Why Are Target Markets Important to a Marketing Plan?
A marketing plan outlines the strategies and tactics a business wants to use to reach its sales and profit goals. Developing those strategies and tactics requires information about the needs and wants of prospective customers. Through market research, a company learns who, among all the potential customers, might purchase a company's goods and services. Those individuals become the target audience for all marketing communications, sales and product development. They comprise segments of the total marketplace known as target markets. Barbara Cunningham of the University of Missouri Extension Office states that a business without a clear understanding of its target markets may as well be wearing a blindfold.
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Definition
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Target markets form the customer base for any business. They represent people who may use a product or service, have the financial capability to buy it and can be reached through one or more media. Demographic, socioeconomical and behavioral data allows businesses to understand what messages will generate the best response among their target markets. To remain competitive, companies today must concentrate on their target markets to develop long-lasting relationships with buyers.
Segmentation
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Target markets can be broken down demographically using factors such as gender, age, income, "family life cycle" (single, married, married with kids, retired), level of education and ethnicity, according to Ohio University Extension's Nancy H. Bull. She also includes geographic, recreational tendencies and time constraints as possible criteria.
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Advantages
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Bert Rosenblum, marketing professor at Drexel University's LeBow College of Business, cites "product positioning and easy identification of opportunities" among the advantages of using a target marketing approach in creating the marketing plan. Target market selection enables advertising to develop copy that hones in on a specific audience and select the most cost-effective media to use. It also permits product development to tailor features and design for the target audience.
Disadvantages
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Target marketing requires solid market research to be effective, an investment small businesses may be reluctant to make. Higher promotional and administrative costs incurred from using different approaches for several audiences can be a drawback to target marketing, according to Dr. Rosenblum. Another disadvantage arises when a company narrows its focus to the extent that brand loyalty could be eroded.
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