Study Notes for Target Markets

Marketing Study Notes

What is a target market?

A target market is a market segment that has been deliberately selected by an organization in order to focus their marketing efforts and offerings.

Why is target market selection important?

  • Target market selection is the second major phase of the STP process.
  • It is important because it is a key marketing strategy decision.
  • The choice of a target market allows the firm to focus its marketing efforts and match its offering to the needs of that segment.
  • Firms should select target markets where they can compete successfully.

How are target markets selected?

Usually target markets are selected using a mix of the following evaluation criteria:

  • Size of the segment (sales)
  • Segment growth rate
  • Profit margins
  • Competitive rivalry
  • Access to distribution channels (available to the firm)
  • Importance of brand equity (and whether the firm has strong brands)
  • Firm’s strategic direction
  • Firm’s growth goals
  • Firm’s resources to compete in the potential target market

Related topics

The STP process (study notes)

The market segmentation evaluation criteria (study notes)

Target market selection (study notes)