A target market is a group of customers with similar needs that forms the focus of a company's marketing efforts. Similarly, target marketing involves tailoring the company's marketing efforts to appeal to a specific group of customers. Selecting target markets is part of the process of market segmentation—dividing an overall market into key customer subsets, or segments, whose members share similar demographic characteristics and needs. Demographic characteristics that are analyzed for target marketing purposes include age, income, geographic origins and current location, ethnicity, marital status, education, interests, level of discretionary income, net worth, home ownership, and a host of other factors. The company then selects from among these segments the particular markets it wishes to target. "Small businesses that identify the needs of specific target markets—existing and potential customers who are the focus of marketing efforts—and work to satisfy those needs, are more effective marketers," according to Gloria Green and Jeffrey Williams in Marketing: Mastering Your Small Business.

Target marketing can be a particularly valuable tool for small businesses, which often lack the resources to appeal to large aggregate markets or to maintain a wide range of differentiated products for varied markets. Target marketing allows a small business to develop a product and a marketing mix that fit a relatively homogenous part of the total market. By focusing its resources on a specific customer base in this way, a small business may be able to carve out a market niche that it can serve better than its larger competitors.

Identifying specific target markets—and then delivering products and promotions that ultimately maximize the profit potential of those targeted markets—is the primary function of marketing management for many smaller companies. For instance, a manufacturer of fishing equipment would not randomly market its product to the entire U.S. population. Instead, it would conduct market research, using such tools as demographic reports, market surveys, and trade shows, to determine which customers would be most likely to purchase its offerings. It could then more efficiently spend its limited resources in an effort to persuade members of its target group(s) to buy. Advertisements and promotions could then be tailored for each segment of the target market.

There are infinite ways to address the wants and needs of a target market. For example, product packaging can be designed in different sizes and colors, or the product itself can be altered to appeal to different personality types or age groups. Producers can also change the warranty or durability of the good or provide different levels of follow-up service. Other influences, such as distribution and sales methods, licensing strategies, and advertising media, also play an important role. It is the responsibility of the marketing manager to take all of these factors into account and to devise a cohesive marketing program that will appeal to the target customer.

Small business enterprises are also encouraged to continually examine their marketing efforts to make sure that they keep pace with changing business realities. For example, business start-ups typically accept any kind of legitimate business in order to pay the bills and establish themselves as a viable entity. But long after the start-up has blossomed into a solid member of the local business community, it may continue to rely on these early accounts rather than casting its net for more promising clients. "Are you happy with the makeup of your customer base and the nature of the work you do now?," asked Kim Gordon in Entrepreneur. "Altering the types of accounts you serve, their size, location or other criteria can have a big impact on your bottom line…. Instead of letting your current customer base define you, use target marketing to determine who your next customers or clients should be." The process of redefining ideal clients and customers can be painstaking and time-consuming, for creating profiles of your new target audience necessitates extensive research into ideal prospects and the marketing measures that will be most effective in reaching them, as well as your own desires for your company's future direction. But for many small business owners, the effort is worthwhile. "By targeting your ideal prospects, you'll avoid detours and grow your business in all the right directions," wrote Gordon. "Soon you'll have the kind of company that matches your vision and grows increasingly profitable over time."


Cohen, Eric. "How to Target Smarter." Target Marketing. May 1998.

Durden, Jonathan. "Questioning the Term 'Targeting' is Fundamental." Marketing. November 3, 1994.

Field, Anne. "Precision Marketing." Inc. June 18, 1996.

Gordon, Kim T. "Cream of the Crop." Entrepreneur. January 2001.

Green, Gloria, and Jeffrey Williams. Marketing: Mastering Your Small Business. Upstart Publishing, 1996.

Weinstein, Art. Market Segmentation: Using Niche Marketing to Exploit New Markets. Probus, 1989.

SEE ALSO: Market Segmentation

User Contributions:

Comment about this article, ask questions, or add new information about this topic: