- What Is a Target Market?
- What are Demographics and Demographic Segmentation?
- What Demographics Should You Consider?
- Benefits of Segmentation
- Segmentation Mistakes to Avoid
Understanding your target demographic is a key component to effective digital marketing. The better you know your target audience, the better you’ll be able to create content and advertising that draws them in and compels them to convert with your company. Several factors go into defining your target audience, including age, geography, marital status, and educational level. Here we explore what a target demographic is and how you can best develop yours.
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What Is a Target Market?
A target market is a term used to describe a particular group of potential clients or customers that a business wants to sell its services and products to. Once a business fully understands its target audience, it can direct its marketing efforts towards those specific individuals. Target markets are made up of clearly defined hypothetical customers who are most likely to be interested in a company’s products, services, or online content.
Many businesses spend a significant amount of time and money to better understand, define, and monitor their ideal audiences. The better a company knows its target market, the more it will cater to that specific market in terms of marketing and products.
There are several important benefits of understanding your target market, including that it:
- Helps you attract and convert new customers
- Increases the number of high-quality leads
- Allows you to directly address a clearly defined audience
- Ensures you stay focused on the market you want to attract
- Increases customer loyalty
- Helps to differentiate you from your competitors
What Are Demographics and Demographic Segmentation?
Demographics refers to studying particular groups of people based on sex, race, age, education level, and income. Businesses use demographics to define their target market more clearly by narrowing down on their ideal audiences’ specific characteristics, interests, likes, dislikes, and problems.
For example, an over-50 community will want to know how many individuals in their area are approaching this age and how many of those individuals would be able to afford to live in the community. Using this information, the community has a more precise idea of who they should target in terms of marketing.
Demographics are commonly used as a marketing tool to draw in customers and predict trends and behaviors. The best way to use demographics is to utilize demographic segmentation or to segment a market based on specific factors. Demographic segmentation provides companies with several smaller target markets to allow a business to determine a particular group’s size and needs.
For example, a company could segment their target demographic by age group and study this age group’s trends and behaviors. After studying the age group, the company may notice particular buying patterns specific to this market.
Other types of segmentation you can use to break down your target audience include:
- Psychographic segmentation – This refers to a target market’s personality, values, beliefs, and lifestyle.
- Geographic segmentation – This involves separating target markets based on their neighborhood, city, area code, region, or another geographic-related factor.
- Behavioral segmentation – This refers to segmenting a demographic by their user status, spending habits, and brand interactions.
What Demographics Should You Consider?
There are several demographics to consider when studying a target market and practicing demographic segmentation. These include:
- Marital status
- Professional experience
- Education level
- Sexual orientation
- Number of children
- Family composition
There are several ways in which you can find out demographic information related to your target market. The most common ways to obtain this information include:
- Public records – Most demographic data is readily available through public records. Good websites to check when researching demographics include USA.gov, U.S. Census Data, and U.S. Center for Economic Studies.
- Your existing customer base – Another way to obtain information on your target market is to get data from your current customer base. Data points to consider when analyzing your existing customers include their interests, spending power, buying patterns, language, age, stage of life, and location.
- Private surveys – Marketers often use private surveys to collect demographic information about their target and existing market. This can be done by sending out a survey via email or posting a survey on social media. You can also include a demographic-related survey in a survey sent out for a different purpose, such as a customer-service survey or a survey following up after someone purchases something from your company.
Benefits of Segmentation
There are several benefits of using demographic segmentation in your marketing efforts. These benefits include:
- Cost-effective – Obtaining demographic information is often very affordable or even free in many cases. Sending out surveys costs very little, and researching census websites costs nothing for marketers while still providing a wealth of knowledge.
- Ability to monitor social trends – Performing demographic data research provides an easy way to keep track of shifts and social trends over time, ultimately helping a company predict buyer behavior and cater to buyer interests and needs.
- Increased return on investment – Demographic segmentation enhances a company’s ability to effectively market to their target audience, increasing the overall return on investment (ROI).
- Better services and products – Understanding your target demographic allows you to better understand your customers and create products and services that best meet their needs.
- Happier customers – Catering to your target demographic allows you to provide a more personalized experience for your customers, which can increase their overall satisfaction with your company and its products and services.
Segmentation Mistakes To Avoid
The following are a few segmentation mistakes to avoid when performing data research:
- Basing your segmentation on instincts rather than data
- Using outdated or duplicated data
- Creating demographic segments from limited data
- Not taking into account your target demographic’s time of engagement
- Creating market segmentations that aren’t aligned with your company’s goals
Incorporating demographic segmentation into your marketing strategy can greatly increase your overall ROI and help attract new customers. The more defined your target demographic is, the more successful your marketing efforts will be.