What Are the Core Concepts of a Target Market?

A target market is a select group of customers in a larger audience or population in whom your company decides to invest money to promote its brand, products or services. Companies often begin by breaking down a larger market into smaller segments with similar demographic, lifestyle or behavioral qualities and then identify a targeted segment for a given campaign.

The whole point of defining a target market is to be as clear as possible who you are speaking to through marketing and promotions. Rather than trying to deliver one universal message in hopes or reaching "everyone," you want to clearly depict your "typical" customer so that you know how to affect them and also where to find them for message delivery. Household cleaning products, for instance, are historically promoted during daytime soap operas, since that is when a large contingent of stay-at-home moms are available and watching.

Not all target markets are created equal. One of the key determinants when comparing one potential market to another is the size. If two markets pose similar opportunities, the one that is the largest often becomes the primary target. Growth potential is also a key consideration. If you see more obstacles in a large market, you may choose a market that is small but growing fast. If you can get in early into a growth market, you can entrench yourself as a major player.

The level of competition impacts a company's decision whether to make a play in a given target market. In essence, you have to weigh the ability of your message to shine through against other competitors. For instance, if one potential target market has five competitors and another has 10, the first seems more ripe. However, you also need to consider how well your strengths align with that given market. In some cases, you may enter a more competitive market because of greater customer demand and because your strengths align well to give you advantages.

An overriding issue in target market selection is profitability. Companies often identify two to three potential discrete segments of customers who may have strong interest in the brand. Usually, you launch your first promotional campaign to target the group you see as the most profitable once you build a loyal following. As you maintain those relationships, you may begin messaging a secondary market to expand. Marketing is an investment, and the market you feel provides the greatest return is usually targeted first.