Target markets

Target markets are groups of buyers toward whom a business or organization directs its marketing efforts. Target markets can include groups of consumers, businesses, government, or users of services or products from nonprofit organizations.
Target markets and target marketing can be compared to the idea of hitting the bull’s-eye. The term bull’s-eye comes from the ancient sport of archery, where the black center of the target is surrounded by a white circle and resembles the eye of a bull. Similar to aiming at the bull’s-eye in a target’s center, good marketing aims at a specific grouping of customers. The idea of choosing the right target market—hitting the bull’s-eye—comes from the reality that no firm has the ability to sell all products to all customers.
When choosing target markets, managers consider the size of target group, the profit potential, accessibility to that group of consumers, and the potential interest of those consumers. In the United States, the number of potential customers and their purchasing power is usually available using U.S. census bureau data. Access to potential target markets (i.e., availability of distribution channels to get products or services to customers) and advertising and sales promotion methods to make potential customers aware of a firm’s offerings can be assessed through informal market research. Assessing consumers’ interest in a firm’s offerings is often done through focus groups, market tests, and SURVEYS.
For any organization, the benefit of defining target markets is marketing efficiency. The more marketers know about their customers or potential customers, the better opportunity they have to meet the needs of those consumers. Good marketers anticipate their customers’ needs, often even before the customers recognize them. Many companies think in terms of their products rather than the benefits they are providing to consumers. One of the failures of many marketing executives is to not think in terms of their consumers, termed marketing myopia by Harvard business professor Theodore Levitt.
Marketers in nonprofit organizations often have additional problems. Typically they have at least two distinct target markets, donors and recipients. User groups are different from donors to nonprofit groups, whether they are financial contributors or people giving their time. Donors typically have different motives, interests, income, and other demographic characteristics from users. This requires nonprofit marketers to develop different marketing strategies for each audience. Often target user groups for nonprofit organizations are hard to identify and difficult to communicate with.
Whether for nonprofit organizations or businesses, once viable target markets have been identified, marketers then decide what type of marketing strategy to use. Generally there are three choices: undifferentiated, concentrated, or multisegment. An undifferentiated strategy involves using one marketing mix for all target markets. Undifferentiated strategies minimize marketing costs by using the same message, promotions, signs, products, etc., for all target groups. On the other hand, an undifferentiated approach may not be appropriate for some target audiences. Many U.S. companies have failed in their initial international marketing efforts by not adjusting their marketing mix for target markets abroad.
A concentrated strategy involves focusing a firm’s efforts on one target market and developing products, pricing, promotion, and distribution strategies for this group of consumers. Small firms without sufficient resources to compete in many markets often use a concentrated strategy.
A multisegment strategy involves identifying a few target markets, a basic marketing mix, and adapting product offerings, pricing, promotional efforts, and distribution strategies for each group. Business-to-business marketers often use multisegment strategies employing different distribution and promotional methods for large versus small and domestic versus foreign customers.
See also market segmentation.