A target market includes anyone who would buy your product, use your service, rent your tools, or lease your infrastructure.
In a perfect world, you could find your target market, focus your research and advertising dollars on this group of people — and ignore everyone else.
To help you find your target market in the messy, real world, I’ve laid out a simple process and shared a barebones template to help you stay organized.
What Is Your Target Market?
In practical terms, your target market is the group of people who:
- Actively want your product, service, etc.
- Can pay for it
- Are serviceable by your company
- Share characteristics or traits
In even more practical terms, your target market is the people you can realistically sell to. It’s not worth trying to convert people who don’t want your product, can’t pay for it, or can’t actually be serviced by your company.
Benefits of defining a target market
A target market is usually defined at the business strategy level, and used for:
- Product development: Are we prioritizing features our market craves?
- Pricing: Does our model align with how our market likes to buy?
- Distribution: How do we allocate resources efficiently and profitably across channels?
- Brand positioning: How do we differentiate ourselves to appeal to our ideal customers?
- Business planning: Which markets should we enter or avoid?
Once a company has decided to focus on a target market, it’s not going to change often.
It makes sense: you are looking for the type of people who need your offering today, tomorrow, and next year. This core group can grow or shrink, but the characteristics that identify them are likely to stay relatively constant.
Target market is not a target audience
I see these terms used loosely, if not interchangeably, but they are distinct. Your target market is the group of people you are going after because they are most likely to use your product or service.
A target audience is a much narrower group that you can create at the campaign level to go after a specific type of customer persona.
It’s more about defining who you are speaking to in a particular moment rather than targeting as a business. It’s useful for things like ad campaign targeting, copywriting, creative development, or email segmentation.
To put it simply, a target audience is a specific group of people within your target market that you are trying to reach with a particular campaign, message, or content.
5-Step Approach to Finding Your Target Market
This guide is written for anyone with a product or service that they want to market to the right people. You do not need an MBA, a love of marketing, or any special tools beyond an internet connection.
If you have customers, users, and website traffic — that will help a lot — if you don’t, just do what you can for now, and work on getting more traffic and increasing your conversion rate.
I’ve included a downloadable target market template at the end of the post.
Step 1: Draft a Positioning Statement
A positioning statement articulates what you sell, why people buy it, and where your business sits in the wider market.
Keep your statement short, about 1-2 sentences maximum, and answer fundamental questions like:
- What is the problem we solve or the benefit we provide?
- Who needs this solution or benefit most?
- Why do they need this benefit now?
- Do we fit in an existing market category? If not, which categories do we fall between?
Keep your statement focused on the big picture — don’t worry about special features, USPs, or how your brand differentiates itself — stay focused on what you do and the people you serve.
There is a ton of free advice online about how to write brand positioning statements, why they are useful, and even a positioning statement generator if you just want to get this over with.
Here are two example positioning statements:
Tech startup: “We’re building a simple tool for freelancers who are overwhelmed by big CRMs and just want to keep track of clients, invoices, and deadlines.”
Local service business: “We repaint parking lots, safety zones, and ADA signage for commercial property managers in the Seattle metro area who need reliable, fast-turnaround service.
This step is about clarity, not perfection. Keep the statement concise, capture the key information, and move on.
Later steps will test and refine what you stake out here.
Step 2: Get Data On Your Target Market
Now it’s time to zoom out from your particular business to consider the product or service category you think you are in. Try to get some solid information by looking at:
- What’s the market size in terms of customers and spend?
- How fast is it growing?
- What types of businesses already serve this market?
- Who are your closest competitors?
- How much revenue does the average customer generate?
- How saturated or competitive is the market?
To get this data, you will need to conduct market research or pay someone else to do it.
I recommend seeing how far you or your team can get on your own. Accurate market sizing data is expensive, but you can find places where it’s published online if you are scrappy.
SERP analysis, where you analyze search engine results pages, can tell you a lot about the state of the market, how competitive and crowded it is. Data from ad platforms (like how much are companies spending per impression or click) can provide some helpful context as well.
Paying for non-public data is an option worth exploring at this step. Budget in a few thousand dollars for this, at least, but you will get decently accurate data from as far back as 10-20+ years ago.
Once you start putting together official figures for investors, you’ll want to use third-party data at the very least, if not hire an outside firm to give its disinterested analysis.
Step 3: Profile Your Target Market
With a clear view of what your business does and the market at large, it’s time to zoom in on the buyers in this market who might be interested in what you sell.
There are five aspects of a target market profile, let’s go through them one by one.
Demographic Factors
These are the characteristics and traits typical of buyers in your market.
- Age
- Location
- Occupation
- Role
- Income
- Education
There are lots of demographic factors you could consider, so it’s important to discover the ones that really differentiate your target market from the market as a whole.
If you have customers, you should definitely dig into any data you have in your CRM, website analytics, POS, and social accounts. This is the best place to start to really see who gets the most out of what you offer and what traits that group has in common.
Without existing customers or users, you will have to be a little more creative about finding information.
Product reviews often contain demographic clues, and you can pick up trends there. Sometimes there are subreddits and other forums related to your market where you can get a sense of who the buyers tend to be.
Looking at your competitors is also a good idea. How do they perceive their target market? I’d look closely at competitor keyword strategies, their tone and diction on social media, and the specific value offered by any lead magnets on their site.
On a website security company site, for example, are they offering a whitepaper aimed at CTOs, a free audit tool for managers, or a security checklist for entry-level roles?
Firmographic Factors
Firmographic data is absolutely essential in B2B, where organizations are the buyers. If you sell to consumers, don’t worry about this.
These are the characteristics and traits typical of business buyers in your market, like:
- Company size
- Revenue
- Ownership structure
- Industry
- Number of clients
There are other characteristics, like tech stack, customer base, and funding (e.g. Series A vs Series E), which can be vital to track in certain target markets.
The firmographic data on your target market informs every aspect of a marketing and sales funnel: who you target, which leads are qualified, what gets proposed, and so on.
Finding this data on public companies is a matter of checking their filings with various regulators.
In private markets, there is still a lot of public information that companies share themselves, and some data available on sites like Crunchbase, LinkedIn, and PayScale, though you will have to pay to get quality data at scale from any of those platforms.
Psychographic Factors
These are the psychological characteristics and traits typical of buyers in your market, such as:
- Personality
- Lifestyle
- Activities
- Interests
- Values
- Beliefs
- Attitudes
- Preferred channels
If you aren’t familiar, check out this post for examples of psychographics and how brands use them to their advantage. They play a critical role in ad targeting, messaging, differentiating your brand, and a host of other tactical decision-making.
What you are trying to find here are the overarching psychological factors that apply to most of the people who want your product.
If your brand has any social media presence at all, you can start by looking at your followers, especially those that engage and share.
Talking to customers is the best way to find out what they think. Interviews, surveys, polls — all of these can help you gather some of the data behind what motivates them.
You can also learn a lot by studying competitor messaging, especially from the brands that are having the most success in the space. What appears to be resonating for them?
Seasonal Factors
These capture recurring patterns in the ways customers buy throughout the year or over their lifetime, such as:
- Time of year
- Holidays or events
- Weather patterns
- Budget cycles (for B2B)
- Personal milestones (weddings, empty-nester)
There is a bit of seasonality in every industry, and understanding the key factors will help you launch promotions at opportune moments and avoid misinterpreting data when it’s been overly affected by these forces.
Reviewing data from your customers (website traffic, POS data, CRM data) is the best place to start finding seasonality within your target market.
Purchase Behavior
These aim to capture the typical ways that buyers make decisions in your market, and usually include:
- Purchase frequency
- Price sensitivity
- Research habits
- Preferred payment methods
- Preferred buying channels
It’s important to know how people behave at the point of purchase in order to refine your funnel, pricing, and sales tactics. Are they impulse buyers? Are they loyal to brands, or do they chase deals?
This should be fairly straight-forward data to collect from your CRM or POS.
Step 4: Define Target Market Segments
The goal here is to surface the major groups of buyers who make up your target market. Some questions to ask:
- What categories, niches, or sub-industries already exist?
- Who already buys from us, and what do they have in common?
- Are we solving different pain points for different customers?
- Which customer segments are your competitors focused on?
- What segments are over-served or underserved?
In this step, you are not just trying to define the various segments that make up your target market, you are also trying to find which of those segments represent the most likely buyers of your product.
Bring to bear any of the market and customer data you have to start answering these questions. Some easy ways to get started:
- Analyze your best customers: Look for common traits among your highest-value or most loyal buyers.
- Group by use case: Segment based on the different problems your product solves for different types of buyers.
- Use firmographics or demographics: Break down your market by company traits (B2B) or personal traits (B2C) to find clear patterns.
- Identify moments of urgency: Focus on the situations or pain points that lead people to need your product now.
- Review acquisition sources: Track which channels bring in your best buyers.
Once you have identified these segments, create a profile that tracks the most salient factors (demographics, psychographics, etc.), especially where they differ from your target market at large.
A barbershop, for example, might have a target market made up of recognizably different segments, such as:
- White collar regulars: 2-3 weeks between visits, rarely change style, book recurring appointments, prioritize consistency.
- Parents with kids: 4-6 weeks between visits, prioritize flexibility
- College students: 6-8 weeks between cuts, routinely change styles, low-to-no tip, walk-ins vs booking ahead.
Step 5: Create a Simple Document
I included a simple template at the bottom of this post, but you can use whatever format you want.
Copy the template and follow the instructions below.
The goal of the final step is to create a simple, clear, shareable document that captures the essential features of your target audience.
This document is useful for communication and accountability. You can keep people on the same page and use more consistent language to talk about different segments.
It’s also really easy for marketing campaigns to drift away from the original mission. Are we really targeting the market we set out to? If not, why not?
Target Market Template
This target market template is free. To use it:
- Open the link
- Select File > Make a Copy
- Create a title and Save the document
Now you can fill it in, tweak it, add your logo, and spice it up.
Instructions for using the target market template
Here is what should go in each section and where it’s covered in the process.
Position statement: 1-2 sentences that capture what your company sells, who buys it, and the market you are in. This is created in Step 1 and revised in Step 5.
At a glance: Summarize the most important findings from your research in Step 2. Include high-level data, statistics, or info that would fit in a slide deck versus dense research findings.
Close competitors: Include 3-5 of the companies with similar offerings that define the range of competitors. Link the company name to their homepage and offer a 1 sentence description that captures their positioning.
Key Factors: Fill out this table with the corresponding information you found in Step 3 when you profiled your target market. Include only the most important factors for each category, the ones that really define who is/isn’t a part of your market.
Segments: Identify 2-4 segments of your target market and highlight their most important distinguishing features.
