How to Identify and Understand Your Target Market
When asked who their target market is, a business owner may be tempted to say, “Everyone!” What they’re really saying is, “I don’t know.” Let me explain. By definition, a target market is the specific group of consumers that your products or services are meant for.
But that definition means very little by itself. To identify your target market, you first need to understand those who live around your business: that is your demographic.
Here’s an example of a target market analysis:
Meet Company A.
Company A provides fitness classes to a town of roughly 50,000 people, half of which are college students. The other half is evenly split between retired couples and young families.
Already we can see that there are three main segments within Company A’s demographic: college students, retired couples and young families.
For the sake of this example, let’s say Company A is interested in narrowing its focus to local college students.
To attract this segment’s attention, the fitness company needs to better understand who these college students are.
Here’s what it knows about them:
- Between the ages of 18–23
- 50% are women
- 80% hold a 3.4 GPA or better
- 85% grew up within a 4-hour drive of campus
- 90% are involved in sports
- Attend classes between 8:00AM–10:00PM
The above is Company A’s target market. It clearly defines who its audience is, which in turn tells it how to market to them. We’ll cover more on that in a minute. Now when asked who their target market is, Company A can confidently say, “Students who are young, intelligent, evenly split between sexes, live close enough to visit home on breaks and are active.”
Now that Company A knows who its target market is, it needs to better understand how they act and why they act the way they do: their psychographics. This is a term used to refer to a group of people’s attitudes, aspirations, opinions and so on. In essence, where do they go to get information and why?
In this case, Company A’s target market consists of the Millennial Generation, also known as Generation Y. This group of people is often on the go. Because of this, it’s no surprise that they use their mobile phone more often than not to search online. They also spend a great deal of their time on social sites like Instagram, Twitter and Facebook.
Now that Company A knows who its target market is and has a deeper understanding of who they are, it can make informed decisions about things like how long to stay open, what services to offer and how to best market to them.
The below questions are just a few of the many decisions that should be made based on its target market’s wants and needs:
How long should Company A stay open?
The goal is to establish hours that meet the needs of the students while still producing the greatest profit for the business. Company A knows that all college classes run between 8:00AM and 10:00PM. It also knows that some students might want to work out before class, others during lunch, and others still after class.
To find the perfect schedule that’s both lucrative for the business and convenient for its target market, Company A has decided to test a 6:00AM–12:00AM schedule. The critical thing here is that it continues to track traffic hourly over at least a four-month period when classes are in session. The results will reveal the optimum schedule for Company A.
What classes and amenities should be offered?
Company A knows that its target market is very active and involved in sports. It could be beneficial to contact the college coaches to learn what training regimens are being implemented. Company A might then offer classes and amenities that complement and even mirror what its target market is already doing. This allows students to supplement their current training schedule and to continue training in the off season.
Knowing what they’re doing will also help the fitness company determine what training equipment to purchase and what physical space is needed. The better Company A understands its target market, the better it will be at providing them what they need.
What marketing strategy would be most effective?
Because Company A’s target market consists of Millennials, who heavily use technology, their marketing plan should reflect that.
An effective plan would include a mobile-responsive website so students can view its hours of operation, contact information and class list at a glance. It will also want to offer online booking, and potentially even an app where students can easily book classes on the go. And because its target market spends much of its time on social sites, the company may also want to provide training tips and informative images showing proper form on Facebook, Twitter, and Instagram.
You now know what terms like demographic, target market and psychographic mean. You also understand how to put them into action. Take what you’ve learned and apply it to your business. Perhaps you’ll learn something new about your target market—or even discover who it really is.