As discussed in Intro to Marketing Part I, a target market is the market segment to which a particular product is marketed.
It is often defined by age, gender, geography, socio-economic grouping or in B2B sales, industry. Target market is a key concept for your business. The more you know about your target market and how to position your product to sell to that market, the more successful your business will be.
Target Segment Identification
Target segments or markets are often defined by their demographic attributes such as age, gender, geography or income. They are also often grouped by preferences such as trendy, organic, etc. In B2B marketing, target markets are typically defined by industry and business size.
Consumer Markets
Consumer markets can be specific to a part of the globe or can sometimes be global in nature such as Baby Boomers, those people born from about 1946 to about 1959 in World War II affected countries. This huge segment of the population has been defining market trends since their birth and will continue to do so as they age. In most countries, these consumers are generally better educated and more affluent, and are often the consumers of high end merchandise as well as merchandise that creates quality of life.
In western countries, another segment that has recently been gaining notoriety is the ‘tweenies’. These are the aged eight to twelve year olds, no longer children in terms of maturity and taste but not yet teenagers. This sought after group, armed with discretionary income, are the likely segment for those selling electronics and gaming equipment as well as fashion merchandise.
There are also a number of groups that have less household recognition but are very important in the marketplace. One such example is LOHAS. This segment of consumers who subscribe to Lifestyles of Health and Sustainability (LOHAS) is an enormous marketplace ($228.9 billion in the U.S.) for goods and services focused on health, the environment, social justice, personal development and sustainable living. The consumers attracted to this market have also been collectively referred to as Cultural Creatives. Approximately 30 percent of the adults in the U.S., or 50 million people, are currently considered LOHAS Consumers. The interconnections between global economies, cultures, environments, and political systems play a large role in the holistic worldview of the typical LOHAS Consumer, but equally important are the interconnections of mind, body and spirit within individuals.
Business Markets
Business markets have huge variation based on industry, size, location and governance.
Business markets encompass a vast array of variations, influenced by factors such as industry, size, location, and governance. These diversities contribute to the dynamic nature of business-to-business (B2B) markets, shaping the strategies, operations, and relationships within them.
One significant differentiating factor among business markets is the industry in which they operate. Industries vary greatly in terms of their products, services, and market dynamics. For example, the automotive industry is characterized by complex supply chains, long production cycles, and stringent quality standards, while the technology sector is known for rapid innovation, shorter product lifecycles, and high competition. Each industry has its unique characteristics, market forces, and customer expectations that shape the behaviors and strategies of businesses within it.
The size of businesses also plays a vital role in market variations. Small and medium-sized enterprises (SMEs) often face different challenges and opportunities compared to large corporations. SMEs may have limited resources, leaner organizational structures, and a more localized customer base. In contrast, larger enterprises typically have greater financial capabilities, broader market reach, and more complex decision-making processes. The size of a business influences its market behavior, strategies, and interactions with other market participants.
Geographical location is another key factor contributing to market variations. Business markets operate within local, regional, national, and international contexts. Local markets may be influenced by specific cultural norms, regulations, and economic conditions, while international markets introduce complexities related to cross-border trade, diverse customer preferences, and global competition. The geographic location of a business impacts its market dynamics, supply chain logistics, market expansion strategies, and competitive positioning.
Furthermore, governance structures also shape business markets. Governance refers to the rules, regulations, and policies that guide business operations within a specific jurisdiction. Different countries and regions have varying legal frameworks, industry standards, and regulatory environments. These governance factors influence market entry barriers, trade policies, intellectual property protection, and business practices. Understanding and adapting to the governance structures of a market is crucial for businesses to operate legally, ethically, and successfully within that jurisdiction.
In summary, business markets exhibit substantial variation driven by industry characteristics, business size, geographical location, and governance structures. These variations impact market strategies, competitive dynamics, customer behaviors, and overall market performance. Recognizing and adapting to these variations is essential for businesses to effectively navigate and thrive in diverse B2B markets.
The healthcare industry, for example, has enormous needs for products from basic office supplies to sophisticated electronics, software and equipment, linens, personal consumables and so on. Does the notion of serving the healthcare industry seem too daunting to you as an online reseller? Or, is it too large a segment to be meaningful? Try thinking about smaller segments within this industry such as physicians’ offices who buy not only traditional medical supplies but also office furnishings including artwork, paper goods, promotional items, waiting room reading materials, electronics such as pagers and so on.
Manufacturing industries require every manner of tools, specialised and generic parts, machinery and so on. Again, too daunting? Narrow your segment to auto parts manufacturers; narrow again to auto parts manufacturers with revenues of less than £10,000,000.
Who are your target markets? Sports enthusiasts? Travelers? College students? Families with young children? Identify the markets that you sell your services or products to as specifically as possible. The better you know your market, the better you can plan your marketing campaign.
Characteristics of Target Segments
The value of identifying target segments is that they are groups of people with similar points of view and/or similar needs or purchasing patterns. By understanding those segments, you can position your products in the optimal way.
Need
Once a target segment has been identified and described to the extent possible demographically, it is useful to understand that segment’s needs. Are they looking for value and efficiency? Do they need support because they have too much on their plates? Are they analytic and particular and have the finances to support that approach? Are they empty nesters looking for ways to enjoy their new lives? Are they people with a strong devotion to a holistic and spiritual approach to life and are willing to make life changes to operate that way?
Resources
What kind of resources does your target population have? Are they middle income people who want a bargain or want to buy products that look high end but are economically priced? Are they high income people who prefer to surround themselves with one-of-a-kind creations and seek out fine craftsmaship? Are they wholistic folks who prefer to buy natural and organic and will search the Net looking for goods that match their special needs?
Methods of Receiving Information
Where do you find your target segment and how do they receive information? Are they socialising in MySpace or searching eBay for bargains?
Purchasing Behavior
Does your target market purchase frequently? Do they follow sales and buy at a good price or read supporting materials and buy quality? Are they constantly seeking out new sources or do they show purchase loyalty?
The answers to these questions give you the information you need to optimise sales. The next question is, how do you discover what your target market is thinking about and how they purchase? Move on to Intro to Marketing Series Part III – Market Research Techniques.