Also known as a target audience or a targeted market, a target market is a specific group of consumers that a business wishes to attract and sell its line of goods or services to. A target market may be defined in terms of age, gender, sexual orientation, economic class, ethnicity, religion, or location. This process of socio-economic grouping allows businesses to create profiles of the typical customer who is likely to purchase products from the company, which in turn provides the basis for the creation of marketing and sales initiatives that allow the business to build a clientele within that customer demographic.
The identification of a target market is very important to the long-term operation of a business. Without a clear understanding of who is likely to be interested in the products offered by the company, it is very difficult to proactively take steps to connect with potential customers. By defining the basic characteristics of a given target audience, and then identifying the ways that the company can meet their needs and wants, the process of building a customer base becomes much easier.
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While some companies tend to focus on reaching and maintaining a specific target market, other businesses will seek to establish ongoing relationships with consumers in several different markets. This helps to insulate the company from sudden changes in customer tastes or financial reversals that impact the entire consumer demographic. For example, if a company cultivates one product line that appeals to teens and another that attracts people between the ages of fifty and sixty-five, the business can often offset unforeseen drops in sales in one demographic with the continuing strong sales in the other.
Many companies use the concept of a target market to develop new product lines that will allow the business to increase the size of its client base within that same demographic. This means that a company which produces sporting equipment may create and market a line of sports memorabilia, such as wall art, histories of various sports, or jewelry with a sports theme. Consumers who already purchase the sporting equipment may also purchase goods from the additional lines, since they trust the products previously purchased from the manufacturer.
It is not unusual for any business to assess its appeal in various target markets, and determine if there is a need to expand into other markets. Even companies that have already diversified and have a strong presence in several markets will want to be on the lookout for emerging markets where they can reach different demographics while holding on to current clients. For this reason, the task of identifying and qualifying a target market is an ongoing process for businesses of any size, ranging from the mom-and-pop store down the street to the multi-national corporation.