Target Market is a technical term from marketing, but it means basically what you’d think: what is the group of people (the market) that you’re aiming at (targeting)?
But why should I have a target market at all? Shouldn’t I aim for as many customers as possible?
Basically, the short answer is that you can’t really do anything useful for the whole world; by selecting a smaller subset of potential customers, you can make something they actually want. But that’s easier to understand by looking at some examples….
Target Market’s Preferred Product
For ease of discussion, let’s say you make food. What kind of food should you make? Obviously, you should make the best you can, to make your customers as happy as possible. But how do you tell?
The problem is, there’s no widespread agreement on what constitutes the “best” sort of food. Even laying aside the fact that I love fried chicken while my partner is a vegetarian, there’s not even an agreement about general characteristics of food. Should it be hot or cold? (Depends on the season and where you live.) Should it be high-quality organic ingredients, or processed and preserved? (Depends on how quickly it will be eaten, and whether the purchaser is a health nut.) Should it be mostly carbohydrates, or should it emphasize protein? (Depends on the diet and metabolism of the customer.)
There’s no way you can make everybody happy: what my father-in-law thinks is pleasantly spicy, I think is inedible; what I think is tasty he thinks is bland. If you make something yuppies like, college students can’t afford it; if you please the college students, higher-income diners will think the quality is too low.
And if you try, you’ll just make everyone unhappy.
Case study: Why buy a Compaq?
For a while, in the personal computer market, there was no reason in the world you would buy a Compaq. They were cheaper than Sony… but if you cared about getting it cheap, you’d buy Dell. They were higher quality than Dell, but if you cared about high quality, you’d buy Sony. They were more reliable than Asus, but if you cared about reliability you’d buy IBM.
There was NO characteristic of computers that Compaq was best at. They were a middle-of-the-road machine on every conceivable test.
Customers don’t want average. They want the best… by whatever definition of “best” they have in mind.
No target market? No clear answer. But if you pick a target market, you can make a product that makes those people happy.
Target Market’s Preferred Place
How are you going to get your food in the same place as your customers? Will you deliver it to them? Will they come to your restaurant to eat it? Will you meet in the middle, at a grocery store?
Well, people who are busy tonight will want it delivered, no question. But other people don’t want to pay the extra to get it delivered (in higher prices, or tipping the driver, or both); they’d prefer to go get it. But some of them will prefer to pick it up and take it home, while others would rather eat at your restaurant. But all of those options are more expensive than buying it at the store and cooking at home, so some people would rather you sell it to the grocery.
No target market = confusing muddle. Pick a target market, and you and easily determine how they want to get their food.
Target Market’s Preferred Promotions
How will your customers find out about your food? Will you advertise on TV? In magazines? Will you have a website? How about this new social media thing? Or maybe you should have one of those dancing sign-flippers out on the street corner? Or maybe you don’t need to advertise at all — word of mouth will be sufficient.
Depends on who your customer is. Some groups spread news of new products quickly and reliably — but if you’re targeting introverts, you’d best not rely on word of mouth. TV and newspapers will get some people, but Americans under 35 watch Hulu and YouTube and get their news from Twitter and Google — they’d miss your ads entirely. Social media will hit that crowd, but will miss a good portion of their parents. And can you afford to have TV ads and newspaper ads and radio ads and still have someone monitoring your blog and your Twitter feed and your Facebook fan page? Search Engine Optimization doesn’t come cheap.
Trying to reach everyone is an easy way to waste a lot of money. Trying to reach a particular subset of people is much cheaper, much easier, and (given the above considerations of product and place) much more effective.
Summary and Action Steps
Your business can’t make everyone happy, and trying to pretend that you can will only lead to frustration… for everyone involved. Make yourself and your customers happy, and pick a target market.
Who most needs your product?
Who most knows that they need your product?
Who most commonly buys your product?
What do they do? Like? Buy? Talk about?