Definition: A target market is a certain portion of the population that a business identifies as the main audience for its products or services. In other words, it is a group of people that the company will focus to reach, as they are the ones intended to consume what the business is selling.
What Does Target Market Mean?
Identifying a target audience is essential to develop effective marketing strategies. Companies will normally put a lot of effort into identifying all the characteristics of such group through a procedure called market segmentation.
This marketing technique will determine elements such as demographic qualities, geographic location, psychological characteristics and behavior of the targets, in order to design the most effective strategies to sell products and services to them. By using another tool called the marketing mix, often referred as “the 4 P’s”, a business will define price, product, place and promotion strategies that fit the needs, preferences and tastes of its intended audience in order to reach them. Depending on the company’s strategic plan, the target market could be very wide or narrow.
For example, companies that work for particular niches will find its target market to be very limited. On the other hand, companies with low-cost or product differentiation strategies will have a broader audience to reach. In such cases, most businesses design a wide product line in order to reach different segments through customized products or services that fit each of their particular needs.
Example
A new product called LemonAid is being launched to the market by Freska Co. a company that produces refreshing beverages for different markets. The company’s product line is very extensive, they started producing alcoholic beverages and later on they diversified their portfolio to include energy drinks, soda and other soft drinks. The company came up with LemonAid after identifying that there was a market for lemon-flavored drinks that was not content with the products that were currently available.
The Marketing Department identified this segment as male and female individuals within the ages of 35 to 45 years old, most of them with an aversion for black soft drinks. The segment was not homogenous in terms of income, since many different economic segments were potential consumers. The company successfully launched the product and it became one of the top sellers within its target market.
