Savvy marketers usually divide the population into different segments before selling their products. The most important segment is the target population -- those who are those most likely to use a company's products. People over 50 may be the target population for a new type of vitamin, for example. Over time, a portion of the target audience become customers, while some remain nonbuying consumers. The eligible population includes those in the target population, plus all noncustomers outside the target population who still have the ability and interest to buy.
The eligible population is much larger than the target population. It represents all of the people who can potentially buy the product. These individuals may live within a 5- or 10-mile radius of a small restaurant or retail store, for example. Hence, they fall within the designated market area. Small businesses can usually determine their market area by studying traffic patterns, highway configurations and where their nearest like competitor is located. For example, a major highway may divide two separate market areas. The small restaurant may receive most of its business from customers east of the highway. People living west of the dividing highway may patronize the competitor's restaurant. Consumers in a company's target audience have been identified as having a particular trait or characteristic. They are the target population because the business owner has identified them as the select group of people on which to base his marketing efforts.
A small company's target population is defined by such variables as gender, age, income, education level and occupation, according to Inc.com. Other variables may include family size, ethnic background and marital status. A target population is easily identifiable because of these characteristics. Those in the target population who become customers are considered the penetrated market. The eligible population is not as easily determined. There are essentially three types of noncustomer consumers in the eligible population, according to NetMBA.com: qualified available market, available market and potential market. The qualified available market are those who can legally buy the product. Available market consumers have the money but just haven't made a purchase. And those in the potential market may not have the money but are still interested.
No small company targets the entire market or population with its advertising or marketing. It would be cost-prohibitive. Instead, most marketers focus on the most important target-audience elements -- those that are most germane to their products and services. For example, a high-end women's clothing retailer may target women over age 35 with incomes above $100,000. A restaurant may create a larger-portioned meal for blue collar men between the ages of 21 and 54. Marketers then rely on word-of-mouth or advertising that reaches the eligible population to gain their patronage.
Marketing managers of small companies may use other variables to reach their eligible population. The eligible population may share certain lifestyle or usage characteristics with those in the target audience. For example, those in the target and eligible population may be interested in extreme sports or working out regularly. A small restaurant may run ads to market its late-night hours, which may appeal to certain people in both the target and eligible population.