a marketing team distributes, promotes, and prices a product is derived from information about the target market.
Target markets vary hugely depending on the company and the product. As a result, target markets are organized and specified according to a number of different factors. These factors include geography, relationship to the product, demographics, socioeconomics, behavior, and psychology.
Target groups can include people who live in a particular region of the world, or a particular climate. A company that manufactures and sells winter apparel or equipment used for winter sports, such as skiing and snowboarding, would market to a target group consisting of people who live in areas that experience cold weather, or mountainous regions in which winter sports are very popular.
Target markets can be organized based on relationship the product being sold as well. For example, a company that sells weight loss products would incorporate into their target marking those people who had a negative relationship with exercise, tweaking their marketing techniques to play that relationship to the advantage of the company.
Demographics and socioeconomics are arguably the most important factors by which target markets are organized and identified. Target markets organized based on these factors take into account the age, gender, jobs, level of education, and personal income and wealth. For example, a pricey makeup company would identify a target market that most likely included women who are old enough and educated enough to have the disposable income to spend on the products being offered. These target customers would most likely live in well-to-do areas of the country and world, so advertisements for the products would likely be concentrated in wealthy and cosmopolitan areas.
Behavior of potential customers is another factor taken into account when identifying a target market. This includes how often customers will need to, or be willing to, buy the product, how likely they are to return to the same store or company, and other factors that impact the way people shop. Companies who are marketing kitchen products, for example, need to take into account how often people will go between purchasing two items of a similar nature, such as a blender or a set of pots and pans.
Studying the psychology of potential customers is often referred to as psychographic segmentation, and it includes studying the lifestyles, values, and overall attitudes of the consumers. When companies are marketing electronic products, such as televisions or video game consoles, they must take into account how their potential customers want to spend their free time, in order to focus their advertising on people who are very interested in entertainment and leisure.
Target Market Examples
As you can probably imagine, target markets for some items and products are relatively easy to identify. Makeup companies market nearly exclusively to women, companies that sell construction tools or automobile parts market nearly exclusively to men, cigarette companies used to market specifically to teenagers so that they could become lifetime customers, and so on. Here are a few examples of companies and products, and their corresponding target markets.
Toy and board game companies such as Hasbro or Mattel have a very specific target market. Interestingly, toy companies have to maintain a balance between marketing to parents and marketing to children. Their products have to be advertised in a specific way so that children are interested in the toys, but also so that parents are willing to buy them. The target market, in terms of adults, includes people of a certain advanced age, since younger people are less likely to have children. Families with children tend to live in suburban areas rather than in large cities or metropolitan centers, so the target market probably also includes those people who live in suburban parts of the country or the world.
Apple offers a huge variety of products, all of which have specific target markets, but a particular series of advertisements several years ago were aimed at a very specific target market. This advertising campaign involved personifying Mac computers and other personal computers, commonly known as PC’s. Macs were represented by a young, smart, sharp-looking man, while PC’s were represented by an older, portly, and relatively technology-naïve man. In this campaign, Apple was advertising for a target market of young tech-savvy people, perhaps people who were eager to embrace the future of technology, which Apple convinced them they could not do if they owned a PC.
Amazon is a hugely successful global company, and in recent years they have developed an e-reading device that they named the Kindle. Currently, the Kindle’s target market is most likely a lot broader, since e-readers have become incredibly popular in recent years. However, the initial target market for the Kindle was more specific. It included a younger demographic, because potential customers had to have a flair for technology, and be able to find their way around a tablet-like device. Younger generations are more likely to embrace changes and advances in technology, so it would make sense to market a new technology like e-readers to younger people. The target market also included more educated people. Those who have pursued education beyond high school are more likely to indulge in reading for pleasure, and therefore more likely to buy an e-reader. The target market also included those people who earned enough money to spend a few hundred dollars on a device like the Kindle. In a basic sense, Kindles were originally marketed to young, smart, well-to-do consumers, because they were most likely to be interested in books and new technology, and also able to afford an e-reader.
Alcohol companies provide a great example of companies who want to appeal to a wide variety of target markets. Relatively cheap beers are advertised in a way that appeals to the target market of younger drinkers, such as college students and a bit older, who have limited money to spend on alcohol but still want to participate in a partying culture. Companies that manufacture and sell wine or bourbon, on the other hand, advertise to a target market of older consumers who are more interested in quality and refinement than they are in price.
Though target markets may seem easy to understand and predict, a huge amount of research goes into pinpointing a specific group of potential and likely consumers, in order to further the sales of a particular product or line of products. Understanding target markets can lead to a better understanding of overall business strategies. Expanding your knowledge of the marketing world, and the research involved in marketing a product, will enable you to make more informed decisions, whether you are marketing or being marketed to.