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A target market is a group of customers that a firm identifies as the focus of marketing and sales activities. Establishing a well-defined target market is considered a fundamental marketing practice with implications for product development, promotion, pricing, distribution and branding. The following are common types of target market.
Total MarketLarge firms with significant marketing resources may simply target the total addressable market for a particular product or service.LocationLocation is often a primary consideration when choosing a target market. For example, a restaurant with one location may target office workers in a downtown neighborhood.DistributionA business may choose distribution channels to reach their target customer. Alternatively, they may base their target customer on their distribution channels.
NicheSmall firms often choose a niche in order to find competitive advantages against far larger and more established firms.ValuesBusinesses that are primarily concerned with having a positive impact on the environment or the quality of life of communities may develop a target market based on customers with similar values.
Price SensitivityPrice sensitivity is the degree to which a customer is willing to pay a top price in a particular product category. For example, some customers are willing to pay high sums for quality headphones where other customers view headphones as a commodity.Complementary Products Complementary products and services are designed to be used with another firm's products and services. This usually means adopting the other firm's customers as your target market. For example, a souvenir shop across the street from a resort hotel may view the hotel's customers as their target market.
DemographicIdentifiable groups in a population based on factors such as gender, age, income and culture.SubcultureSelf-forming groups who identify with one another based on factors such as hobbies, music and fashion.LifestyleAspects of lifestyle such as people who are too busy to cook meals at home but are health conscious. Corporate CustomersFirms that sell to large corporate customers may explicitly list out their target customers based on factors such as industry and market cap.
Existing CustomersIt is common for new products to have existing customers as their target market as firms seek to increase their wallet share.
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