Target Market (Junior Cert Business Studies): Revision Notes
Target Market
When businesses create products or services, they need to identify exactly who is most likely to buy from them. Understanding your target market is essential for business success because it helps companies focus their efforts on the right customers.
What is marketing?
Before we explore target markets, it's important to understand what marketing means. Marketing involves all the activities a business uses to connect with potential customers and persuade them to purchase their products or services. This includes everything from advertising and promotions to understanding what customers actually want and need.
Marketing is much broader than just advertising - it encompasses market research, product development, pricing strategies, distribution channels, and customer relationship management.
Understanding target markets
A target market is the specific group of people who are most likely to be interested in buying a particular product or service.
Rather than trying to sell to everyone, smart businesses identify their target market and focus their marketing efforts on these potential customers. This approach is much more effective and cost-efficient than attempting to appeal to all consumers.
Examples of target markets
Understanding target markets becomes clearer when we look at real business examples:
Real Business Examples: Target Market Identification
- Teenage clothing brands like Penneys target young people aged 13-19 who want fashionable, affordable clothes
- Kerrygold butter targets families and cooking enthusiasts who value quality Irish dairy products
- Dublin Bus targets city commuters, tourists, and residents who need public transport
- PlayStation gaming consoles target children, teenagers, and young adults who enjoy video games
Each of these businesses has identified a specific group of people who are most likely to want their product.
Key characteristics of target markets
Target markets are usually defined by shared characteristics that make certain people more likely to buy a product. The main characteristics businesses consider include:
Demographic factors
- Age - Different age groups have different needs and preferences
- Gender - Some products appeal more to specific genders
- Income level - How much money people earn affects what they can afford
- Family situation - Single people, couples, or families with children have different needs
Geographic factors
- Location - Where people live (urban vs rural, specific regions)
- Climate - Weather conditions affect product demand
Lifestyle factors
- Interests and hobbies - What people enjoy doing in their spare time
- Values and attitudes - What matters most to them
- Lifestyle choices - How they prefer to live
For example, SuperValu might target families living in suburban areas who value convenience and quality Irish products, whilst also having sufficient income for weekly grocery shopping.
Businesses often combine multiple characteristics to create a detailed profile of their ideal customer, making their marketing efforts more precise and effective.
Market segmentation
Market segmentation is the process of dividing a large market into smaller, more specific groups based on shared characteristics.
This strategy helps businesses create more targeted marketing campaigns. Instead of using a one-size-fits-all approach, companies can tailor their messages to appeal to different segments.
Benefits of market segmentation
Market segmentation provides several advantages:
- More effective advertising - Messages can be customised for each segment
- Better product development - Products can be designed to meet specific needs
- Improved customer satisfaction - Customers receive more relevant products and services
- Higher profits - Targeted approaches often generate better sales results
Real-world example
Worked Example: AIB Bank Market Segmentation
Consider how AIB Bank segments their market:
- Student banking - Targets young people aged 17-25 with services like student accounts and graduate programmes
- Personal banking - Focuses on working adults who need everyday banking services
- Business banking - Serves companies and entrepreneurs requiring commercial financial services
Each segment receives different marketing messages and product offerings that match their specific needs and circumstances.
Key Points to Remember:
- Target markets are specific groups of people most likely to buy your product or service
- Businesses identify target markets using characteristics like age, gender, income, location, and interests
- Market segmentation divides large markets into smaller, more manageable groups
- Focusing on target markets makes marketing more effective and profitable than trying to appeal to everyone
- Understanding your target market helps businesses create products and services that customers actually want and need