# Target Market: Definition, Purpose, Examples, Market Segments

![Target Market](https://www.investopedia.com/thmb/1Kr3GFHcWa_J-eP7kzhKLi-yTZk=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Term-Definitions_Target-market-49a03b58f6d54ddd88d46521f248fc8a.jpg)

*— Investopedia / Mira Norian*

> **Definition**
>
> A target market is a group of consumers who are most likely to purchase a product based on various demographic and marketing factors.

## What Is a Target Market?

A target market is a group of individuals who have been identified as the most likely potential customers for a product due to their shared characteristics such as age, income, and lifestyle. Identifying the target market is a key part of the decision-making process when a company designs, packages, and [advertises its product](https://www.investopedia.com/terms/a/advertising-costs.asp).  

### Key Takeaways

*   A target market is a group of customers with shared demographics who have been identified as the most likely buyers of a company's product or service.
*   Shared characteristics typically include lifestyle, income, and age.
*   Identifying the target market is an important part of the development and implementation of a successful marketing plan for a new product.
*   The target market also can inform a product's specifications, packaging, and distribution.

## How a Target Market Works

A new product must satisfy a need, solve a problem, or both. That need or problem probably isn't universal. It most likely addresses the wants and concerns of a subset of [consumers](https://www.investopedia.com/terms/c/consumer-theory.asp) such as environmentally-conscious vegetarians, science nerds, or outdoor enthusiasts. It might appeal to a teenager, a middle-aged professional, a bargain-hunter, or a snob.

Envisioning your likely target market is part of the process of creating and refining a product. It informs decisions about its packaging, marketing, and placement.

## How Do I Define My Product's Target Market?

Market researchers use [activity, interest, and opinion (AIO) surveys](https://www.investopedia.com/terms/a/activities-interests-and-opinions.asp) to construct psychographic profiles of their target customers. Marketing professionals divide consumers into four segments:

*   **Demographic**: These are the main characteristics that define your target market. Everyone can be identified as belonging to a specific age group, income level, gender, occupation, and education level.
*   **Geographic**: This segment is increasingly relevant in the era of globalization. Regional preferences should be taken into account.
*   **Psychographic**: This segment goes beyond the basics of demographics to consider lifestyle, attitudes, interests, and values.
*   **Behavioral**: This segment relies on research into the decisions of a company's current customers. New products may be introduced based on research into the proven appeal of past products.

## What Is an Example of a Target Market?

Each of the four target markets can be used to consider who the customer is for a new product.

There were an estimated 62,091 Italian restaurants in the U.S. in 2024. A corner pizza joint might appeal mostly to a younger and more budget-conscious consumer. An old-fashioned white tablecloth place might be frequented by older individuals and families who live in the neighborhood. A newer venue down the street might cater to an upscale and trend-conscious crowd who will travel a good distance for the restaurant's innovative menu and fancy wine list.

A savvy businessperson has consciously considered the ideal target market for the restaurant in each successful case. They've tweaked the menu, decor, and advertising strategy to appeal to that market.

## Why Are Target Markets Important?

Few products are designed to appeal to everyone. The Aveda Rosemary Mint Bath Bar is available for $19.50 per bar at Aveda beauty stores. It's marketed to upscale and eco-conscious consumers who will pay extra for quality.

Clé de Peau Beauté Synactif Soap retails for $110 a bar and is marketed to wealthy, fashion-conscious consumers who are willing to pay a premium for a luxury product.

An eight-pack of Dial soap costs $9.79 at CVS and is known to get the job done.  

Part of the success of selling a good or service is knowing to whom it will appeal and who will ultimately buy it. Its user base can grow over time through additional marketing, advertising, and word of mouth. That's why businesses spend a lot of time and money on defining their initial target markets and why they follow through with special offers, [social media campaigns](https://www.investopedia.com/use-social-media-to-grow-business-8391642), and specialized advertising.

> **Important**
>
> A business may have more than one target market. A primary target market is the main focus. A secondary target market is smaller but has growth potential. Toy commercials are targeted directly to children and their parents are the secondary market.

## What Are Market Segments?

Dividing a target market into segments involves grouping the population according to the key characteristics that drive their spending decisions. They include gender, age, income level, race, education level, religion, marital status, and geographic location.

Consumers with the same demographics tend to value the same products and services so narrowing down the segments is one of the most important factors in determining target markets.

People who fall into a higher income bracket may be more likely to buy specialty coffee from Starbucks rather than rely on Dunkin' Donuts. The parent companies of both these brands have to know this so they can decide where to locate their stores, where to stock their products, and where to advertise their brands.

## Target Market and Product Sales

Identifying the target market is an essential part of a product development plan along with manufacturing, distribution, price, and promotion planning. The target market determines significant factors about the product itself. A company might tweak certain aspects of a product such as the amount of sugar in a soft drink or the style of the packaging so it appeals more to consumers in its target group.

A company might expand its target market internationally as its product sales grow. International expansion allows a company to reach a broader subset of its target market in other regions of the world.

A company might find that its domestic target market expands in addition to international expansion as its products gain more traction in the marketplace. Expanding a product's target market is a revenue opportunity worth pursuing.

## How Detailed Should a Target Market Be?

It depends. A product might be designed for a mass market or a niche market and a niche market can be a very small group indeed, particularly in a product's early introductory phase.  

Some carbonated beverages aim for a universal market.

Coca-Cola had to branch out to 200 markets abroad to continue growing its customer base. Gatorade is owned by Pepsi Cola but the brand is positioned as a drink for athletes. The soda brand Poppi is branded as a healthy, sparkling, prebiotic soda with real fruit juice and gut health and immunity benefits and it's aimed at a younger, healthier, and more trend-conscious target market.  

## How Do Companies Use Target Markets?

Consider a casual apparel company that's working to build its distribution channels abroad. It conducts some research to determine where its apparel will be most successful and to identify its primary target market. It discovers that the people most likely to buy its products are middle-class consumers between the ages of 35 and 55 who live in cold climates.

It's reasonable for the company to focus its advertising efforts on northern European websites but it may also consider how its apparel can be most attractive to that target market. It may revise its styles and colors and tweak its advertising strategy to optimize its appeal to this new prospective market.  

## What Is the Purpose of a Target Market?

A target market defines a product and a product defines a target market. It can influence a product's design, packaging, price, promotion, and distribution when its target market has been identified. A luxury cosmetic won't be sold in a pharmacy. An expensive pair of shoes comes with a branded cloth drawstring bag as well as a shoebox.

All those factors are signals to the target audience that they have found the right product.

## The Bottom Line

Identifying the target market is part of the process of creating and refining a new product.

A target market can be translated into a profile of the consumer to whom a product is most likely to appeal. The profile considers four main characteristics: demographic, geographic, psychographic, and behavioral. These factors help determine who is most likely to purchase a company's product.

> **Article Sources**
>
> 1.  IBISWorld. "[Italian Restaurants in the US - Market Research Report (2014-2029)](https://www.ibisworld.com/united-states/industry/italian-restaurants/4303/)."
>     
> 2.  Aveda. "[Rosemary Mint Bath Bar](https://www.aveda.com/product/17762/16545/body/bath/rosemary-mint-bath-bar?gclid=CjwKCAjwhOyJBhA4EiwAEcJdcWYCfAMCnOB4ssttKqzLcrU-gKn-7KgISnsxpg7l3zHtx0K4vYmJGBoCatIQAvD_BwE&gclsrc=aw.ds#/shade/7_oz%2F200_g)."
>     
> 3.  Cle de Peau. "[Synactif Soap](https://www.cledepeaubeaute.com/synactif-soap/0729238162952.html?gclid=CjwKCAjwhOyJBhA4EiwAEcJdcSE9mrPaAd61kqKN8jvpVAQd7hLFPdrIiGVnChnuyl1SG2IrPOB6ehoCu9kQAvD_BwE&gclsrc=aw.ds)."
>     
> 4.  CVS. "[Dial Hand Soap](https://www.cvs.com/shop/personal-care/hand-sanitizer-soap/hand-soap/q/Dial/br)."
>     
> 5.  The Coca-Cola Company. "[Coca-Cola Australia](https://www.coca-colacompany.com/au/news/coca-cola-from-startup-to-global-enterprise)."
>     
> 6.  Pepsico Partners. "[Gatorade](https://pepsicopartners.com/PEPSICO-BRANDS/GATORADE®/c/brand_gatoradeBeverage)."
>     
> 7.  DrinkPoppi. "[Why Poppi? Soda's Back](https://www.drinkpoppi.com/why-poppi/)."