Language
Country/Area
No result found
Why choosing the right target market is the key to success?
In the business world, the selection of target markets is crucial to the success of a business. The target market, also called the serviceable available market, is the group of customers to which a business targets its marketing efforts and resources. This group of customers shares common characteristics, such as age, location, income, or lifestyle, and is considered most likely to purchase the company's products or services.
Choosing the right target market is not only the core of business planning, but also a crucial step in the market segmentation process.
Once companies have identified their target markets, they often tailor their marketing mix (i.e., the 4Ps) to these markets to meet the needs and expectations of their target customers. This includes surveys to understand consumer motivations, purchasing habits and media usage patterns. This information helps companies develop marketing strategies and effective resource allocation that are in line with the mindsets of the target market.
Importance of target marketThe first step in the market segmentation process is to identify the total available market (TAM). This market includes current customers as well as potential customers and may include key influencers. Using feminine hygiene products as an example, the TAM might be defined as all women aged 14 to 50. This is essential to understanding the needs of specific groups.
Understanding consumer needs and behaviors enables companies to allocate marketing resources more effectively, resulting in more cost-effective marketing efforts.
When choosing a target market, companies need to consider the similarities and differences in customer needs. If customer needs across the entire market are similar, a company may choose an undifferentiated market strategy; on the contrary, if market segmentation shows significant demand differences, a differentiated strategy is needed. Additionally, in some cases, the analysis may reveal an unprofitable market, in which case the firm chooses not to enter that market.
Market segmentation methods
Market segmentation can be mainly divided into consumer market and commercial market. The consumer market includes individuals or households who purchase goods for personal use rather than for sale at a profit, while the commercial market refers to businesses or organizations that purchase goods for resale, to make other goods, or for daily operations. When segmenting a market, companies can divide the market based on geography, demographics, psychographics, behavior, or demand.
For example, demographic segmentation could divide adult males into different groups such as 18-24, 25-39, 40-59, and 60+. Psychographic segmentation might produce groups such as young singles, traditional families, socially conscious people, and conservatives. Through these segments, companies can identify the markets with the greatest profit potential and market more effectively.
Target Market Selection
When selecting a target market, companies need to consider the following: market size and growth potential, the attractiveness of the market structure, and the compatibility of the market with the company's goals and resources. These considerations are often subjective and require a high level of judgment on the part of managers. Choosing the right target market will affect the company's future growth and market share.
Choosing the right target market can help a company stand out in a highly competitive market.
In addition, if a company chooses to operate in multiple markets simultaneously, it must clearly distinguish between primary target markets and secondary target markets. The primary target market is the main focus of a company's marketing activities, while the secondary target market is the potential growth segment. For businesses, understanding the consumer characteristics of these markets can help them better formulate marketing strategies.
Effective Marketing Mix
Once the target market has been selected, the next step is to design an appropriate marketing mix. The traditional marketing mix consists of four elements: product, price, place and promotion. These elements interact with each other, and companies need to adapt their content to the needs of their target market. The positioning of the product itself, the setting of market prices, the product distribution channels and promotion strategies are all formed on this basis.
For example, if the target market is high-income groups, high-end product positioning and corresponding pricing strategies can be adopted. On the contrary, if the target is price-sensitive consumers, it may be necessary to adjust to a more competitive pricing strategy. The correct deployment of the marketing mix determines whether a company can effectively establish connections with its target market.
Does choosing the right target market and designing an effective marketing strategy mean that a business will definitely be successful?
