What is a target market?
One of the biggest mistakes an ecommerce business owner can make is to try to sell everything to everyone. No matter how amazing your product or service is, you won’t go far unless you focus on a target market.
A target market is a segment of consumers who are more likely to do business with you. Your target market can be based on demographics, geography, psychographics, or other important defining features. The target market plays a critical role in designing marketing campaigns because it defines the type of audience you want to serve.
Importance of a target market
To understand the importance of a target market, imagine you are a business selling accounting software. The software helps accountants get more work done in a small amount of time and reduces the risks of committing errors. Your target audience, in this case, will be accountants looking for a software solution.
However, if you do some research, you can find out that there are other interested customers for your software, like freelancers who want to have more control over their cash flow. It can be a business owner who needs to support his financial department.
Having a clear idea of the market you want to reach and your service or product could be the most useful can help you create successful marketing campaigns. In many cases, the buyer of your product may not be the same as you thought, so your messaging needs to be tailored to the audience making the purchases.
Why do I need a target market?
Understanding your target market helps in any marketing endeavors. When your marketing plan covers the specific selection of potential customers, you can:
- Speak your customer’s language. Knowing your target market means that you understand your customers. For example, the kind of language you use for millennials will be different from the one you use for baby boomers.
- Improve conversions. Because you will know what matters to your customers, you can convert your audience. You can get an idea of the offers that are most likely to appeal to your niche market and create future leads. This means you can get more sales and more leads as well.
- Differentiate your business from competitors. Target audience is a part of what makes your business unique. You can set your company apart as a go-to choice in your market. To do this, you need to know who you can serve best. Knowing your audience helps you build a brand around this lot and eventually turn them into a loyal community of buyers.
- Build customer loyalty. The more you know your target audience, the better it will be to discover what it takes to have loyal customers. As customers start identifying with your business, they will open doors to referral programs and loyalty programs.
- Improve your products or services. Knowing your target market eventually leads to improvement in your products or services. You can put yourself in the shoes of people you sell to and deliver better results.
- Spend less. Target market saves you from launching pointless ad campaigns and sales strategies that target the wrong customers. It is crucial to keep costs low, especially when you are building your brand. Knowing the target audience ensures that you only spend on campaigns that focus on the right customer.
How to define a target market?
Without research, you cannot define a target market or prepare relevant marketing campaigns. Once you know what your product or service is, you can look at your competitors and first see their target market. Sometimes, it is easy to gather this information due to language, imagery, or the company makes it public.
Other times, it’s challenging to identify the target market for your product. For example, people assume that Lego’s target market is children aged between 2-12 years, but Lego also appeals to older children and adults who want to re-experience their childhood. So it is hard to understand a target market when the companies do not clearly show it.
Defining your target market can be easier than this. Here’s how you can find information on your potential audience:
Online research
Start by looking up people who purchased your product once and talked about it online. Social media is a good place to start collecting this information for brands, competitors, and anyone talking about your offerings. If someone speaks negatively, find out why they are expressing this opinion and how you can help change the narrative.
Analytics
Check the data gathered from analytics to find out the age, geographic location, and other specific information to build a buyer persona. Google Analytics is a free and handy tool for this job. If you have social media accounts, you can see the analytics from there as well.
Focus groups
Conduct focus group discussions with people you think will be interested in your product and ask them important questions that will give you some key insights about their interests and whether they align with your brand’s mission and vision.
How do we segment a target market?
Once you define a target market, you might see that it will still be too broad to develop a targeted campaign. Creating specific information like product descriptions will be hard in such cases, and you will need to segment this audience further. The key factors in market segmentation are age and geography. Using these factors, you can create a marketing campaign that’s tailored to a specific segment of your target market. Other factors for segmentation include:
- Relationship
- Hobbies and interests
- Buyer behavior
- Technology
- Education
- Profession
- Income
Examples of target market
There are four major categories that a target market can fit into. These categories are a mix of broad or limiting features. However, not all attributes are important for a target market profile; sometimes, it is fine to go with only one category.
Geographic
If a product or service only appeals to a target market in a certain geographic area, there is no point in creating content outside of this location, language, or value set. An example of a geographic target market is the postal service of a specific country. Usually, the only people using these services are those living in that country. So it is not important to collect or serve information in different languages or to other locations.
Behavioral
This category is defined by understanding buying behavior to see if a buyer will shop from you. You can determine this by knowing which brands a customer holds dear, how much money they are willing to pay for items similar to yours, and how often they buy similar products. These are important details to know because even if you have highly informed target demographic information, you may miss out on the sale. If the audience has brand loyalty towards the competitor or buys a product like yours only once a year, it will be hard to target them no matter how much you try.
Demographic
Data for the target demographic audience includes personal information like age, educational level, income, gender, relationship status, etc. This information can be very valuable when choosing a target market as it can outline how important a product is or what price the person can pay for it. An example of a demographic target market is customers at Starbucks who are usually aged between 25-44 and are high-earners.
Psychographic
These are qualitative human characteristics like opinions, behaviors, and attitudes that help identify more about a human than just their demographics. Human opinions can be as simple as liking warm or cold weather or complex as a political affiliation. Human interests can be broad like indoor sports or niche like collecting pressed flower candles. Our activities can be very straightforward, like fitness or elaborate as storm chasing. Defining a target market by psychographics helps you create targeted advertising. For example, launching a digital ad for people who like pressed flower collectibles is a psychographic target market.