What Is a Target Market?

A target market refers to a group of potential customers to whom a company wants to sell its products
and services. This group also includes specific customers to whom a company directs its marketing
efforts. A target market is one part of the total market for a good or service.

Consumers who make up a target market share similar characteristics including buying geography,
buying power, demographics, and incomes.

Identifying the target market is an essential step for any company in the development of a marketing
plan. Not knowing who the target market is could cost a lot of money and time for a company.

Characteristics of a Target Market

Demographics

Your target market should include people who share similar demographic characteristics. Demographics
include items such as age, gender, income level and amount of education. For example, demographic
information may show you that a likely user for your product is a male between ages 25 and 34 who
earns between $25,000 and $35,000 per year and has a four-year college degree.

Psychographics

Psychographics identify lifestyle choices that can influence whether individuals are potential users of
your product. For example, if you determine that your product appeals to people who are physically fit,
you can promote an aspect of your product that encourages fitness. If potential users are fishermen, you
can advertise that your snack product is convenient to carry along on a fishing trip.

Usage

You'll also want to know the type and frequency of usage for your product. You may determine that
customers are most likely to use your product only in certain situations, such as when attending a social
gathering. Your advertising can create a scenario in which a customer is at a party and a need for your
product arises.
Benefits

You'll want to identify a common benefit that customers hope to obtain by using your product. Users of
a cologne or perfume may want a fragrance that appeals to the opposite sex. Buyers of an automobile
may want luxury or prestige. People who buy life insurance likely seek the peace of mind that comes
from knowing their families are provided for if they die prematurely.

Geographic Location

Potential users of your product may live in a specific area, which can affect how you market and
distribute your product. For example, if you operate your business in a warm-weather area but your
product appeals to those who live in colder climates, you'll have to decide whether it's better to relocate
to that area or perhaps offer your products by direct mail or the Internet.

Market segmentation

Market segmentation is the research that determines how your organisation divides its customers or
cohort into smaller groups based on characteristics such as, age, income, personality traits or behaviour.
These segments can later be used to optimise products and advertising to different customers.

By understanding your market segments, you can leverage this targeting in product, sales, and
marketing strategies. Creating your marketing communications both in ad messaging and advanced
targeting on digital platforms like Facebook and Google using your segmentation will allow for better
response rates and lower acquisition costs. Market segments can power your product development
cycles by informing how you create product offerings for different segments like men vs women or high
income vs low income.

Companies who properly segment their market enjoy significant advantages. According to a study by
Bain & Company, 81% of executives found that segmentation was crucial for growing profits. Bain also
found that organisations with great segmentation strategies enjoyed a 10% higher profit than
companies whose segmentation wasn’t as effective over a 5-year period.

Companies like American Express, Mercedes Benz, and Best Buy have all used segmentation to increase
sales, build better products, and engage better with their prospects and customers.
Types of Market Segmentation

Geographic Segmentation

While typically a subset of demographics, geographic segmentation is typically the easiest. Geographic
segmentation creates different target customer groups based on geographical boundaries. Because
potential customers have needs, preferences, and interests that differ according to their geographies,
understanding the climates and geographic regions of customer groups can help determine where to
sell and advertise, as well as where to expand your business.

Demographic Segmentation

Demographic segmentation sorts a market by demographic elements such as age, education, income,
family size, race, gender, occupation, nationality, and more. Demographic segmentation is one of the
simplest and most commonly used forms of segmentation because the products and services we buy,
how we use those products, and how much we are willing to spend on them is most often based on
demographic factors.

Firmographic Segmentation

Firmographic segmentation is similar to demographic segmentation. The difference is that demographics

Behavioural Segmentation

Behavioural segmentation divides markets by behaviours and decision-making patterns such as

Psychographic Segmentation

Psychographic segmentation takes into account the psychological aspects of consumer behaviour by
dividing markets according to lifestyle, personality traits, values, opinions, and interests of consumers.
Large markets like the fitness market use psychographic segmentation when they sort their customers
into categories of people who care about healthy living and exercise.

How to Get Started with Segmentation

Market segmentation doesn’t need to be complicated to be effective. There are five primary steps of
segmentation.

 Conduct Preliminary Research – Get to know your customers better by asking some initial,
open-ended questions.
 Determine How To Segment Your Market – Decide which criteria (i.e.
demographics/firmographics, psychographics, or behaviour) you want to segment your market
by.
 Design Your Study – Ask a mix of demographic/firmographic, psychographic, and behavioural
questions. Be sure to make your questions quantifiable.
 Create Your Customer Segments – Analyse your responses either manually or with statistical
software to create your segments.
 Test and Iterate – Evaluate your segments by ensuring they are usable and helpful. If they
aren’t, try segmenting based on other criteria.

Brand Positioning
Put simply, brand positioning is the process of positioning your brand in the mind of your
customers. Brand positioning is also referred to as a positioning strategy, brand strategy, or a
brand positioning statement.
The Battle for Your Mind, the idea is to identify and attempt to “own” a marketing niche for a
brand, product, or service using various strategies including pricing, promotions, distribution,
packaging, and competition. The goal is to create a unique impression in the customer’s mind so
that the customer associates something specific and desirable with your brand that is distinct
from rest of the marketplace.
It is based on the concept that communication can only take place at the right time and under
the right circumstances.”
 Brand positioning occurs whether or not a company is proactive in developing a position,
however, if management takes an intelligent, forward-looking approach, it can positively
influence its brand positioning in the eyes of its target customers.
7-Step Brand Positioning Strategy Process
In order to create a position strategy, you must first identify your brand’s uniqueness and
determine what differentiates you from your competition.

There are 7 key steps to effectively clarify your positioning in the marketplace:
1. Determine how your brand is currently positioning itself
2. Identify your direct competitors
3. Understand how each competitor is positioning their brand
4. Compare your positioning to your competitors to identify your uniqueness
5. Develop a distinct and value-based positioning idea
6. Craft a brand positioning statement
7. Test the efficacy of your brand positioning statement
How to Create a Brand Positioning Statement

There are four essential elements of a best-in-class positioning statement:

Target Customer: What is a concise summary of the attitudinal and demographic description of the
target group of customers your brand is attempting to appeal to and attract?

Market Definition: What category is your brand competing in and in what context does your brand have
relevance to your customers?

Brand Promise: What is the most compelling (emotional/rational) benefit to your target customers that
your brand can own relative to your competition?

Reason to Believe: What is the most compelling evidence that your brand delivers on its brand promise?

Brand identity

Brand identity is the face of a brand. Brand identity includes logos, typography, colors, packaging, and
messaging, and it complements and reinforces the existing reputation of a brand. Brand identity attracts
new customers to a brand while making existing customers feel at home. It's both outward- and inward-
facing. To manage brand identity, organizations should invest in a brand management system that helps
them stay consistent while still having the flexibility and the speed necessary to succeed in today's
market.

7 key design elements you need to create a brand identity

1. Clear brand purpose and positioning

The first part of establishing a brand identity is determining what your purpose and positioning is. The
brand purpose is the big reason for your existence. Brand positioning is the naming of who your product
is for and why your product is a better option than the competitors. Defining these will inform your
strategy as you create a logo, decide on a color palette, etc.

Brand positioning is the process of making the purpose actionable. By naming your target customer and
differentiating yourself from the competition, you lay the groundwork for your brand to accomplish your
purpose.

2. Thorough market research

A brand's purpose and positioning can be informed, at least in part, by market and customer research.
To understand the cultural tension described in the previous section, research is crucial.

One of the best ways to conduct market research is to simply talk to people. Phone interviews allow for
detailed discussions and place a helpful emphasis on the human element of research—an element that's
essential if you want to make an emotional appeal to customers.

3. Likable brand personality

Something I've heard several times is the question "If your brand were a person, what would they be
like?" It might be a bit cliché at this point, but it's a smart way to think about brand personality.

And brand personality is an important thing to consider. It will come through in every part of your brand
identity if you get it right. Brand personality has a huge impact on the voice and tone used in your
marketing materials and other communications. If a personality isn't established, customers will get
mixed messages and have trouble connecting with your brand.
If you're having a hard time getting started, here's an exercise to try: Which celebrities best represent
your brand? Is there an actor or actress, musician, or public personality that embodies the same traits as
your brand? This could be a good starting point for nailing down different aspects of your brand's
personality.

4. Memorable logo

Which came first—the logo or the brand? It's difficult to say, because logos and brands are constantly
being refined and adjusted, but by and large, a clear brand should come first, followed by a logo that
matches, compliments, and enhances that brand.

Your logo is central to your brand identity design. It's the piece of your brand identity that people will be
exposed to the most. It needs to line up with all the other elements of your brand identity, as well as the
broader emotional appeal of your brand. For example, take a look at this logo.

When a logo is simple, it becomes an open canvas customers can fill with positive experiences they have
with the brand. Also, the simpler the logo, the easier it is to scale between mediums such as digital
advertising and the more traditional print advertising such as flyers or brochures.

The final thing to consider when designing a brand logo is all the places a it could possibly be displayed.
A logo needs to be flexible enough to look great on a huge billboard or as a tiny social media icon.
Simplicity is helpful here as well.

5. Professional typography

Stressing about finding just the right font may lead others to designate you a "typography nerd," but
you'll come out ahead when you pick a font that works in harmony with your logo and colors.

Fonts are powerful. The most famous fonts are recognizable even when taken out of context. You'll
want a single primary typeface to lead your brand design, and it should work well with your logo and
your color palette. It should also, like your logo and color palette, be simple.

 Don't use fancy fonts (especially if you don't have the experience or knowledge to use them
well).
 Don't avoid default fonts. They're readable, and you can set the typeface differently if you want
it to stand out.
 Don't mix more than two font families at a time.
 Do mix contrasting fonts (such as a serif and a sans-serif).
 Choose the right font size and line length for legibility.
 Align your text to the left. A ragged right is easy to read.
 If it's over 60 characters per line, it's okay to justify it. However, avoid hyphenation.
 Don't use all-caps to emphasize text.