Target Market Explained

What Is a Target Market?

A target market is the defined group of consumers most likely to purchase a company's product or service. Rather than trying to sell to everyone (an approach that wastes marketing resources and produces diluted messaging), target market selection focuses a company's efforts on the customers most likely to buy, buy repeatedly, and refer others.

Defining a target market is the foundational step in all marketing strategy. Without it, product design, pricing, distribution, and communication decisions lack direction. It is directly linked to the process of market segmentation — where the whole market is divided into groups — and targeting, where specific segments are selected for focus.

Target Market vs. Market Segmentation vs. Positioning

These three concepts work in sequence:

1. Segmentation: Dividing the total market into distinct groups with shared characteristics or needs
2. Targeting: Evaluating each segment and selecting which ones to serve — these become your target markets
3. Positioning: Defining how your brand will be perceived by the target market relative to competitors

This is the STP framework (Segmentation, Targeting, Positioning) — the cornerstone of modern marketing strategy.

How to Identify Your Target Market

Step 1: Define the Total Addressable Market

Start with the broadest possible definition of who might buy your product. Then narrow based on realistic purchase probability.

Step 2: Segment the Market

Apply segmentation bases — demographic, geographic, psychographic, and behavioral — to identify meaningful subgroups. See: market segmentation for a detailed breakdown of segmentation approaches.

Step 3: Evaluate Each Segment

Assess each segment against criteria:

• Size: Is the segment large enough to be profitable?
• Growth: Is the segment growing or declining?
• Accessibility: Can you reach this segment through available channels?
• Competition: How intensely contested is this segment?
• Fit: Does your product genuinely serve this segment's needs better than alternatives?

Step 4: Select Target Segments

Choose the segment(s) where your product delivers the best fit, the competitive environment is manageable, and the potential return justifies marketing investment.

Types of Target Market Strategies

Strategy	Description	Best For
Undifferentiated (mass marketing)	Treat the whole market as one target	Commodity products (sugar, petrol)
Differentiated	Serve multiple segments with tailored offerings	Large companies with broad product lines (P&G)
Concentrated (niche)	Focus intensely on one specific segment	Specialist firms, luxury brands, startups
Micromarketing	Highly personalised, individual-level targeting	E-commerce, digital platforms (Netflix, Amazon)

Target Market Examples

• Nike Running shoes: Serious recreational runners aged 20–45, health-conscious, willing to pay premium for performance
• Rolex: High-income professionals seeking status symbols and quality craftsmanship; typically 40+
• Ryanair: Budget-conscious leisure travellers in Europe; price sensitivity is the primary driver
• LinkedIn: Working professionals, recruiters, and businesses seeking talent or B2B connections

Target Market and the Marketing Mix

Once a target market is defined, every element of the marketing mix (4Ps) should be optimized for that specific customer:

• Product: Features and design that solve the target customer's specific problems
• Price: Aligned with the target segment's price sensitivity and willingness to pay
• Place: Distribution channels the target customer actually uses
• Promotion: Messages, media, and tone that resonate with the target customer

And the target market definition feeds directly into brand positioning — once you know who you are targeting, you can define exactly how to position your brand for that group.