In business, it is essential to know the best ways to sell a product or service to maximize sales and increase profits.

Companies spend a lot of time considering types of target marketing to determine who their customers are and how to market the services and goods they provide to them effectively. When attempting to identify the majority of their customers and market to them, companies figure out the most efficient messaging, the best physical and online places to advertise, the visuals to use, and other factors such as timing to deliver campaigns that speak to customer preferences.

They can also design and define a marketing strategy for products for specific customer needs and niches within the markets.

The Target Marketing Process

The target marketing process can best be described as that of:

  • Segmenting markets based on customer traits.
  • Targeting the segments with specific types of messaging.
  • Positioning the brand for success in a competitive market.

There are several types of target market examples. These target markets are groups of consumers who are likely to purchase products and services from a company. They can be groups of consumers toward which a business markets a new product or plans to increase sales for an existing one. Companies may have different target markets for different products. A target market example occurs when a nutritional supplement company markets separate multivitamin supplements to women and men to meet their respective needs.

Dividing Target Markets into Segments

Companies may also have several target markets with several levels of target marketing for one product. A target market example is a retirement fund that is marketed to 20-somethings just starting in their career and to midlife divorcees seeking an additional means of savings. By figuring out the most appropriate audiences to market to, businesses optimize marketing expenses. This process of selecting groups to target is called segmentation.

The practice of segmentation is a process of both organization and research. By breaking consumers into types, businesses can segment their marketing strategies for these different types or start by marketing to the most significant target group.

Four ways to segment your target market are demographic, geographic, psychographic and behavioral segmentation.

Demographic Segmentation of a Market

Companies often begin by looking at demographic information to segment their market. Things like age and income level are quantifiable and easy to measure. Also, companies can use this information to reduce the risk of advertising to consumers who show little interest. Companies can maximize their return on investment in their marketing activities.

Examples of demographic segmentation include age, gender, income level and occupation.

Age is a common factor in what people buy and how. Marketers frequently segment by age. Television commercials, for example, show actors in the age range of the target demographic using the product or talking about it.

Additionally, age is a factor in how consumers perceive and respond to advertising. For example, people in the 18-to-34-year age range and those who are 65 and up, respond well to direct mail. Email marketing and coupons are considered good practices when it comes to Generation X.

Gender often determines consumption habits. A simple example is that women are far more likely than men to buy makeup.

Income level determines whether consumers buy luxury brands and influences their values of quality and ethics as they relate to a product or service.

Occupations have different considerations. Salespeople, for example, usually dress well for their clients and tend to spend more money on business clothing and travel. Business-to-business marketing involves targeting the specific needs of customers based on their occupations and company functions.

Other demographic factors, such as education level and family size, also affect purchasing decisions and need to be considered in a business’s target marketing strategy.

Geographic Segmentation of a Target Market

Geographic segmentation refers to a target strategy based on where and how you sell products.

Local brick-and-mortar retail stores with no online shop focus on marketing strategies such as placing ads in newspapers and partnering with other local businesses. They use SEO to target consumers searching for their types of products in local towns and surrounding areas.

Culture plays a significant role when considering geographic segmentation. It is important to consider cultural differences and trends in preferences as they relate to geographic areas. For instance, seafood is more easily marketed along the coastline. Seasonal products such as winter jackets do better in colder climates.

New territories require a target strategy that treads carefully. Market research is needed to define the market adequately. Companies sometimes fail to understand their new target geography due to cultural differences. A classic example is the U.K. grocery company Tesco’s failure to expand to the U.S. due to its inability to understand American grocery shopping habits.

Psychographic Segmentation of a Target Market

Opinions, lifestyles, values, interests and activities are all ways to segment according to psychographics. By grouping people according to these criteria, marketers can choose messaging that appeals to likes and dislikes, rather than assuming these things based on age and other demographic and geographic factors.

Lifestyle can come down to whether someone is a student or an office worker. It can be associated with someone’s marital status, their sexual preference or level of political activism.

Activities segmentation considers whether the person is a frequent patron of the arts and music events or whether they prefer team sports events. Perhaps they like to go on frequent hikes in their spare time or stay indoors and read.

Interests, values and opinions are vital when considering how consumer segments see products and how to best market to them. Many millennials consider green products and corporate social responsibility when purchasing. Typically, movies, television, music and other media depend primarily on the subjective opinions and experiences of an individual consumer.

Behavioral Segmentation Based on Consumption Habits

Not to be confused with psychographic segmentation, behavioral segmentation focuses more on consumption habits. Measures of frequency, loyalty, usage, occasion and benefits for the customer are all behavioral considerations.

Frequency: Does the customer tend to buy products in bulk at one time or the same number of products spread over time at shorter intervals?

Loyalty: How loyal are particular customer segments? What can be done to increase retention for less loyal types of customers? How much focus needs to be on acquiring new customers?

Usage: How frequently do consumers use the product? Marketers often group segments based on heavy, moderate and light users.

Benefits needed: Many products and services offer multiple benefits. One customer of a spa may seek massage for relaxation, while another customer is more likely to receive massage to treat pain and tension in a specific area of the body. A differentiation of services may be needed to highlight and cater to specific benefits.

Targeting the Customer Segments

In seeking to define and segment customers according to demographic, geographic, psychographic and behavioral traits, it becomes clear to a business where to target its marketing efforts and how to do so efficiently. However, to segment properly, companies must look at who is buying from them and figure out why they are buying.

Use Social Media to Estimate Targets

There are many levels of target marketing by which businesses can seek to understand their customers and their habits. Using social media to determine target markets by engaging directly with consumers to figure out likes and dislikes is a great tool. Reading customer reviews on Yelp, Google Business and other public review aggregators helps businesses identify which benefits to highlight in marketing their products and services.

Gather Data on Customers

Google Analytics and other analytics platforms can be excellent sources of knowledge as to when and how users interact with a business website. By observing the links consumers click to get to their site, companies can create marketing content that speaks to specific demographics.

For example, if a cleaning products company finds that a considerable portion of its site traffic is from a blog on how to choose cleaning products that are safe for children, it may devote part of its budget to buying Facebook ads that specifically target new millennial mothers.

Other data sources for target marketing can be customer surveys, focus groups and in-depth interviews.

Evaluate Competitor Activity

Looking at the marketing activities of competitors also helps form the basis of a targeting strategy by examining which demographics they pursue, how they speak about their products, and which channels of communication they use most frequently. Businesses may adopt similar targeting. Observing your competitors’ marketing activities can help you form strategies that are better suited for your target markets by illustrating how your brand appeals to consumer segments differently from theirs.

Brand Identity and Positioning

In addition to observing competitors’ targeting activities to establish appropriate segments, targeting and positioning help businesses determine how their product can be better marketed to these and other segments. A company must determine its brand identity, its pricing strategy, the features of its products, services and staff and perform competitive analysis to see where it stands out as a market leader.

A business may better define its niche by observing its competition and noticing areas of the market that represent an untapped opportunity to sell to customers successfully. By carving out a niche, a business can garner loyalty from specific types of customers and demonstrate effective targeting strategy.

Pricing as a Positioning Tool

Pricing is another positioning tool in which a business seeks to define whether it wants to cater to a select few for a higher price or a broader demographic at a lower price range. Often, higher-priced products are considered higher quality and therefore subject to more rigorous standards. This is reflected in how high-end brands communicate quality over quantity in their messaging.

Many brands choose a middle ground where they use messaging to describe a product that is both superior in quality and reasonable in price.

A company’s pricing strategy largely depends on the market and which segments are more likely to buy their products or services.

Promotional Strategy and Messaging

Promotion is a significant portion of positioning that considers the channel and messaging by which a brand promotes itself. Promotional channel choice can tie into the behavioral habits of consumers as it relates to demographics, but there is no rule. Each market is different, and proper targeting strategy requires research.

Does it make sense for your brand to promote a new service through social media? Which social platforms? Are television ads appropriate, or does it not make sense according to psychographic, demographic or other segment data?

Messaging as a means of promotional positioning establishes specific words and imaging with a brand in the minds of customers in the target market. These words and images often appeal to the wants and needs of a target customer segment to effectively sell the product.

Repositioning, Product Design

Companies can try other strategies to position their products. They can reposition their brand or product using new messaging that targets different market segments. For example, if a car company wants to reposition itself as a luxury brand, it can use messaging that reflects sophistication and leisure.

A company may also design a product to fit the tastes or needs of specific segments to serve a particular demand within the market. While this doesn't guarantee a sizable market position, it may allow a company to change its brand’s perception by its targeted segments.