Firstly, a target market can be defined under four main categories:
- Geographic – Where are they?
- Demographics – What age, gender, income, and what occupation are they?
- Psychographic – What personality, values, lifestyles, attitudes do they have?
- Behaviour – What need does the product they are buying fill? e.g. Nurofen – painkiller, Gaviscon – Heartburn
Remember what you identify the market as is crucial as they are the people you are trying to sell your product or service to. Selling to the wrong market will generate no sales and no income for the business. That’s why identifying your market is crucial to a business.
A good way to look at businesses identifying their target market is through adverts on Television. What program are you watching? Let’s say ‘The X factor’. Now, this is a music program, therefore, all the adverts will be music-related or entertainment-related as the people that are watching it like entertainment or music. Therefore, if they see an advert with entertainment or music they like, they might want it. You can identify target markets of businesses through where they place their advertisement on TV.
Let’s have some key terms to do with Market Segmentation:
- Segmenting – Dividing up the market into distinctive or recognisable groups.
- Targeting – Selecting a segment of a market to target.
- Positioning – A business finding the segment of the market to put their product into it.
Criteria for Segmentation
- Relatively homogeneous groups (don’t worry! That long word only means ‘similar’).
- Distinctive and identifiable.
- Accessible – capable of being reached.
- Sufficiently large to be profitable otherwise the segment is too small.
- Undifferentiated Marketing – ignore segments and treat groups the same.
- Focussed Strategy – target a particular segment.
- Differentiated Marketing – a different marketing mix for each segment.