A target market is a specific group of consumers that a business wants to attract and sell its products or services to. This helps companies build customer profiles and create sales and marketing initiatives. Identifying a target market is important for building a customer base, and some companies focus on multiple markets to insulate themselves from changes in customer tastes. Companies can also use the target market concept to develop new product lines and expand into other markets. Identifying and qualifying a target market is an ongoing process for companies of any size.
Also known as a target audience or target market, a target market is a specific group of consumers to whom a business wishes to attract and sell its line of products or services. A target market can be defined in terms of age, gender, sexual orientation, economic class, ethnicity, religion or location. This socio-economic clustering process allows companies to build profiles of the typical customer who are likely to purchase products from the company, which in turn provides the basis for creating sales and marketing initiatives that allow the company to build a customer base across the board. within that customer demographic.
Identifying a target market is very important to the long-term functioning of a business. Without a clear understanding of who is likely to be interested in the products offered by the company, it is very difficult to take proactive steps to connect with potential customers. By defining the basic characteristics of a certain target audience and then identifying ways in which the business can satisfy their needs and wants, the process of building a customer base becomes much easier.
While some businesses tend to focus on reaching and retaining a specific target market, other businesses will look to establish ongoing relationships with consumers across multiple markets. This helps insulate the company from sudden changes in customer tastes or financial reversals that impact the entire consumer demographic. For example, if one company cultivates a product line that appeals to teenagers and another that appeals to those in their 50s and 65s, the company can often compensate for unexpected drops in sales in one demographic with the continued strong sales in the other.
Many companies use the target market concept to develop new product lines that will allow the company to increase the size of its customer base within the same demographic. This means that a company that manufactures sports equipment can create and market a line of sports memorabilia, such as wall art, stories about various sports, or jewelry with a sports theme. Consumers who already purchase the sports equipment can also purchase goods from the additional lines, as they trust the products previously purchased from the manufacturer.
It’s not unusual for any company to assess its appeal in various target markets and determine whether it needs to expand into other markets. Even companies that have already diversified and have a strong presence in different markets will want to be on the lookout for emerging markets where they can reach different demographics while holding on to current customers. For this reason, the task of identifying and qualifying a target market is an ongoing process for companies of any size, ranging from the mom-and-pop store all the way down to the multinational corporation.
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