Definition of Market:
The term “market” refers to a collective group comprising individuals, companies, and other organizations with the potential to purchase products or services.
Target Market
A target market is the specific group of existing and potential customers who are most inclined to purchase your product or service.
Entrepreneurs should be able to articulate the characteristics and traits of their ideal customers, by identifying who is most likely to purchase their product or services. This clarity aids in tailoring marketing strategies and product offerings to effectively meet the needs and preferences of the target market.
Benefits of Knowing Your Target Market:
1, Advertising Strategy:
Understanding your target market helps you decide how and where to advertise, ensuring that your marketing messages reach the right audience effectively.
2, Pricing Strategy:
Knowledge of your target market enables you to determine the right price for your product based on income levels and the purchasing power of potential consumers.
3, Product Selection:
It helps you select the appropriate range of products to offer, which align with the preferences and needs of your target market.
Criteria for Describing Your Target Market:
Defining your target market involves developing criteria to identify the specific group of individuals or businesses who are most likely to be interested in purchasing your products or services.
Here are some factors a business can consider when defining its target market.
1, Age.
Age is a critical factor in shaping the consumer behavior of your potential customers. People’s interests and preferences change as they grow older, which affects their socializing habits and media consumption.
By determining a customer profile, you can develop a marketing campaign geared toward your target market, which can be much more cost-effective than trying to reach a mass audience.
For example, If you want to place an advertisement, it’s important to choose a platform where your target audience is likely to see or hear it.
Let’s look at the age ranges and their Target Market Characteristics:
a, The Age Range: 55 years old and above.
They are well-established in their careers, with relatively stable incomes and savings.
They prioritize quality and reliability in products and services, and they are more likely to value traditional advertising channels like newspapers and television.
They are interested in products and services related to health, retirement planning, leisure activities, and travel.
Although they are less tech-savvy than younger generations, they are increasingly adopting digital technologies.
b, Millennials and Younger: Age Range: Approximately 25 to 39 years old
They are often characterized as digital natives, and comfortable with technology and social media.
They prioritize convenience and experiences in their purchasing decisions, and value brands that align with their personal beliefs and values, such as sustainability and social responsibility.
They are more likely to be urban dwellers with diverse interests and lifestyles. They also embrace trends in health and wellness, technology, and sustainability.
They seek authenticity and transparency from brands and favor those with a strong online presence and engagement.
c, Generation Z and younger Millennials: Age Range: Approximately 18 to 24 years old
Target Market Characteristics:
They are highly connected and digitally fluent, preferring online platforms and social media for communication and information.
They value authenticity and personalization in products and brands.
They are usually students or starting their careers, making them budget-conscious.
They prefer experiences over material possessions, making them interested in travel, events, and unique offerings.
Their purchasing decisions are influenced by social media trends and peer recommendations.
2, Income
Income is a crucial factor in determining a target market’s purchasing power and preferences. Here’s how income influences target market segmentation and purchasing behavior:
a, Low-income consumers.
Lower-income consumers typically have limited discretionary income. They prioritize affordability and value when making purchasing decisions. Products or services priced too high may be out of their reach.
Lower-income consumers often opt for basic or generic products that meet their essential needs at an affordable price. They may prioritize necessities like food, housing, and healthcare over luxury items.
When targeting lower-income markets, businesses must focus on affordability, emphasizing value propositions, discounts, and budget-friendly options. Price promotions, payment plans, and financing options can also attract these consumers.
Lower-income consumers may prefer shopping at discount stores, supermarkets, or online marketplaces where prices are lower and a wide range of affordable options is available.
b, Middle-income consumers.
Middle-income consumers have more disposable income than lower-income groups but still seek value for money. They’re willing to pay for quality but are sensitive to price increases.
Middle-income consumers seek a balance between quality and price. They’re willing to pay more for products that offer better features, durability, or brand reputation.
In middle-income markets, businesses can emphasize both quality and affordability. Marketing messages may highlight product features, benefits, and competitive pricing relative to similar offerings in the market.
Middle-income consumers may shop at department stores, specialty retailers, or online platforms that offer a balance of quality and affordability.
c, Higher-income consumers.
Higher-income consumers have greater purchasing power and are less price-sensitive. They may prioritize quality, brand prestige, and unique features over affordability.
Higher-income consumers are more likely to splurge on luxury goods, premium services, or experiences that enhance their lifestyle and status.
Higher-income markets require a different approach, focusing on exclusivity, prestige, and luxury. Marketing efforts may include premium branding, personalized experiences, and limited edition products to appeal to affluent consumers.
Higher-income consumers often seek premium shopping experiences, preferring upscale boutiques, luxury department stores, or exclusive online platforms with curated collections.
3, Gender
Gender segmentation in marketing enables businesses to precisely target their audience, and tailor products, as well as campaigns that meet the distinct needs and preferences of men and women
For instance, a clothing retailer may offer diverse styles and colors for both genders to meet fashion preferences within each group, while a cosmetics company may focus on makeup products for women and grooming products for men, to align their offerings with the specific interests of their target demographics.
Gender may also be exploited by a business to craft customized marketing messages that resonate with each gender group. For example, by using language, imagery, and themes a car manufacturer may emphasize safety and reliability for female consumers while highlighting performance and power for male consumers.
Gender-based market analysis can be used beyond marketing, to shape product development and enable businesses to create products tailored to the needs of each gender. For example, a business may develop smartphones with larger screens and longer battery life for men who prioritize functionality, and sleek designs with advanced camera features for women focused on aesthetics and social connectivity.
Furthermore, a business may implement gender-tailored in-store interactions and online initiatives, to cater to the distinct preferences of both males and females. For example, the layout and design of both the physical and online store could be optimized to appeal to male and female shoppers differently. This could involve creating distinct sections or zones within the store that cater to specific interests or styles.
4, Education
Education plays a significant role in how businesses develop target markets for their products.
a, First and foremost, there exists a direct correlation between education levels and purchasing power, and this phenomenon is exploited by businesses’ to develop market segmentation strategies. Consumers with higher levels of education often have greater disposable income and may be willing to invest in premium or specialized products.
For instance, a luxury car manufacturer may target affluent consumers with advanced degrees who are more likely to appreciate the craftsmanship and technology incorporated into their vehicles, thus aligning their products with the purchasing power and preferences of their target market.
b, Higher education exposes individuals to new interests, values, and ideas, which foster critical thinking. As a result Educated consumers prioritize experiences over possessions, hence enabling businesses to craft targeted products and marketing strategies for sectors like travel and hospitality. Education also expands exposure to innovations, making educated consumers early adopters of new technologies.
c, Furthermore, the nature of education, including specific fields of study or training, can also inform businesses’ target market decisions.
For example, a software company offering advanced coding tools might target individuals with backgrounds in computer science or engineering, recognizing that these consumers are likely to have the skills and interest necessary to utilize their products effectively.
5, Location
Location is a significant factor for businesses to develop their target markets for products .
Firstly, businesses use geographical location to understand the demographic makeup of an area, allowing them to tailor products and marketing strategies to suit the needs and preferences of local residents.
For instance, a retail chain could offer different product assortments in urban and rural locations based on the population density and cultural preferences of each area.
Secondly, location data helps businesses analyze local trends and consumer behaviors, allowing for targeted marketing efforts.
By understanding the unique characteristics of a specific region, businesses can adapt their messaging and promotions to resonate with local consumers.
For example, a restaurant chain might emphasize regional cuisine or cultural events in their marketing campaigns to appeal to residents in a particular city or neighborhood.
Additionally, businesses use location-based data and technologies to personalize customer experiences and optimize sales channels. Mobile apps and geolocation services enable businesses to send targeted promotions and recommendations based on consumers’ real-time location data.
For instance, a retail store can send notifications to nearby customers about ongoing sales or exclusive offers, driving foot traffic and sales in-store.
Lastly, businesses tend to locate their facilities, warehouses, and retail outlets strategically, to ensure an efficient supply chain management and prompt product delivery to customers.
For instance, an e-commerce company may target a particular state or province by establishing warehouses in key locations to reduce shipping times and costs for customers within those regions, thereby increasing their competitiveness in local markets.
Entrepreneurship & Business Management N4 marketing feasibility study
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