You’ve heard it before, but I’ll say it again: Sales teams and entrepreneurs need to know their target market. You can get there by asking yourself, “Who is the ideal fit for my offering? What are their interests and priorities?”
Answering these questions can help you prioritize the deals you’re most likely to win. But how can you really understand the ins-and-outs of your target market?
As a marketer, I can’t tell you how valuable it is to deeply understand your target market. Not only can it help you tailor your messaging, but it also helps you understand your customers’ pain points and goals even better.
Let’s take a closer look at what a target market is, go over how to conduct a target market analysis, see some helpful examples, review target market segmentation, and look into how sales teams can leverage target markets.
Table of Contents
- What Is a Target Market?
- How to Analyze Your Target Market
- Target Customers
- Target Market Examples
- Target Market Segmentation
- How Sales Teams Can Leverage Target Markets + Segmentation
- Know Your Target Market and Grow From There
Let‘s say you’ve created a B2B software product that helps remote construction teams. In that case (and to state the obvious), you’d probably focus on companies within the construction industry. But defining your target audience doesn’t stop there.
You know your industry, but there’s no one-size-fits-all mold for the businesses within it. If I were pinning down a target market for this product, I’d start with business characteristics — for instance, company size and scale would be a good place to begin.
Your product will suit certain companies better than others, and selling to a Fortune 1000 company isn’t the same as a small construction business with less than 100 employees.
In this case, you‘d want to pin down the size of your ideal customer’s business — and this number would be the start of a target market analysis.
Let’s take a closer look at what that process looks like.
As the name implies, target market analysis is the basis for identifying your target market. Here are the five steps you can take to conduct one of your own.
1. Analyze your product or service.
Take a look at what you’re selling to understand which consumers would get value from your product. The questions below will help with the brainstorming process:
- “What need does my product or service fill?”
- “Are there any problems or pain points it solves for?”
- “Who would benefit most from my product or service?”
Once you’ve answered these questions, I suggest getting feedback from current customers. Conduct a focus group or ask your service department about their common problems.
Analyzing your product or service in this way will help you better understand your target market. In fact, you might learn that your current customers aren‘t the people you’re trying to target. If you notice a disconnect in this process, you’ll want to better align your target market with your actual marketing goals so you can realign.
Analysis Example
Let’s imagine I have a company that sells inexpensive, “function-over-form” athletic footwear that stresses comfort and arch support instead of trendy aesthetics.
When conducting my target market analysis, I’d start by taking a thorough, objective look at the product to get a solid grip on its value and differentiating factors.
I may find that my company’s shoes are better suited for day-to-day wear instead of legitimate athletic competition, lack trendy appeal, and can help with sore feet while standing.
This initial insight can help shape the personas that my company will ultimately target. I’d have a better picture of how to construct its value proposition. In this case, my business might find that suburban men over 50 who don’t exercise regularly appear to be the most likely to buy our shoes.
Pro tip: Be open to uncovering new personas. If you’re set on who you *think* your current customer is, you may end up missing out on valuable customers.
2. Check out the competition.
Perform an analysis of your competitors to see who they’re targeting. Take a look at their customer base, and see if you can find an area of the market you could focus on that they might be missing.
The best way to do this is to conduct a competitive analysis. This entails researching who your competitors are, what they offer, and even reviewing their sales tactics.
Looking at your competitors will even help you identify target market gaps that you can fill. Are there any target markets they don’t focus on?
This could lead you to expand into new markets geographically or develop new products to target a different market.
Competitive Analysis Example
If we look at my shoe company example again, the next step I’d take would be to dig into my competitors’ products, how they were selling them, and any noticeable gaps in their potential target markets.
After conducting a competitive analysis, I might find that my competition was ignoring some geographical trends embedded in our target markets.
Let‘s say my competitors’ retail locations and store placements were primarily in cities — ignoring locations like suburban strip malls and local “mom and pop” retail stores. With that information in mind, I’d have a starting point for appealing to a target market that my competition is ignoring.
Pro tip: If you want to dig deeper into potential opportunities, conduct social listening. See what your competitors’ customers are saying to see if there’s something you can do for them that your competitor isn’t currently fulfilling.
3. Choose criteria to segment by.
A target market can be segmented by a few different variables. Consumers can be split by demographic, geographic, and behavioral factors.
This is essentially the process of creating a buyer persona. You’ll divide your target market into several target customers — also known as (you guessed it) buyer personas.
For example, perhaps your target market is midsized companies looking to purchase marketing automation software. You could divide your target customers into several groups, including marketing department leaders, sales leaders, founders, or CEOs.
Here are some of the most common ways to segment a target market:
- Age
- Gender
- Income
- Location
- Behavior
- Lifestyle
- Values
- Interests
Buyer Personas Example
Back to my shoe company example. For this step, I’d begin to string more detailed personas together. Again, I’d base my segmentation criteria on the product analysis I did earlier, and refine it according to the competitive analysis I just completed.
In this case, a significant portion of the criteria would revolve around age, social class, location, and interests — making one of our personas older, working class, suburban consumers who prioritize function over form.
Pro tip: You can have as many or as few buyer personas as you want. Don’t try to force yourself to come up with 10 different personas. If your analysis is telling you that you have two or three really strong personas, focus on those.
4. Perform research.
As you begin narrowing your market, the research phase doesn’t end there. What marketing strategies should you use to reach your potential target market? Is the target market large enough for your product or service? Market research will help you learn more about your target market.
Picking the right target market can tell you a great deal about your business. Are you looking to become a true velocity business, or do you see yourself as a steadier flow of pipeline with enterprises and consumers?
Research Example
After creating my target persona for my shoe company, here’s how I’d conduct market research. I’d survey consumers that fit my target market, potentially employ more direct tactics like hosting focus groups, and take a few more measures — like social listening or one-on-one interviews — to ensure that I have a thorough understanding of my target consumers.
From there, I’d be able to shape a thoughtful value proposition that will guide my sales messaging, outreach strategies, pricing structure, and other crucial sales-related factors that influence how my company reaches consumers.
Pro tip: Spend time on this step. The more details you have about your customers, the market, and your competitors, the more prepared you’ll be to share your product.
5. Track and evaluate your results.
Target market analysis should never be static — you don‘t just conduct one, be immediately content with the results, and stop there. It’s an ongoing process. You need to continuously track your results, evaluate what you see, and iterate on the conception of your target market to appeal to it more effectively.
Evaluation Example
Once the other steps have been covered, I’d continue to monitor how my efforts resonate with my target persona. If sales aren’t where they need to be — or it appears I might have other personas I can cater to — I might restart this process and shift gears on my messaging, strategies, or target market as a whole.
Pro tip: Your target market is not set in stone! You can always adjust and refine as you go.
Target Market Examples
Let’s look at some of the best-in-class companies — both B2C and B2B — to see how they set up their target markets.
1. Atlassian Target Market
Atlassian offers a suite of collaboration tools designed to help developers and product leaders take their projects from concept to completion.
Like most large companies, Atlassian uses target market segmentation to look at different markets and break up its unique value propositions, terminology, and values.
This tells us that while Atlassian can work with almost anyone doing software development, it recognizes how its value proposition changes depending on the market segment in question. I like how it reaches its various segments by dividing its offerings by solution, team size, and industry, allowing prospects to find the best fits for their needs.
Even the same product for two different customer types creates different levels of value.
2. Nike Target Market
Nike offers products to athletes and other consumers who want to exercise regularly. They offer shoes — with a focus on running, basketball, and the brand’s iconic Jordans — as well as apparel.
Nike works with athletes and a fitness-minded audience, but we know a good target market definition can’t be that broad.
I’ll break down two of their segments:
- Young athletes. Kids who get frequent exercise and play sports growing up are a huge, growing category for Nike. Nike engages with this market through sports leagues and associations and with endorsements from popular sports stars like LeBron James.
- Runners. With a focus on new types of shoes, Nike shows it targets consumers based on both demographic information and lifestyle. Nike launches shoes and apparel designed to help the avid runner stay on the road a bit longer.
3. Starbucks Target Market
Next time you’re sipping your cold foam cold brew, I invite you to ponder the target market of the top coffee chain in town: Starbucks.
Many of their locations have been remodeled and offer a hip, contemporary look. Not that surprising since about half of their customers are between the ages of 25 and 40 (*raises hand*).
You’ll also notice nearly every Starbucks customer on their phones. And that’s because 60% of their business in the U.S. comes from Starbucks Rewards members who typically order from their apps, according to a Starbucks earnings call from Q2 2024. The Rewards program and mobile ordering is such a big part of the company’s business now that even its website messaging emphasizes the perks:
The next clue we have on their target market is the location of their shops. By positioning its locations in heavily urban areas and including a drive-thru, Starbucks is attracting on-the-go professionals. To recap, here are a few of Starbucks’ target markets:
- 25-40-year-olds. Remodeled locations accommodate their largest demographic base.
- Tech-savvy adults. Their mobile app has caught on and lends itself to a mobile-first crowd.
- Working professionals. Their urban focus tells us the type of lifestyle they’re catering to.
4. Apple Target Market
What about a company that occupies both the B2B and B2C spaces? How can it develop a target market with such a broad set of customers? Apple is the textbook case for innovation and product design.
But how does that apply to finding a target market? With its wide array of product offerings, Apple has a little something for everyone. Here are two of their target markets:
- Tech enthusiasts. A customer category that launched Apple‘s brand decades ago, technology enthusiasts still get attention from the company. With launches of new tech categories (including wearables, Apple TVs, and HomePods), Apple has shown it’s still creating value for this segment. There is also a tremendous ecosystem where owning a suite of Apple products enables better interoperability among your tech.
- Healthcare. One market Apple has its eyes on is healthcare. By focusing on the appeal of having health information right at your fingertips through your phone and the Apple Watch, they’ve positioned healthcare workers to more conveniently communicate with patients.
Apple doesn’t seem to exclude many people from its target market and has positioned itself to benefit both consumers and businesses — even the landing page for the Apple Watch somehow targets both tech enthusiasts and health-focused people alike with its tagline, “The ultimate device for a healthy life.”
I like that its success has been more about understanding the value of its different segments rather than excluding people from them.
5. McDonald’s Target Market
McDonald‘s target market has always been broad and encompasses a wide variety of customer personas. Younger professionals represent one of the chain’s more prominent target market segments — and that trend is reflected in many of the company‘s location remodels. Several McDonald’s franchises have been revamped to look sleeker, more modern, and better suited for millennials.
“Full nest” families with children over six represent another key base for the chain. The franchise takes many strides to appeal to this specific segment, primarily reflected in its Happy Meal options.
Gen Z customers have also become a standout segment of McDonald’s target market. In fact, according to a report by dcdx, McDonald’s was the most liked brand by Gen Z in 2023. There’s no doubt that the company has adjusted its target market strategy to accommodate this growing segment of young consumers.
Ultimately, the franchise‘s target market isn’t singular and clear-cut in terms of most demographics — but it is specific in terms of its various personas’ economic circumstances. Its value proposition fundamentally rests on the fact that its food is inexpensive and accessible.
You need to have a firm grasp of your target customers if you‘re going to develop pointed, effective value propositions. The success and viability of your sales messaging, prospecting efforts, and broader sales process rests on your knowledge of who’s buying your product or service and the mindset that makes them do it.
That starts with target market segmentation.
Target Market Segmentation
Target market segmentation is the process of partitioning your target audience into more focused, identifiable, and approachable groups (or segments). It’s a broad concept that can take on a lot of forms. Here are some top categories I suggest you consider:
- Geographic segmentation. Dividing your target market based on geographical boundaries.
- Firmographic segmentation. A practice specific to B2B sales where firms are divided based on characteristics like company size or number of employees.
- Behavioral segmentation. Dividing your target market based on behavioral tendencies and decision-making patterns.
- Demographic segmentation. Dividing your target market based on factors like income, education, race, gender, or occupation.
- Psychographic segmentation. Dividing your target market-based elements like personality traits, values, and opinions.
How you elect to segment your target market will be specific to your company‘s needs and interests. In many — if not most — cases, you’ll employ more than one of the segmentation methods listed above when defining a target market.
When you identify the customers you want to serve — and the ones you don’t — ask yourself:
- “Do my target customers have different problems they’re solving with my product?”
- «Do my target customers get different value from my product?»
- “Are either of these things related to demographic, geographic, or lifestyle components?”
In order to segment effectively, you must have a decent way of measuring the value you provide to the market. Then, identify if certain groups are getting more value than others.
This will power the positioning of your product. Suddenly, you can pinpoint pain for your customers while speaking their language.
I’ve found this helps you refine your position in the market and connect on a deeper level with your customer. Having a target market (or target customer) is all about relevancy and relating to the person on the other side of the cash register.
How Sales Teams Can Leverage Target Markets + Segmentation
Segmentation poses several benefits for sales teams. If you know who will be most receptive to your product or service, you get a leg up when conducting most steps of your sales process.
Lead Prospecting
For one, I think effective segmentation can be a major asset in prospecting. If your SDRs have a solid picture of the types of customers that show an interest in your offering, cold leads can become a little warmer — letting those reps make more thoughtfully guided use of your sales messaging when connecting with prospects.
Lead Qualifying
Beyond that, segmentation can also help with lead qualification. Knowing whether a lead fits the bill of a class of high-converting customers gives reps a head start during that stage.
I find it helpful to have some kind of criteria that can immediately distinguish a prospect who needs your product or service from one who lacks the decision-making tendencies, location, or economic circumstances to actually get something out of it. Target market segmentation gets you there.
Reaching New Markets
Finally, target markets provide sales teams with the necessary information to breach new markets and sell to them effectively. If you’re not on top of any emerging markets that might need your product or service, you could hit a wall with your sales potential and lose out on incredibly lucrative business opportunities.
Know Your Target Market and Grow From There
I’ve learned that knowing your target markets inside and out is one of the most fundamental tenets of successful sales efforts. If you‘re not actively analyzing, pursuing, and refining your understanding of your target markets, you’re losing out on sales and pinning yourself into a corner with your business potential.
Following the steps I outlined above will put you on the right path for thoughtful market segmentation and successful sales efforts.
Editor’s note: This post was originally published in July 2018 and has been updated for comprehensiveness.