What’s a target market? It’s a group (or groups) of customer(s) that a business has decided to aim it’s products and marketing to. This group can be as small (left-handed, redheads who walk with a limp) to as large (women) as you desire, though generally it’s a good idea to focus your marketing on a reasonable target market. Part of the process of creating a business plan involves defining your target markets, preferably with an idea about the market size.
Why are Target Markets Important?
No non-commodity business or product can be the one thing that is required by all customers. Sure, if you sell salt, you might be the monopoly (or heck, oxygen) and not worry about your target market; but for the rest of us, we have to define these markets so that we can structure our businesses to suit them.
Are you a discount store? Well, then you have to sacrifice personalised customer service (to some extent), location and aesthetics. Maybe even stock levels. Are you a B&M in a shopping centre? Your product line is going to be very different and have a higher focus on the general public than the discount store. And so on.
By defining your target markets, you can then adjust your store to meet their expectations – everything from pricing to product mix to location. By meeting all their needs, you create goodwill and brand loyalty because you are ‘their store’. To them, it seems you are perfect – while to those outside of your target market, you might be mediocre at best. Mediocrity means that converting these untargetted customers, these poor fits take a lot more effort (and dollars) than those who are already targetted. In an e-commerce site, you can see this is in low conversion rates. In a physical store, it’s during the sales process when you realise that you are putting in a ton of effort and still getting very few sales.
Apple does this really well – to their die-hard loyalists, they are perfect. Beautiful products, seamless integration, good customer service and a status symbol all rolled into one. To others, they are over-priced, control freaks that have created a cult.
The hardest part of having a target market, of understanding who we are focusing on also means letting go of the idea that everyone should be our customers. There are individuals, even groups of individuals, who we just can’t / won’t focus on. Doing so might be a detriment to other customers (example – by some reports, Yu-Gi-Oh players can be a horrendous group to have in-store); while others just have products or needs that we can’t meet (example – a RPGer looking for 40 year old product).
At the end of the day, letting customers go is difficult. We see the loss revenue, the loss opportunity and want to win their custom. Yet, meeting these untargetted markets need can be more costly than its viable. It could be a matter of timing (bringing in a new product line) or it could be a decision, but we have to remember why we chose to target the markets we did in the first place. Learning to let go is a hard lesson to learn and one that most of us have to relearn on a regular basis.
Once you let go of these untargetted customers, realising they just aren’t going to buy from you, you can (or should) realise that there’s often space enough for your competitors. If some customers won’t buy from you, perhaps they are better suited to your competitors? Perhaps you should point them in that direction.. It’ll keep them happy and leave you focused.