5 Steps to Choose a Target Market for Your Business

In marketing, businesses that want their strategies to work well need to segment the market. From there the business draws up your target market to set a direction for the business to succeed. This is a very important step in building a marketing strategy that brings you closer to customers and raises sales.

What is a target market?

A target market is a group of customers a business has chosen to promote and sell its products to. A target market helps the business set direction and build a better-fitting, more effective marketing strategy. Each target market is segmented by customer characteristics into different groups, each with a suitable strategy. This is where the business can engage customers best on its products and services. With a target market, the business's plan of action becomes more accurate.

Why identify a target market?

Establishing a target market helps a business steer its marketing strategy better and saves a lot of time spent analyzing strategy. When a business does not define its goals clearly, it easily drifts off course and runs into many business risks. A target market also helps improve and shape products to match the shared tastes of the customer group: product quality, packaging, price, sales channels and distribution method. For example, a clothing business aiming at the women's fashion market needs styles and designs that suit women. Everything from style to color should be researched by age and gender to get the best results for selling products and expanding the market. Then find distribution channels for the product, such as selling online through systems the biggest e-commerce marketplaces, TV-style ads over the internet. All the data collected from the target market is the basis on which a business sets its strategic direction and refines its product. Guided by that direction, the business gradually improves and develops the product to better meet user needs. The business then draws on the target market to plan production, pricing and sales capacity. These factors help refine a product that attracts more customers, which expands the market and leads to an increase in sales, and in profit. Over time the business's target market will expand at home and abroad. Imagine a business that never clearly defines its target market: its chance of failure is very high. Its products are made with no set direction, mass-produced with nothing distinctive or memorable, and there is no sensible way to get them to market.

Steps to identify a target market for your business

The target market is clearly very important, and it is the first thing a business needs to define. So a business needs to research and define its target market clearly, and it can do that in 5 steps:

Step 1: Plan for the target market

To pinpoint the target market for your business, you need to collect statistics and observe the potential markets. Then make a list of the products and services that the target market can offer. For example, a web development company will target people who want to build and grow a website for their company or themselves. A manufacturer of household goods will aim at housewives, chefs and restaurants. A target market is one that brings the business a lot of benefit and that the business is able to reach. Run surveys and collect feedback on what users need from the product and service, using qualitative or quantitative research. Interview and study groups of people objectively, gather their input and compile it into a report. A business that wants to be more precise should run quantitative research for its product, because it then gets specific, detailed figures to build tables that assess each indicator. That said, which research method to choose depends on the scale of the project and the business's operations.

Step 2: Segment the market

We divide the market into different segments and put people who share characteristics into the same group. These are the main, standout traits that make the next decisions easier, such as age, gender, income and interests.

Segment by customer characteristics

Segment by gender, age, current job and average income, religion, marital status and education level. With these customer characteristics, the business adjusts its products and services and uses different ways of advertising to and reaching customers.

Segment by location

People in different areas have different needs, so a business needs to divide them clearly to build specific strategies. Segment the market by plains or mountains, urban or rural areas, different countries, and so on.

Segment by social status

Based on the traits of different social classes, a business distributes different volumes of product to the market. Segmenting by customer interests also helps the business choose more suitable ways of selling.

Segment by behavior

Track and assess your customers' buying behavior to see what drives your product's growth. Solve the problems tied to consumer behavior so you can set accurate goals and effective marketing strategies.

See also: Use Maslow's hierarchy of needs to analyze customer psychology effectively

Step 3: Identify the customers you are aiming at

Thanks to advances in science, technology and the internet, reaching customers has become much easier. By using social media platforms and the customer information you collect, you can run surveys and assess how feasible your plans are. See also: 5 steps to define your customer persona

Step 4: Build the market strategy

A business can run multiple segments within one segment of the target market, using different advertising and marketing methods for the same product in each segment. From this the business learns which form of advertising and marketing suits that market segment best. Alternatively, a concentrated market approach puts all marketing activity for the product into that one target market. It uses a single advertising method and a single distribution channel to sell the product, and specializes the product to attract customers from different segments. The focus is on doing well what the business already offers: product quality, design, production technology and distribution.

Step 5: Run advertising tests

Running ads brings a business many benefits: it spreads the product to different groups of customers, raises revenue quickly, and produces plenty of data to analyze for later campaigns. You can run different ad formats for the same product to compare them and reach an accurate conclusion. So if a business wants to execute its marketing strategy well, it needs to build its target market well. The strategy then rolls out more smoothly and brings the business more profit.