what part of a business plan describes a company's target market

Target Market Examples

Elon Glucklich

7 min. read

Updated April 24, 2024

Imagine your dream is to own a diner.

You have restaurant experience and a great location in mind – you just need the bank to approve your loan to get started.

But the bank has questions. A big one it wants answered is: who is your target market?

It might be tempting just to say, “hungry diners.” But you’ll need to dig deeper to truly define your target market . 

In this article, we’ll use this diner scenario to walk through the market research process and illustrate what the final result could look like.

• Questions about your target market

Before you even set foot in the bank, you should already have asked – and taken steps to answer – several key questions about your target market.

Let’s call our example business the Bplans Diner. Where is that perfect location you’ve found for the diner? Is it in a densely populated urban area, suburban neighborhood, or rural?

What are your hours of operation? Some diners cater to a breakfast crowd, while others might offer 24-hour dining to be a favorite among night owls. When you expect your peak hours could help determine whether you should expect to sell more omelets or hamburgers.

What’s the area’s median income, and what types of businesses or institutions are nearby? This information will help you determine pricing and marketing strategies for your diner. For instance, if your diner is located in a business district, you may want to offer lunch specials. But if it’s near a college or university, you might want to offer student discounts.

This is what a thorough target market analysis looks like, providing key insights and data to pinpoint the specific groups of customers most likely to patronize your diner. Gathering all of this information may sound intimidating, but it’s really just a matter of doing research. If you need help and guidance, check out our complete guide to conducting market research for your business . 

Let’s look at an example of a target market analysis for this diner. Then, we’ll break it down and discuss each element in detail.

• Example of a target market analysis

As you can see, the target market analysis follows the basic market segmentation process of splitting out potential customers into their demographic, geographic, psychographic and behavioral traits.

Next, let’s take a look at each in more detail. Afterward, we’ll look at how you can harness your target market analysis into actual business strategies.

• Demographic

You may have noticed that the demographic analysis in our example is very broad – 18 to 65 years old, including students, workers, and some seniors.

Finding your target market isn’t always about identifying a narrow demographic to cater to. In the case of a restaurant, it makes sense to focus on the geographic location and who currently frequents the area (more on that in the next section).

A different approach may be needed for a technology product that’s sold online. In that case, narrowing the demographic focus to specific age ranges or needs would be much more important than where the business is located.

In the case of the diner, we reached our decision by conducting a demographic analysis, examining the age ranges, occupations, and other concrete data points about potential customers near the proposed location (Reminder: we didn’t do this for the Bplans Diner, we’re just providing an example). 

There are several ways to go about collecting this information for your business. The most straightforward is to get out in the neighborhood, take a look around and talk to people. Are you mostly seeing students, or families? Are there a lot of office workers in the area? 

You can also look up data from the U.S. Census Bureau , which includes population, age, income and other useful information, often down to the neighborhood level.

After conducting this research, one valuable step is to create a detailed customer persona that represents the typical customer you expect for your business (we provide an example of a customer persona for the diner further down in this article).

While the demographic analysis considers the type of people who might frequent your business, the geographic analysis considers the characteristics of the neighborhood itself. 

Our target market analysis for Bplans Diner noted that we plan to operate in an urban area near a university with heavy foot traffic and expect a fair amount of late-night diners.

A key reason for examining the geographic makeup of your businesses is to size up your competition. If there’s already a popular diner in the area you plan to target, getting customers could be a major challenge. But if there’s a lack of dining options or no one is serving diner-style food, you’re more likely to be successful. Determining the size of your market will help you create reasonable revenue projections. 

We also mentioned the plan for Bplans Diner to cater to a late-night crowd. Examining the geographic makeup of the neighborhood will help you determine if there are the kinds of businesses – bars, music venues, or businesses such as hospitals where people are working all hours – to justify targeting this group.

• Psychographic

You know the demographics and geographic characteristics of your market. Now it’s time to consider the attitudes and values of your potential customers.

The psychographic analysis helps to understand the lifestyle of potential customers and how that might affect their preferences as consumers. If many of your potential customers are health-conscious, for instance, you’ll want to ensure your diner provides options like salads or gluten-free menu items. But if most customers are families looking for a place to bring their children, it may be important to keep classic items like hamburgers and french fries on the menu.

The best way to understand your potential customers’ attitudes is to get out and talk to them. Customer interviews are among the most powerful methods of validating a business idea , since you’ll get honest, real-time feedback from the kinds of people your business would depend on.

Finally, the behavioral analysis expands on customer psychographics by examining what customers do, given their values. This is another place where it’s worth considering the broad demographics of the diner’s target market – 18 to 65 years old, split among students, workers, and seniors.

They may all want the diner’s food, but their behaviors will vary widely. College students might be looking for a late-night study spot, or a place to meet up with friends for dinner before a concert or sporting event. But workers and seniors might be more interested in breakfast or lunch specials. 

Each of these behaviors gives a business owner valuable information to target individual segments of their target audience. For instance, you might want to play popular music in the evenings to get young diners ready for a night out on the town. But you’ll want a quieter ambiance at the time of day when seniors are most likely to come in. The environment can be adjusted based on when certain customers frequent the business.

Addressing behavioral aspects like buying motivations and concerns of your potential customers will also help you effectively market your diner. For example, you could create marketing campaigns based on student discounts, late-night specials, or a family-friendly atmosphere, depending on your customers’ behaviors.

• Connecting a target market analysis to business strategy

So far, we’ve touched on each of the components of a target market analysis for a diner: customer demographics, geographics, psychographics, and behaviors. (It’s also important to conduct an industry analysis to understand competitive and macroeconomic forces affecting your planning.)

With the target market analysis complete, you’re better equipped to demonstrate a thorough understanding of your customers to a lender.

Here are a few insights a business owner could use for the Bplans Diner, developed through the above analysis.

• Bplans Diner Competitive Analysis

Market Trends: Growing demand for late-night food options, increasing preference for healthy dining options.

Competitor Strengths and Weaknesses:

Competitor A: Strong brand but limited menu options.

Competitor B: Wide variety of options but lacking in ambiance.

• Bplans Diner Marketing Strategy

Product Differentiation: Offering a diverse menu that caters to various preferences, including healthy options.

Positioning: Establishing Bplans Diner as a reliable, quality, 24-hour dining option in the region.

Promotion: Utilizing social media to announce special night-time deals and promotions.

• Get started with your business plan template

A target market analysis is a key part of any business plan. But it’s just one piece. At Bplans, we take some of the pain out of business planning. We’ve developed a free business planning template to help reduce entrepreneurs’ time to create a full, lender-ready business plan. Bplans has also collected over 550 free sample business plans across numerous industries. Find a plan in your industry to get inspiration for your plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.

Table of Contents

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How to Write a Business Plan: Target Market Analysis

The Business Plan and the Importance of Defining Your Target Market

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Conducting a Market Analysis

Polling your target market, writing the market analysis, online tools for market research, u.s. online market research sources, canadian online market research, local sources of market research, doing your own market research.

 Creative Commons CC0

The market analysis is basically the target market section of your business plan . It is a thorough examination of the ideal people to whom you intend to sell your products or services.  

Even if you intend on selling a product or service only in your community, you won't be selling that service to everyone who lives there. Knowing exactly what type(s) of people might be interested in buying your product or service and how many of them reside in your projected area or region is fundamental in creating your market analysis.

Once target market data has been established, you'll also work on sales projections within specific time frames, as well as how prospective sales might be affected by trends and policies.

Research is key and cornerstone of any solid  business plan .

Don't Skip This Step!

Don't skip market research; otherwise, you could end up starting a business that doesn't have a paying market.

Use these general terms as linchpins in research data for the market analysis section of your business plan, and to identify your target market:

But don't stop here. To succinctly define your target market, poll or survey members of your prospective clients or customers to ask specific questions directly related to your products or services. For instance, if you plan to sell computer-related services, ask questions relating to the number of computing devices your prospective customers own and how often they require servicing. If you plan on selling garden furniture and accessories, ask what kinds of garden furniture or accessories your potential customers have bought in the past, how often, and what they expect to buy within the next one, three, and five years.

Answers to these and other questions related to your market are to help you understand your market potential.

The goal of the information you collect is to help you project how much of your product or service you'll be able to sell. Review these important questions you need to try to answer using the data you collect:

• What proportion of your target market has used a product similar to yours before?
• How much of your product or service might your target market buy? (Estimate this in gross sales and/or in units of product/service sold.)
• What proportion of your target market might be repeat customers?
• How might your target market be affected by demographic shifts?
• How might your target market be affected by economic events (e.g. a local mill closing or a big-box retailer opening locally)?
• How might your target market be affected by larger socio-economic trends?
• How might your target market be affected by government policies (e.g. new bylaws or changes in taxes)?

One purpose of the market analysis is to ensure you have a viable business idea.

Find Your Buying Market

Use your market research to make sure people don't just like your business idea, but they're also willing to pay for it.

If you have information suggesting that you have a large enough market to sustain your business goals, write the market analysis in the form of several short paragraphs using appropriate headings for each. If you have several target markets, you may want to number each. 

Sections of your market analysis should include:

• Industry Description and Outlook
• Target Market
• Market Research Results
• Competitive Analysis

Remember to properly cite your sources of information within the body of your market analysis as you write it. You and other readers of your business plan, such as potential investors, will need to know the sources of the statistics or opinions that you've gathered.

There are several online resources to learn if your business idea is something worth pursing, including:

• Keyword searches can give you an overall sense of potential demand for your product or service based on the number of searches.
• Google Trends analysis can tell you how the number of searches has changed over time.
• Social media campaigns can give you an indication of the potential customer interest in your business idea.

The U.S. Small Business Administration (SBA) has information on doing your market research and analysis , as well as a list of free small business data and trends resources you can use to conduct your research. Consider these sources for data collection:

• SBA  Business Data and Statistics  
• The U.S. Census Bureau maintains a huge database of demographic information that is searchable by state, county, city/town, or zip code using its census data tool . Community, housing, economic, and population surveys are also available.
• The U.S. Department of Commerce Bureau of Economic Analysis (BEA) has extensive statistics on the economy including consumer income/spending/consumption, business activity, GDP, and more, all of which are searchable by location.

The Government of Canada offers a guide on doing market research and tips for understanding the data you collect. Canadian data resources include:

• Statistics Canada  offers demographic and economic data.
• The  Business Development Bank of Canada (BDC)  offers market research and consulting with industry experts.
• The Canada Business Network provides business information to entrepreneurs by province/territory, including market research data.

There are also a great many local resources for building target market information to explore, including:

• Local library
• Local Chamber of Commerce
• Board of Trade
• Economic Development Centre
• Local government agent's office
• Provincial business ministry
• Local phone book

All of these will have information helpful in defining your target market and providing insights into trends.

The above resources are secondary sources of information, in which others have collected and compiled the data. To get specific information about your business, consider conducting your own market research . For instance, you might want to design a questionnaire and survey your target market to learn more about their habits and preferences relating to your product or service.

Market research is time-consuming but is an important step in affording your business plan validity. If you don't have the time or the research skills to thoroughly define your target market yourself, hiring a person or firm to do the research for you can be a wise investment.​

Small Business Administration. " Market Research and Competitive Analysis. " Accessed Jan. 13, 2020.

Target Market: What It Is and How to Define Yours in 2024

Apparently, some people can sell ice to an Eskimo. If your company doesn’t employ salespeople with superhuman selling powers, however, it’s critical to cater your product or service, as well as your marketing efforts, to the specific target market most likely to purchase it.

What is a target market?

A target market is a distinct customer group with shared characteristics such as demographics, income, lifestyles, or behaviors and is a subset of the total market for a product or service. It is regarded as the most likely potential customer for a business, maximizing the profitability and success of its marketing efforts.

In other words, your target market is a niche group of people who are most likely to buy your product — be it to satisfy a need or solve a pain point. When conducting your market research , you should be laser-focused on reaching and attracting that group because they’re just waiting to discover you.

If targeted correctly, they’ll become your biggest fans, be devoted enthusiasts of your products, and invite all their friends to your profit party, with increased market share as the VIP guest.

That’s why you must define your target market, clearly understand it, and create a business plan to attract your ideal potential customer . You can start with broad categories like location and age groups, but the more granular you get with the help of digital intelligence , the more you can boost your conversion rates.

Your target market strategy will include adapting your product lines, packaging, and distribution channels to win your fans’ approval or optimizing your marketing strategy and messaging to speak their language.

To learn more about utilizing Similarweb Digital Data to define and win your target market, click below.

Fuel Digital Growth with Market & Audience Intelligence

Go beyond your own first-party data: Track your digital market share, benchmark your business performance, and monitor consumer trends.

Target market example: Anti-aging face cream

Here’s a target market example. If you were to sell anti-aging face cream, you’d likely not succeed in selling it to many consumers under thirty, right? Some skin-conscious shoppers might start worrying about their wrinkles in their twenties, and they may even buy your product, but your biggest devotees, that sweet spot of solidarity, will come from that group above thirty-five.

Your primary target market will be the consumers to whom you are catering your product and marketing resources, in this case, clientele over thirty-five. Your secondary target market will be niche pockets of clientele, for example, people with certain skin disorders, dry skin, or sun-damaged skin who want to revive their appearance.

But let’s not guess. Let’s delve into Similarweb Digital Data based on real-user digital signals inside Amazon. Here’s some of what you can learn about the Wrinkle & Anti-Aging Devises category with a few clicks on your keyboard:

• Over 63% of the consumers visiting the category are above 35 years of age
• Almost 80% of them are female
• More than 75% work full-time, and most have an annual income of $50K – $100K
• The vast majority are college-educated (83.5%)
• 47% live in a two-person household

Shopper insights, Wrinkle & Anti-Aging Devises category on Amazon, Dec 2022 – Nov 2023

Whether launching a new product for anti-aging face cream or trying to grow its existing market share , you’ll have to understand and consider your target market.

The more you know about your potential customers, the more you can cater to them. A famous TikTok teen might look great on the packaging but won’t feel relatable or might even be offputting to your more mature customers, and a glass jar will probably feel more credible than a squeezy tube. You might even decide to create two separate products, each appealing to different target markets.

When marketing your skin-reviving cream, there will be specific keywords that appeal to your group of fans, language that resonates with who they are, and places where they like to shop, be it online or at brick-and-mortar stores. These factors must be considered, and defining your target market is vital to that data-driven decision-making process .

The five main target segments

When conducting your target market analysis , you’ll want to divide your audience into distinct market segments to be more effective in reaching and engaging it. Don’t worry about getting too specific. Consumers outside your chosen scope can and will still buy your products. No one is stopping them from joining your fan club. They just won’t be the primary focus of your marketing campaigns.

You can examine many market segmentations, but they mostly fall under 5 main categories.

• Demographic — This segment includes the fundamental traits identifying your target audience . Every potential customer falls into a specific age group, generation, income level, gender, and education level.
• Geographic — With the ever-increasing impact of globalization and streamlined shipping processes, this segment has become more critical to consider, as regional trends will affect your conversion rates.
• Firmographic — Suitable for business-to-business (B2B) companies and considers the target market’s industry, location, size, number of employees, average sales cycle, customers, and products.
• Psychographic — This segment delves deeper into the “why” behind the decision-making and considers lifestyle, hobbies, interests, dislikes, opinions, attitudes, and values that drive a person’s buying habits.
• Behavioral — This segment closely examines what your audience does, how it behaves, and what it comes into contact with to spot untapped product and marketing opportunities and relies heavily on research into market trends.

What’s the difference between your target market and your target audience?

Once you’ve analyzed your product utilizing these five target segments and understood the characteristics of the consumers it serves, you’ll have your target audience, which is the specific section of your target market on which you will focus your strategic efforts.

It’s critical to base your target audience on thorough audience research . Successful companies have insights specialists who read reports, conduct surveys , and analyze digital data to target consumers who are genuinely interested in their product, even if they don’t align with the initially intended customer base.

If, for example, your company decided to create a product to compete with the Air Tag, it would face heavy competition from Apple, an established consumer electronics company with a devoted following — the Apple cult. You could market your tag as a crucial product for travelers. On the other hand, you could find a niche market you can appeal to and build your product and marketing around it.

With extensive research, you might discover that pet owners require a small GPS device for their cats and dogs. You could then design a product with pet icons and create ads utilizing targeted keywords such as “pet gps tracker” and social posts that appeal to dog and cat owners.

The mini GPS tracker might still appeal to travelers looking for a lively design (the target market), but you’d craft your marketing campaign to target the dog owners, your target audience.

To hone in on your target market and discover the consumer trends driving conversions today, download our exclusive State of Ecommerce flagship report.

Download our flagship market research reports

A comprehensive report on consumer market research trends in 2023

How can you define your target market?

When determining your target market, aim to pinpoint a specific niche or micro-consumer demand to enhance the relevance of your marketing messaging and ultimately increase sales in your primary target market. Here are some of the most popular ways to analyze your potential market:

• First-party data : Analyze your existing customer base, subscribers, and website visitors when they interact with your site and marketing campaigns or make a purchase. Talk to the customer support and social media teams to recognize your customers’ needs and pain points.
• Surveys and questionnaires: Gather quantitative and qualitative data from your target audience with single-choice and open-ended questions. Online survey apps like SurveyPlanet, SurveyMonkey, and Responsly are great tools to get you started.
• Interviews: Conduct one-on-one interviews with your target market to gain insights into your target audience. Speak with industry experts, influencers, or stakeholders for in-depth discussions and a more thorough understanding of consumer motivations.
• Focus groups: Gather individuals characterizing your target market to provide feedback on your product or service, and include a few outliers to get new perspectives. Focus groups are a great peek into people’s impressions of your product, and you’ll find out who your biggest supporter will be, especially in a group setting.
• Observational research: With a brick-and-mortar business, you can see your customers in real life. Observe how they connect with your products or services, and peek into competing businesses to discover opportunities for improvement.
• Competitive Analysis : Examine your competitors’ successes and failures to understand what’s working and discover new growth opportunities. Granular business benchmarking can help you spot gaps in the market or find ways to differentiate yourself from the competition.
• Social listening: Monitor social media platforms for posts and discussions about your field, brand, products, or services. Join groups and follow your competitors to gain real-time insights into customer sentiments and trends.
• Beta testing: Carry out beta testing phases for your products or services and analyze the feedback from early adopters to spot opportunities to refine your product or service before a full-scale market launch.
• Conferences: Attend industry-specific trade shows, conferences, lectures, and events to learn about developing trends, emerging technologies, and customer preferences, as well as network with professionals and thought leaders in your industry.
• Data Analysis: Take advantage of existing internal sales data and customer feedback to draw conclusions and adjust your business strategy. Utilize Similarweb’s Market Analysis tools backed by real-user insights to discover the consumer trends affecting your industry in real time.
• Digital Analytics : Use website analytics tools to capitalize on your website’s user behavior and benchmark against your competitors . Delve into consumer behavior insights like search patterns, cross-shopping, basket analysis, conversion rates, Marketing Channels , and popular keywords to capitalize on customer preferences and online interactions.

Similarweb provides businesses with a powerful tool for timely real-user digital analytics on websites, apps, industries, or segments. Watch this video to see how.

To explore how to use Similarweb Digital Data to define and understand your target market, click below.

The most conventional way of defining a target market is through demographic data . However, with the effects of social media on shared tastes, demographic data alone can overlook granular audience interest. Surveys, focus groups, and observational research can enhance your understanding of the market and help you boost your sales, but these methods can often be time-consuming or sometimes even inaccurate.

In many cases, by the time you have gathered and analyzed these trends, audience interests have changed, or you may face the say-do gap, where consumers are not necessarily behaving in accordance with the feedback they have given you.

Get the data you need with Similarweb’s target market research tools

As social commerce boosts the appeal of upcoming brands, and dupes (or affordable alternatives) take advantage of the economic downturn, it’s critical to delve deeper into your research and discover the hidden gems that appeal to your target audience today and can potentially increase your sales.

Let’s say your company manufactures products such as vitamins or food supplements for a health-conscious target market in the US, and you’re considering expanding your product line and entering the healthy skincare market as well.

You can use Similarweb’s Market Research tool to understand the market difficulty and answer questions like:

• How loyal is this target market to its current brands and retailers, and is it open to trying out quality newcomers?
• Will we see good ROI for our PPC spend , or should we focus on other ways of capturing audience interest?
• What is the size of this market , and is the competition from its top brands too fierce for us to enter?

Market Assessment Tool, Beauty & Cosmetics category, US, All Traffic, Dec 2022 – Nov 2023

Using the Market Quadrant Analysis tool , you can analyze the top players in the market to identify digital signals that correlate with overall business success and fine-tune your strategy. By cross-referencing complimentary digital metrics, the quadrant offers a comprehensive and meaningful picture that powers actionable market and consumer insights.

Within this tool, you can:

• Dig into insights for audience growth, brand strength, cost efficiency of PPC ads, and the loyalty and retention of your competitors
• Make data-driven decisions regarding which leading retailers would best serve your target market or discover emerging players that would make fruitful partners

Market Quadrant Analysis, Beauty & Cosmetics category, US, All Traffic, Dec 2022 – Nov 2023

Using Similarweb’s Demand Analysis tool , you can identify rising consumer trends, optimize your product portfolio, and fine-tune messaging for the relevant target audience.

Demand Analysis, The Inkey List, US, All Traffic, Sep 2022 – Aug 2023

You can then discover which websites and industries get the highest traffic share for those keywords, informing you where to place your paid search ads. By clicking on the URL links provided, you can examine the specific landing pages that receive this traffic and determine the kind of messaging and content that attracts your target market.

Suppose you decide to sell your revolutionary anti-aging cream through retailers to build your brand and grow a loyal client base. In that case, you can analyze your chosen potential retailers and discover the age demographics that shop there to optimize your market fit.

Demographics, Beauty & Cosmetics category, US, All Traffic, Dec 2022 – Nov 2023

The future of digital market research

Understanding your target market and knowing how to capture its interest can be time-consuming and overwhelming, but it doesn’t have to be. With access to timely real-user consumer insights, the sky really is the limit.

Digital analytics enable businesses to understand what consumers are looking for now and immediately enhance their first-party and survey data to shift strategies and capture consumer demand quickly, especially in a fast-changing economy with an on-demand consumer mentality.

If you’re a market researcher or data analyst, with Similarweb’s Market Intelligence add-on, you can unlock unique digital signals for any target market. With timely insights, you can make data-driven decisions and discover new and efficient growth opportunities so your business can effectively define, engage, and win its target market.

Click below to explore how to use Similarweb Digital Data for market and audience research.

What is a primary target market?

A primary target market is where a company focuses its marketing and business efforts. In contrast, a secondary market can be a smaller or less vital segment that purchases the product but doesn’t have a strong influence on its success.

What is an example of a target market?

An example of a target market for diamond drop gold earrings would be females aged 35-55 with an annual income of over $80K.

What are the 5 ways to define a target market?

You can examine many market segmentations, but they mostly fall under these five main categories: Demographic, geographic, firmographic, psychographic, and behavioral.

What is a target market strategy?

A target market strategy is a business plan targeting a defined consumer group designed to increase sales and boost brand recognition to that customer base.

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Small Business Trends

What is a target market and how to pick one (examples and template included).

When marketing a business, the key to success lies in the ability to target the right group or groups of people accurately. Knowing your target market is essential for any company that wants to create an effective, compelling marketing message that resonates and results in sales.

In this guide, we’ll explore what a target market is, how to define one, and why it’s so important. Let’s get started!

Table of Contents

What is Target Marketing?

Target marketing is indeed a crucial strategy for businesses, particularly for small businesses aiming to maximize their reach and resources. It helps them to hone in on potential customers who are most likely to be interested in their offerings and tailor their messages to those individuals.

Below are some key points about target marketing:

• Specific Focus : Target marketing allows businesses to focus on a specific demographic or set of customers. This focus could be based on age, gender, income, geographic location, interests, behaviors, or a combination of these factors.
• Efficient Resource Utilization : By focusing on a specific target market, businesses can use their resources more efficiently. This helps reduce wastage of resources on marketing efforts that reach people unlikely to purchase their product or service.
• Tailored Marketing and Sales Strategies : Businesses can customize their marketing and sales strategies to meet the specific needs and wants of their target market. This customization leads to more engaging, relevant, and effective messaging.
• Enhanced Customer Relationship : With a well-defined target market, businesses can build stronger relationships with customers by better understanding their needs, preferences, and behaviors. This understanding helps businesses to offer improved customer service and foster customer loyalty.
• Increased Sales and Profits : By targeting those most likely to buy their products or services, businesses can increase sales and, subsequently, profits. Target marketing often leads to higher conversion rates since the marketing efforts are directed towards individuals with a pre-existing interest or need for the product or service.

In conclusion, target marketing is a strategic approach to ensure your business is connecting with the right customers. It can lead to increased sales, more efficient use of marketing resources, and improved customer relationships, all of which are essential for a thriving business.

Before you start a business, it’s also important to write a business plan that includes a personal brand statement and a vision statement to clearly define your goals and objectives.

How to Define Your Target Market

Creating a marketing strategy for your business begins with defining your primary target market.

Knowing who your ideal customer is and understanding their needs and wants is essential for creating an effective plan. Here’s how to define your target market in six simple steps:

1. Conduct Market Research

Start by researching your potential customers to learn more about them. Target market research includes collecting data on demographics, interests, preferences, and purchasing habits. Doing so will help you create a profile of your ideal customer.

2. Define Your Unique Selling Proposition (USP)

Your USP is what differentiates your product or service from competitors and should be tailored to meet the needs of your target market. By clearly defining your USP, you can create a compelling marketing message that resonates with potential customers.

3. Analyze Your Competition

Once you understand the needs of your audience, take a look at what competitors are doing to determine which strategies may be most effective for reaching them. Analyzing the competition will help you determine the best approach for engaging your target market.

4. Segment Your Market

Break down the larger population into smaller market segments based on characteristics such as location, age, gender, education level, income level, and interests. This will help you identify small groups of people with similar interests and needs. By segmenting your market, you can create more targeted campaigns, which will lead to higher conversion rates.

5. Determine Personas

Create personas, which are fictional characters that represent each distinct market segment, so you can get a better understanding of how best to reach them with content that resonates with this specific audience. Doing so will help you create a more tailored message that is sure to resonate with potential customers.

6. Refine Your Strategy

Based on the insights you have gathered in Steps 1-5, refine your overall marketing strategy to best cater to each segment of customers. Things you can refine include messaging, promotions and pricing, content, and channels of distribution.

For instance, a health food company initially struggled with broad marketing efforts. By conducting thorough market research and customer interviews, they redefined their target market to health-conscious consumers aged 25-40, leading to a more focused marketing strategy and a subsequent increase in sales. This example illustrates the practical steps and positive outcomes of accurately defining a target market.

Defining Your Target Market Template

Defining your target market is essential for developing effective marketing strategies and reaching the right customers.

A template can be a useful tool in this process, as it helps to organize and structure the information you gather about your target market.

The template below is designed to guide you through the process of defining your target market and includes prompts for important information such as demographics, behaviors, and pain points.

Target Market Template:

1. Demographics:

• Income level
• Education level

2. Behaviors:

• Purchase habits
• Brand loyalty
• Media consumption
• Hobbies and interests

3. Pain Points and Needs:

• What are the problems or pain points that your target market is facing?
• What are their needs and desires?
• How can your product or service address these pain points and needs?

4. Goals and Objectives:

• What are the goals and objectives of your target market?
• How can your product or service help them achieve these goals and objectives?

5. Unique value proposition:

• What unique value does your product or service offer to your target market?
• How does it stand out from competitors?

6. Other relevant information:

• Include any other information that might be useful in defining your target market.

Why Knowing Your Target Market is So Important for Your Marketing Strategy

Understanding a specific target market is essential for any business to create an effective marketing strategy.

Without a proper understanding of the needs and wants of your target audience, it’s nearly impossible to craft a message that will resonate and result in sales.

Below are five reasons why knowing your target market is so important for your marketing strategy:

• Increased Reach – By targeting a specific group of people, you gain access to an audience who may not have been aware of your business or product in the past. This allows you to reach more potential customers and build a larger customer base.
• Cost Savings – More precise targeting means fewer wasted impressions, resulting in lower costs and higher returns on investment (ROI). Over the long term, this can result in significant savings for your business.
• Improved Engagement – Knowing your target market enables you to craft content tailored specifically to their interests and needs, which leads to improved engagement rates with potential customers. So, not only are you reaching more people, but they are paying more attention to your message.
• Targeted Promotion – You can use highly targeted promotions to strategically reach out to a select group of individuals and incentivize them to purchase from you. This can lead to higher sales and help you stand out from the competition.
• Better Conversion Rates – Understanding the wants and needs of your target audience increases the chances that they will convert into paying customers. The better the understanding of your target market, the better the chance for success.

Consider the case of a startup that failed to identify its target market correctly, leading to ineffective marketing strategies and eventual business closure. Conversely, a successful enterprise, by understanding its target market’s needs, was able to tailor its products, pricing, and promotions, resulting in increased market share and customer loyalty.

These real-world scenarios underscore the importance of target market identification as a cornerstone of business strategy, significantly influencing marketing effectiveness, customer engagement, and overall business success.

Target Market Segmentation

Target market segmentation is the practice of understanding and categorizing potential customers into distinct groups. This helps businesses better meet their customer’s needs by focusing on specific types of consumers and creating tailored campaigns that will resonate with them.

Take, for example, a clothing brand using psychographic segmentation to target fashion-forward young adults who prioritize sustainability. This approach enabled them to craft a resonant marketing message.

In contrast, demographic segmentation might involve a tech company focusing on middle-aged professionals for a new productivity tool, considering their occupation and income levels.

These instances show how different segmentation strategies can be applied to pinpoint the most receptive audience for specific products or services.

Psychographic Segmentation

Psychographic segmentation looks at lifestyle, attitudes, values, and opinions to segment an audience.

Through psychographic segmentation, you can develop a more personalized connection with your customers by crafting messages that fit their unique tastes, values, and interests.

Demographic Segmentation

A demographic target market is a group of consumers who share similar characteristics such as age group, gender, income, education, and occupation.

This type of target market is defined by measurable and observable characteristics.

For example, a business might target young professionals with a high disposable income and a college education.

Geographic Target Market

A geographic target market is defined by the consumer’s location. This type of target market focuses on reaching consumers in a specific geographic area.

For example, a business might target consumers in a specific city or state.

Firmographic Segmentation

Firmographic segmentation focuses on analyzing data about businesses to uncover insights about their strengths and weaknesses in order to reach the right buyers in a B2B setting.

Using firmographics allows marketers to understand which businesses are most likely interested in their products or services before they ever make contact.

A car rental business , for example, might target business travelers who frequently rent cars for work-related trips.

Behavioral Segmentation

Behavioral segmentation looks at how consumers interact with products and services, and their decisions to purchase or not purchase things based on past experiences, preferences, brand associations, and more.

By understanding behavior patterns marketers can craft messages that speak directly to the customer’s wants or needs.

Types of Target Markets

There are many ways to segment a target market, and the type of target market you choose will largely depend on your industry, product or service offering, and overall marketing goals.

Here are some of the most common types of target markets:

B2B (Business-to-Business) is an industry term used to describe companies that sell products or services to other businesses rather than individual consumers.

Examples include computer hardware manufacturers selling to corporate IT departments, accounting firms providing services to other businesses, and software developers creating programs for sale to other companies.

B2C (Business-to-Consumer) is a type of transaction where businesses sell their products directly to consumers, such as grocery stores selling food or clothing retailers selling apparel.

This type of targeting requires an understanding of consumer needs and preferences when crafting campaigns and messages that speak directly to the customer.

Niche Markets

A niche market is a smaller segment within a larger target market. This can be based on demographics, lifestyle choices, interests, or any other factor that defines a subset of customers who share common attributes.

Knowing your niche market can help you create more targeted ads and better understand the specific needs and wants of potential customers within that group.

How Big Should a Target Market be?

The ideal size of a target market depends on the type of product or service being offered and the goals of the business.

Generally, the larger the target market, the greater reach your campaign will have but it can also limit a business’s ability to customize messages to fit its audience.

Having too narrow of a focus when it comes to targeting can result in a lack of engagement from potential customers who could benefit from using your product.

It is important for businesses to find a balance between reach and specificity to maximize their results.

Target Market Examples

When it comes to identifying and reaching your target market, it can be helpful to look at examples of how other companies have done it. Here are four examples of companies and their target markets:

Starbucks Target Market

Starbucks , the coffee giant, targets a wide range of consumers, including busy professionals, college students, and older adults.

They focus on providing a convenient and comfortable experience for their customers, with a wide variety of coffee and food options.

Starbucks locations are often found in high-traffic areas such as downtown business districts, university campuses, and suburban shopping centers.

Their target market is also characterized by consumers who are willing to pay a premium for high-quality coffee and an inviting atmosphere.

Nike Target Market

Nike , the sportswear giant, targets consumers who are active and value fitness and healthy living.

They focus on providing high-performance athletic apparel and footwear for a wide range of sports and activities.

Nike’s target market includes serious athletes, fitness enthusiasts, and casual athletes who want to look and feel good while they exercise.

The company also targets youth and urban culture and often collaborates with popular athletes and fashion designers.

Tesla Target Market

Tesla, the electric vehicle manufacturer, targets consumers who are environmentally conscious and value innovation and technology.

They focus on providing electric vehicles and energy solutions that are sustainable and efficient.

Tesla’s target market includes early adopters of technology, consumers looking for an alternative to traditional gasoline vehicles, and individuals who are willing to pay a premium for a high-performance electric car.

Disney Target Market

Disney , the entertainment giant, targets families and children with a focus on creating magical experiences.

They offer a wide range of entertainment options, including theme parks, cruises, movies, and television shows.

Disney’s target market includes families with children, grandparents, and adults who are young at heart.

They also target consumers who are willing to pay for the Disney brand experience and for the memories that come with it.

Target Marketing Strategies

Developing effective target marketing strategies can help you reach the right customers and increase your return on investment. Here are five target marketing strategies to consider:

• Segmenting the market: Segmenting the market involves dividing the market into smaller groups of customers with similar characteristics. This allows you to create specific marketing strategies for each segment, increasing the chances of reaching the right customers.
• Creating buyer personas: A buyer persona is a fictional representation of your ideal customer. Creating buyer personas can help you understand the needs, wants, and pain points of your target market, and tailor your marketing messages accordingly.
• Developing a unique value proposition: A unique value proposition (UVP) is a statement that communicates the unique benefits of your product or service. Developing a UVP can help you stand out from the competition and attract the right customers.
• Using data and analytics: Data and analytics can help you better understand your target market and develop effective marketing strategies. This can include things like analyzing customer data, tracking website traffic, and monitoring social media metrics as part of a social media marketing strategy.
• Test and optimize: Once you have identified your target market and developed your marketing strategies, it’s important to test and optimize them based on the results. This can include A/B testing your messaging, testing different ad formats, and experimenting with different marketing channels.

What is a target market?

As many quality marketing courses teach, a target market is a specific group of consumers that a business or organization aims to reach with its marketing efforts.

It is defined by characteristics such as demographics, behaviors, pain points, and needs. It helps businesses to understand the needs and wants of their potential customers and create products, services, and marketing strategies that meet those needs.

Can you have multiple target markets?

Yes, it is possible to have multiple target markets. Companies often segment their customer base into multiple target markets in order to design and deliver messages that are more tailored to each one.

It’s important to find the right balance between reach and specificity when attempting to market effectively across multiple target markets.

How do I answer the question ‘What is your target market’?

When asked ‘What is your target market?’, you can respond with an explanation of the type of customers who are most likely to purchase your product or service.

This could include demographic information such as age, gender, income level, and geographic location, and/or psychographic information such as values, interests, lifestyle choices, or preferences.

You may wish to also provide examples of how you identify and target these segments in your marketing campaigns.

What are the 3 common target markets?

The 3 most common target markets are demographic segmentation, geographic segmentation, and psychographic segmentation. Demographic segmentation involves targeting customers based on their age, gender, income level, and other demographic information.

Geographic segmentation involves targeting customers based on where they live, such as by country or city. Psychographic segmentation involves targeting customers based on brand values alignment, interests, lifestyle choices, or preferences.

How detailed should a target market be? What is the purpose of a target market?

A target market should be as detailed as possible in order to ensure that it accurately reflects your ideal customer. The purpose of a target market is to identify the most likely customers for your product or service so that you can create effective and efficient marketing campaigns.

By focusing on this audience, you can make sure that you are reaching the right people with the right message to better engage them and increase your chances of conversion.

What is the difference between target market and target audience?

The difference between a target market and a target audience is that a target market is the group of potential customers that your company is aiming to reach, while a target audience is the people who are most likely to purchase your product or service.

A target market may include multiple different audiences, for example, young adults and retirees, while target audiences will be focused on one particular segment.

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The 10 Key Components of a Business Plan

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 1 million entrepreneurs and business owners write business plans. These plans have been used to raise funding and grow countless businesses.

Download our Ultimate Business Plan Template here >

From working with all these businesses, we know what the 10 elements in any great business plan. Providing a comprehensive assessment of each of these components is critical in attracting lenders, angel investors, venture capitalists or other equity investors.

Get started with a title page that includes your company name, logo and contact information, since interested readers must have a simple way to find and reach out to you. After that be sure to include the 10 parts of a business plan documented below.

What are the 10 Key Components of a Business Plan?

The 10 sections or elements of a business plan that you must include are as follows:

1. Executive Summary

The executive summary provides a succinct synopsis of the business plan, and highlights the key points raised within. It often includes the company’s mission statement and description of the products and services. It’s recommended by me and many experts including the Small Business Administration to write the executive summary last.

The executive summary must communicate to the prospective investor the size and scope of the market opportunity, the venture’s business and profitability model, and how the resources/skills/strategic positioning of the company’s management team make it uniquely qualified to execute the business plan. The executive summary must be compelling, easy-to-read, and no longer than 2-4 pages.  

2. Company Analysis

This business plan section provides a strategic overview of the business and describes how the company is organized, what products and services it offers/will offer, and goes into further detail on the business’ unique qualifications in serving its target markets. As any good business plan template will point out, your company analysis should also give a snapshot of the company’s achievements to date, since the best indicator of future success are past accomplishments.

3. Industry or Market Analysis

This section evaluates the playing field in which the company will be competing, and includes well-structured answers to key market research questions such as the following:

• What are the sizes of the target market segments?
• What are the trends for the industry as a whole?
• With what other industries do your services compete?

To conduct this market research, do research online and leverage trade associations that often have the information you need.  

4. Analysis of Customers

The customer analysis business plan section assesses the customer segment(s) that the company serves. In this section, the company must convey the needs of its target customers. It must then show how its products and services satisfy these needs to an extent that the customer will pay for them.

The following are examples of customer segments: moms, engaged couples, schools, online retailers, teens, baby boomers, business owners, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of business you operate as different segments often have different needs. Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations and income levels of the customers you seek to serve. With regards to psychographic variables, discuss whether your customers have any unique lifestyles, interests, opinions, attitudes and/or values that will help you market to them more effectively.

5. Analysis of Competition

All capable business plan writers discuss the competitive landscape of your business. This element of your plan must identify your direct and indirect competitors, assesses their strengths and weaknesses and delineate your company’s competitive advantages. It’s a crucial business plan section.

Direct competitors are those that provide the same product or service to the same customer. Indirect competitors are those who provide similar products or services. For example, the direct competitors to a pizza shop are other local pizza shops. Indirect competitors are other food options like supermarkets, delis, other restaurants, etc.

The first five components of your business plan provide an overview of the business opportunity and market research to support it. The remaining five business plan sections focus mainly on strategy, primarily the marketing, operational, financial and management strategies that your firm will employ.

6. Marketing, Sales & Product Plan

The marketing and sales plan component of your business plan details your strategy for penetrating the target markets. Key elements include the following:

• A description of the company’s desired strategic positioning
• Detailed descriptions of the company’s product and service offerings and potential product extensions
• Descriptions of the company’s desired image and branding strategy
• Descriptions of the company’s promotional strategies
• An overview of the company’s pricing strategies
• A description of current and potential strategic marketing partnerships/ alliances

7. Operations Strategy, Design and Development Plans

These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:

• What functions will be required to run the business?
• What milestones must be reached before the venture can be launched?
• How will quality be controlled?

8. Management Team

The management team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:

• Who are the key management personnel and what are their backgrounds?
• What management additions will be required to make the business a success?
• Who are the other investors and/or shareholders, if any?
• Who comprises the Board of Directors and/or Board of Advisors?
• Who are the professional advisors (e.g., lawyer, accounting firm)?

9. Financial Plan

The financial plan involves the development of the company’s revenue and profitability model. These financial statements detail how you generate income and get paid from customers,. The financial plan includes detailed explanations of the key assumptions used in building the business plan model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.

One of the key purposes of your business plan is to determine the amount of capital the firm needs. The financial plan does this along with assessing the proposed use of these funds (e.g., equipment, working capital, labor expenses, insurance costs, etc.) and the expected future earnings. It includes Projected Income Statements, Balance Sheets (showing assets, liabilities and equity) and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5.

Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The financial plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture. Note that in addition to traditional debt and equity sources of startup and growth funding that require a business plan (bank loans, angel investors, venture capitalists, friends and family), you will probably also use other capital sources, such as credit cards and business credit, in growing your company.

10. Appendix

The appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the appendix, with the summary of these financials in the executive summary and the financial plan. Other documentation that could appear in the appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.

Find additional business plan help articles here.

Expertly and comprehensively discussing these components in their business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too.

In addition to ensuring you included the proper elements of a business plan when developing your plan always think about why you are uniquely qualified to succeed in your business. For example, is your team’s expertise something that’s unique and can ensure your success? Or is it marketing partnerships you have executed? Importantly, if you don’t have any unique success factors, think about what you can add to make your company unique. Doing so can dramatically improve your success. Also, whether you write it on a word processor or use business plan software , remember to update your plan at least annually. After several years, you should have several business plans you can review to see what worked and what didn’t. This should prove helpful as you create future plans for your company’s growth.

Download The 10 Key Components of a Business Plan Here

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

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Home > Business Plan > Target Market in a Business Plan

Target Market in a Business Plan

… we are targeting this part of the market …

What is the Target Market?

Target Market Segments

Your product will not be of equal interest to all potential customers, as they do not all have the same needs and characteristics. This section of the business plan deals with the analysis of the target market into different groups of customers (customer or target market segments) each having distinct characteristics and needs from the product.

The target market segmentation strategy depends on the business and the product, but generally segmentation falls into the following customer characteristics groups.

Psychographic segmentation

Psychographic segmentation splits up a sales market of a business based on such things as the social class, lifestyle choices, personality traits, tastes, attitudes, and the opinions of its customers.

Psychographic market segmentation examples include the promotion of products such as cars as these often reflect a customers lifestyle, and leisure activities. For example, a car business might identify customers who are interested in keeping the environment green and promote hybrid cars to them, or a business involved in activity holidays will seek to market to customers who show a preference for an active lifestyle.

Demographic segmentation

• Social class
• Size of family
• Nationality

Geographic Segmentation

Geographic segmentation is the process of splitting up a sales market of a business based on the geographical location of the customers. It is a particularly important marketing tool when the business is a multinational, worldwide business, but is also used by businesses to split their markets into region, county, state, city, neighborhood, or postal code.

A geographic segmentation example would be seasonal clothing items such as coats and swimwear. In contrast, in a colder climate coats would be marketed and sold all year round whereas swimwear would be highly seasonal during the holiday period. In a hot climate swimwear would be the all year round product and winter coats might not be sold at all.

Behavioral segmentation

Behavioral segmentation is the process of splitting up the sales market based on brand loyalty, usage, benefits required.

Target Market Presentation in the Business Plan

The business plan target market section can be presented in a number of formats, but a listing of the major customer segments together with a pie chart will show the investor where the main potential for the product lies. In the example below, the market is split into four main segments both in terms of number of customers and percentage of the total target market.

The average customer spend is also included, to reconcile the total target market back to the served available market (SAM) in monetary terms. Finally, a brief statement about the growth prospects for the market is included to show the investor the potential for growth in your chosen customer segments.

When identifying the target-market segments, it is important to be as specific as possible about the customer characteristics which make up each segment. In choosing which segments to concentrate on, take into account the size and potential for growth of each segment, and identify clearly what benefits, both emotional and financial, the product provides for the customer.

This is part of the financial projections and Contents of a Business Plan Guide , a series of posts on what each section of a simple business plan should include. The next post in this series is about the analysis of the competition for the target-market.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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What Is a Target Market (And How to Find Yours)

The better you understand your target market, the more you’ll be able to focus your ads and reach the audience most likely to convert into customers.

Table of Contents

Your target market sets the tone for your entire marketing strategy — from how you develop and name your products or services right through to the marketing channels you use to promote them.

Here’s a hint before we dig in: Your target market is not “everyone” ( unless you’re Google ). Your task in defining your target market is to identify and understand a smaller, relevant niche so you can dominate it. It’s all about narrowing your focus while expanding your reach.

In this guide, we’ll help you learn who’s already interacting with your business and your competitors, then use that information to develop a clear target market as you build your brand .

Bonus: Get the free template to easily craft a detailed profile of your ideal customer and/or target audience.

What is a target market?

A target market is the specific group of people you want to reach with your marketing message . They are the people who are most likely to buy your products or services, and they are united by some common characteristics, like demographics and behaviors.

The more clearly you define your target market, the better you can understand how and where to reach your ideal potential customers. You can start with broad categories like millennials or single dads, but you need to get much more detailed than that to achieve the best possible conversion rates.

Don’t be afraid to get highly specific. This is all about targeting your marketing efforts effectively, not stopping people from buying your product.

People who are not included in your targeted marketing can still buy from you—they’re just not your top focus when crafting your marketing strategy. You can’t target everyone, but you can sell to everyone.

Your target market should be based on research, not a gut feeling . You need to go after the people who really want to buy from you, even if they’re not the customers you originally set out to reach.

What is target market segmentation?

Target market segmentation is the process of dividing your target market into smaller, more specific groups. It allows you to create a more relevant marketing message for each group.

Remember — you can’t be all things to all people. But you can be different things to different groups of people.

For example, as a vegetarian, I’ve eaten plenty of Impossible Burgers. I’m definitely a target customer. But vegetarians are a surprisingly small target market segment for Impossible Foods: only 10% of their customer base.

That’s why Impossible Foods’ first national advertising campaign was definitely not targeted at me:

https://www.facebook.com/ImpossibleFoods/videos/158779836141556

The target market segment for this ad campaign was “meat eaters who haven’t yet tried Impossible products.”

Vegetarians and meat eaters have different reasons for eating plant-based burgers and want different things from the experience. Target market segmentation ensures the company reaches the right audience with the right message.

How to define your target market

Step 1. compile data on your current customers.

A great first step in figuring out who most wants to buy from you is to identify who is already using your products or services. Once you understand the defining characteristics of your existing customer base, you can go after more people like that.

Depending on how someone connects with your business, you might have only a little information about them, or a lot.

This doesn’t mean you should add a lot of questions to your order or opt-in process just for audience research purposes — this can annoy customers and result in abandoned shopping carts.

But do be sure to use the information you naturally acquire to understand trends and averages .

Your CRM is a goldmine here. UTM parameters combined with Google Analytics can also provide useful information about your customers.

Some data points you might want to consider are:

• Age: You don’t need to get too specific here. It won’t likely make a difference whether your average customer is 24 or 27. But knowing which decade of life your customers are in can be very useful.
• Location (and time zone): Where in the world do your existing customers live? In addition to understanding which geographic areas to target, this helps you figure out what hours are most important for your customer service and sales reps to be online, and what time you should schedule your social ads and posts to ensure best visibility.
• Language: Don’t assume your customers speak the same language you do. And don’t assume they speak the dominant language of their (or your) current physical location.
• Spending power and patterns: How much money do your current customers have to spend? How do they approach purchases in your price category?
• Interests: What do your customers like to do, besides using your products or services? What TV shows do they watch? What other businesses do they interact with?
• Challenges: What pain points are your customers facing? Do you understand how your product or service helps them address those challenges?
• Stage of life: Are your customers likely to be college students? New parents? Parents of teens? Retirees?

If you’re selling B2B products, your categories will look a little different. You might want to collect information about the size of businesses that buy from you, and information about the titles of the people who tend to make the buying decisions. Are you marketing to the CEO? The CTO? The social marketing manager?

Step 2. Incorporate social data

Social media analytics can be a great way of filling out the picture of your target market. They help you understand who’s interacting with your social accounts, even if those people are not yet customers.

These people are interested in your brand. Social analytics can provide a lot of information that might help you understand why. You’ll also learn about potential market segments you may not have thought to target before.

You can also use social listening to help identify the people who are talking about you and your product on social media, even if they don’t follow you.

If you want to reach your target market with social ads, lookalike audiences are an easy way to reach more people who share characteristics with your best customers.

Step 3. Check out the competition

Now that you know who’s already interacting with your business and buying your products or services, it’s time to see who’s engaging with the competition.

Knowing what your competitors are up to can help you answer some key questions:

• Are your competitors going after the same target market segments as you are?
• Are they reaching segments you hadn’t thought to consider?
• How are they positioning themselves?

Our guide on how to do competitor research on social media walks you through the best ways to use social tools to gather competitor insights.

You won’t be able to get detailed audience information about the people interacting with your competitors, but you’ll be able to get a general sense of the approach they’re taking and whether it’s allowing them to create engagement online.

This analysis will help you understand which markets competitors are targeting and whether their efforts appear to be effective for those segments.

Step 4. Clarify the value of your product or service

This comes down to the key distinction all marketers must understand between features and benefits. You can list the features of your product all day long, but no one will be convinced to buy from you unless you can explain the benefits .

Features are what your product is or does. The benefits are the results. How does your product make someone’s life easier, or better, or just more interesting?

If you don’t already have a clear list of the benefits of your product, it’s time to start brainstorming now. As you create your benefit statements, you’ll also by default be stating some basic information about your target audience.

For example, if your service helps people find someone to look after their pets while they’re away, you can be pretty confident that your market will have two main segments: (1) pet owners and (2) existing or potential pet-sitters.

If you’re not sure exactly how customers benefit from using your products, why not ask them in a survey, or even a social media poll ?

You might find that people use your products or services for purposes you haven’t even thought of. That might, in turn, change how you perceive your target market for future sales.

Step 5. Create a target market statement

Now it’s time to boil everything you’ve discovered so far into one simple statement that defines your target market. This is actually the first step in creating a brand positioning statement , but that’s a project for another day. For now, let’s stick to creating a statement that clearly defines your target market.

For example, here’s Zipcar’s brand positioning statement, as cited in the classic marketing text Kellogg on Marketing . We’re interested in the first part of the statement, which defines the target market:

“To urban-dwelling, educated, techno-savvy consumers who worry about the environment that future generations will inherit, Zipcar is the car-sharing service that lets you save money and reduce your carbon footprint, making you feel you’ve made a smart, responsible choice that demonstrates your commitment to protecting the environment.”

Zipcar is not targeting all residents of a particular city. They’re not even targeting all the people in a given city who don’t own a car. They’re specifically targeting people who:

• live in an urban area
• have a certain degree of education
• are comfortable with technology
• are concerned about the environment

These are all interests and behaviors that Zipcar can specifically target using social content and social ads .

View this post on Instagram A post shared by Zipcar (@zipcar)

They also help to guide the company’s overall approach to its service, as evidenced by the rest of the positioning statement.

When crafting your target market statement, try to incorporate the most important demographic and behavior characteristics you’ve identified. For example:

Our target market is [gender(s)] aged [age range], who live in [place or type of place], and like to [activity].

Don’t feel like you need to stick to these particular identifiers. Maybe gender is irrelevant for your market, but you have three or four key behaviors to incorporate in your statement.

If you offer multiple products or services, you might need to create a target market statement for each market segment. In this case, it’s useful to define buyer personas .

Target market examples

Nike target market.

Despite its current market domination, Nike actually provides a great example of what can go wrong when you try to target too general of an audience.

Nike started out as a running shoe company. In the 1980s, they tried to expand their target market beyond runners to include anyone who wanted comfortable shoes. They launched a line of casual shoes, and it flopped.

Here’s the thing: Non-runners were already buying Nike shoes to walk to work, or for other casual purposes. Nike spotted this as an opportunity to expand. Instead, they diluted their brand promise, and the company actually started losing money.

The lesson, according to company founder Phil Knight?

“Ultimately, we determined that we wanted Nike to be the world’s best sports and fitness company and the Nike brand to represent sports and fitness activities. Once you say that, you have focus.”

While Nike would certainly not stop casual users from buying its shoes, the company refocused everything from product development to marketing on its target market: athletes of all levels, from pro to beer league.

In fact, understanding the importance of focus led Nike into a highly effective strategy of target market segmentation. The brand has multiple target markets for its various product lines.

On social, that means they use multiple accounts to reach their different target market groups. No one account tries to be all things to all customers.

The post below from Nike’s general Instagram account targets the segment of their audience interested in fashion and lifestyle products.

View this post on Instagram A post shared by Nike Basketball (@nikebasketball)

But the company also has channels dedicated to specific sports. Here’s an example of the content they create for runners:

View this post on Instagram A post shared by Nike Running (@nikerunning)

And that means … the brand has been able to return to marketing its products specifically for casual wear. It just reaches the casual target market through different channels than it uses for its athletic markets. It’s a different target market segment, and a different marketing message

View this post on Instagram A post shared by Nike Sportswear (@nikesportswear)

Like Nike, you might have one target market, or many, depending on the size of your brand. Remember that you can only speak effectively to one target market segment at a time.

Takasa target market

Takasa is a Canadian retail homewares company that specializes in organic, fair trade bedding and bath linens.

Here’s their target market as defined by founders Ruby and Kuljit Rakhra:

“ Our target market is the LOHAS segment, which means Family Lifestyles of Health and Sustainability. This group of people is already living, or striving to live, a green lifestyle … We know our target demo is very conscious about what their families consume, as well as the impact this consumption has on the environment.”

In their social content, they clearly identify the product features most important to their target market: organic materials and fair labor practices.

View this post on Instagram A post shared by Organic + Fairtrade Home Goods (@takasa.co)

The City of Port Alberni’s target market

Why does a city need a target market? In Port Alberni’s case, the city is working to “attract investment, business opportunities and new residents.” To that end, they launched a rebranding and marketing campaign.

And a marketing campaign, of course, needs a target market. Here’s how the city defined it:

“ Our target market is young people and young families 25 to 45 years of age who are entrepreneurial-minded, family oriented, adventurous, enjoy an active lifestyle, desire an opportunity to contribute to growth, well-educated and skilled professionals or tradespeople.”

In their social content, they highlight recreational opportunities aimed at those active and adventurous young families, even using the handle @PlayinPA.

View this post on Instagram A post shared by City of Port Alberni (@playinpa)

White House Black Market target market

White House Black Market is a women’s fashion brand. Here’s how they describe their target customer on their website :

“Our customer … is strong yet subtle, modern yet timeless, hard-working yet easy-going.”

That’s a fine description when talking directly to customers. But the marketing department needs a target market definition with a few more specifics. Here’s the detailed target market as described by the company’s former president:

“ Our target market is women [with a] median age of about 45 … at a stage in her life where she’s very busy, primarily a working woman. She’s probably got one or two kids left at home [or] … her children may be out of the house and on their way to college.”

With their hashtag #WHBMPowerhouse, they focus on this key demographic of women in their 40s with busy home lives and careers.

View this post on Instagram A post shared by White House Black Market (@whbm)

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Christina Newberry is an award-winning writer and editor whose greatest passions include food, travel, urban gardening, and the Oxford comma—not necessarily in that order.

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BUSINESS STRATEGIES

What is a target market and how to define yours

• Rebecca Strehlow
• Dec 7, 2023
• 11 min read

One of the first steps in starting a business is determining your target market. This step alone can be the basis for what products you create, how you brand your business and ultimately who you market to.

With that in mind, you’ll need to develop assets that resonate with your target market. Start by creating a business website that represents your business and uses language and visuals relatable to your audience. Consider what niche you can fit into and what separates your business from the competition. From there you can create messaging, branding and advertising designed for your target market and convert more leads into customers.

Keep reading to learn more about defining your target market and gain expert tips on how to implement this targeting throughout your business strategy.

What is a target market?

Your target market is your product’s primary consumer. Once you know who this is, you can tailor your branding and marketing efforts toward them.

A target market can be composed of a broad group, such as married men over 40 in the US, or it can be quite narrow, such as urban, health-conscious, vegetarian women in Texas. Your market will depend on the particular consumer needs your product addresses.

The three key aspects of a target market include:

Demographics: Age, gender, income, education or employment status.

Geographics: Primary location of your market.

Personality traits: What they like and dislike, as well as where they shop and their favorite brands.

To pinpoint your target market, you’ll need to analyze data about your product niche, your customers and your competitors. You'll also need to understand more about the specific types of target markets in more detail.

What are the types of target markets?

In general there are several ways business owners can categorize target markets. For the most part target markets are divided into the following four main types: demographic, geographic, psychographic, and behavioral.

Demographic

This type of target market is defined by a number of demographic variables such as age, gender, income, education, and family size. Companies might target specific demographic groups based on their buying habits and purchasing power.

Geographic target markets are defined, as the name suggests, by geographic variables such as region, state, city and population density.

Psychographic

Psychographic variables such as lifestyle, values, personality, and social class make up the definition of this target market.

This type of target market is defined by consumer behavior, such as the benefits sought, usage rate, and customer loyalty.

It's important to note that a business may choose to target one or multiple types of target markets, depending on their specific business objectives and marketing strategies.

Why are target markets important?

Understanding your target market is a crucial aspect of developing a successful business. Below we explore the main reasons why understanding your target market is so important in order to ensure a profitable business.

Better customer segmentation : Understanding your target market allows you to segment your customers more effectively, which in turn helps you tailor your marketing messages and products to meet their specific needs and preferences.

Increased focus and efficiency: Focusing on a specific target market allows you to be more efficient with marketing resources while avoiding wasting time and money on efforts that are not likely to reach or resonate with your target audience.

Improved brand reputation: Understanding your target market can help you establish and maintain a positive brand reputation by allowing you to align your brand with the values and interests of your market.

Increased customer loyalty : By understanding your target market and delivering products and services that meet their needs and expectations, you will foster a loyal customer base that is more likely to recommend your brand to others.

Better decision making: Understanding your target market provides valuable insights that can inform important business decisions, such as product development, pricing strategies and distribution channels for marketing efforts.

Target market vs. target audience?

Often used interchangeably, target market and target audience are not the same thing. Your target market is the end consumer while your target audience is to whom your company advertises. While your target market might fall into your target audience, who you advertise to may not, in the end, be the one who consumes the product.

To clarify, let’s look at an example: Kids toys, for example, have a very clear target market: children. In addition, toys are often marketed toward children who identify with a specific gender category. Nevertheless, kids don’t purchase their toys, their parents do. So toy companies must focus their advertising strategies on parents (the target audience) to sell toys for their kids (the target market).

For example, Generation Alpha , kids born between 2010 and 2025 with millennial parents, play with much different toys than their parents did because millennials have different consumer preferences than their Baby Boomer parents. Rather than shopping in big-box stores for brightly-colored toy packages, millennial parents are more likely to purchase clean, minimalistic, and gender-inclusive toys from Instagram ads or Amazon. Therefore, toy companies are using Millennial preferences (the target audience) to sell toys to their Generation Alpha kids (the target market).

How to determine your target market

Gather consumer data

Know your product’s benefits

Investigate your competitors

Segment your audience

Write a target market statement

Refine your research

01. Gather consumer data

The first step in defining your target market is to learn more about your customers. Even if you’ve just started an online store and don’t have many customers yet, these practices will come in handy further down the line.

Start by gathering information about current and past buyers and try to identify characteristics that they have in common. This data will help you market your product to people with similar interests. If you are still in the early stages of your business and haven’t started selling your product, look at competitor markets and use that information to determine your target market.

Using website analytics tools, social media and email marketing analytics platforms, here are some data points you’ll want to consider:

Age: Do your customers share a common decade or generation? Are they millennials, older adults, or something in between?

Location: Where in the world do most of your customers live? Consider the different cities, countries, and regions.

Language: Which languages do your customers speak? Remember that your customers’ language isn’t necessarily the dominant language of their country.

Spending power: Consider socioeconomic factors that may be affecting your customers. How much money are they willing or able to spend?

Hobbies and career: What do your customers enjoy doing? What are their professions, and what do they do in their spare time?

Stage of life: Where are your customers in life? Are they college students? New parents? Retirees?

If your company is B2B rather than B2C , you’ll want to look for characteristics of companies, rather than individual consumers. These traits include:

Business size: Are the businesses that buy from you small, medium, or large?

Location: Where are these businesses physically located?

Vertical: Which industries are most of these businesses in?

Budget: How have these businesses raised money ? Consider how much they’d be willing or able to spend on products like yours.

Be sure to track this information in an orderly manner so that you can keep your findings organized and easily identify trends. Analyzing these trends will allow you to identify shared characteristics within your customer base. These characteristics will inform your inbound marketing efforts and steer your strategy toward your target audience.

02. Know your product benefits

The next step is to understand your consumers’ motivation behind purchasing your product, rather than a competitor. You can learn this information by speaking to your customers directly, asking for testimonials, and by doing in depth competitor research to understand the difference between your product and theirs.

Get to know the benefits—and not just the features—of your product or service. The features are your product’s characteristics. For example, if your business sells suitcases, you might describe your product as being small, compact and having multiple compartments. Your product’s benefits, on the other hand, are the advantages it brings to your customers. Think about how your product makes someone’s life better or easier. The compact, multi-compartment suitcase offers the benefits of being easy to carry and pack as a carry-on.

It’s vital to understanding how your product fulfills its target market’s specific needs. For the suitcase company discussed above, for instance, the target market would be people who benefit from a lightweight, carry-on suitcase—such as business travelers who take short, frequent trips.

03. Investigate your competitors

Hone in on your target market even further by taking a look at which your competitors are targeting. Of course you won't have access to their customer analytics data, but you can understand their customers with a SWOT analysis .

Take a deep dive into competitor websites, blogs and social channels. Consider who their target market is based on their website content, content marketing strategy, and social media branding. You’ll likely be able to infer details about their audience based on their brand language and tone. You can also check for comments on their social media pages to see which types of people are engaging with their posts.

Take an especially close look at their most successful social media and blog posts. Do these pieces of content have anything in common in terms of their offering or branding? Which interests or needs do they address? Use this information to consider what kinds of qualities or advantages appeal most to consumers within your industry.

04. Segment your audience

At this point, you’ve gathered some information about the characteristics and interests of your target audience. Now, it’s time to use that information to clearly define your customer types. This is going to form the basis of your target market.

The best way to do this is through market segmentation. This involves dividing your customers into different groups, or segments, based on their shared qualities.

You can divide your customers based on:

Geography: Physical location, whether it’s your own city or a different part of the world. Note that if your customers are located around the world, you may need to create a multilingual website, as well as localized ads and marketing materials.

Demographics: Characteristics such as age, gender, race or ethnicity, income level, or marital status.

Psychographics: Inner qualities such as personality, lifestyle, or personal values. These are often a product of geographic and demographic factors such as location, generation, or stage of life.

Behavior: Perceived qualities based on online behavior, such as buyer readiness or frequency of use.

If you’re a B2B company, use similar characteristics but apply them to business. Consider firm demographics—known as firmographics—such as industry, location, customer size, business structure, and performance.

To gain a deeper understanding of your segments, you can also create buyer personas. Also called user personas, buyer personas are imaginary characters with traits and behaviors similar to those of typical customers. Ultimately, these fictional characters represent your target market, helping you gain insights into the needs, desires, and lifestyles of your actual customers.

05. Write a target market statement

Now that you’ve determined the defining features of your audience, it’s time to put your findings on paper. Write a target market statement that focuses on the most important audience characteristics you’ve identified in your research. Your statement should include:

Demographic information about your target market, such as gender and age.

Geographic location of your target market.

Key interests of your target market.

Then, sum it up in a single sentence. For example:

“Our target market is women in their 30s and 40s who live in the United States and enjoy casual, comfortable fashion.”

Doing this will keep your brand identity and marketing efforts consistent. It will also come in useful as you adapt your company’s mission statement to be as relevant as possible for your audience.

06. Refine your research

Defining your target market is based on thorough research, but that doesn’t mean it’s going to be perfect the first time around. Even after you identify your market, you’ll still need to continually test and experiment to get an increasingly precise picture of your customers. Staying on top of your market research can also help you keep up with the times, as consumer interests change over the years with technological developments, generational attitudes and passing trends.

To narrow in on your audience, you’ll need to assess your business success and test your targeting efforts. Take a look at who is actually buying from you and which specific products or services they are purchasing. Try to understand how you can adapt future product development or modify your branding or marketing efforts to better fit your customer base.

Utilize A/B testing with your marketing efforts to test the same ad on different audiences and see which version performs better. Alternatively, you can develop two different creatives, each with their own look and language and compare your audience’s responses. Based on the results, you might need to either adjust your business strategy or revise your target market statement. The bottom line is to build a brand that resonates strongly with your audience. Remember, the more targeted your content, the more effective your lead generation strategies—and the more customers you’ll bring to your brand.

What are examples of a target market?

These website examples clearly cater to their target markets. Take note of the phrases and visuals these websites use.

01. Amanda Darby

Let’s take a look at how nutritionist Amanda Darby appeals to her target market. She aims to address people looking to make healthier food and dieting choices. To do this, she’s created a website that fosters a sense of joy and personal empowerment around food. The light and airy background, coupled with the cheerful images of cooking and eating, instantly makes it clear that she targets people looking for a healthy lifestyle.

She also hones in on her audience even further, using phrases that directly appeal to middle-aged women. In the section of her homepage that discusses her nutrition coaching: “You will be the mom who loves food, her body, and knows life isn't perfect, but is perfectly happy living the life she has vs. waiting for the life she will have when she reaches her goal weight.” By directly addressing the concerns of her target market, Amanda helps her audience feel heard and understood. This strengthens their trust in her brand and persuades them that she is the right coach for their needs.

02. Curtinsmith Guitars

From the very first image that appears across the top of this website, it’s clear that Curtinsmith Guitars is crafting something unique. By displaying photographs of their workshop and describing their guitars as “custom” and “handmade,” they directly single out a target market of those looking for unique, one-of-a-kind guitars. This target market is likely musical, appreciative of craftsmanship and not afraid to spend their money on their passions.

The About Us section of the site confirms this targeting. The owner, Paul, writes, “I find it quite profound to create something which, in itself, will continue to create. It is an absolute joy crafting these instruments and it is my prayer that they continue to be a joy for those who play them and listen to them, for many generations.”

In this statement, the brand makes it clear that it targets musicians who value the creative process. They also allude to the quality of their product, portraying them as long-lasting heirlooms with sentimental value.

03. Lima Cakes

Sona Karapetyan uses her artistic vision to create showstopping celebratory cakes. The About section on her website says that Sona “was always experimenting with graphic art & design” and, “When Sona decided to embark on the cake art journey, she experimented with different textures, shapes and architectural elements to create a unique design language.” It also states that she never creates the same cake twice so each cake is unique to each client.

Her neutral-colored web design and sophisticated copy narrow her target market down to mature individuals who appreciate art. Her website also features images of her cakes, clearly displaying her skills to her potential customers. The prices of her custom-made cakes will reflect the effort that goes into each one. These details show that she likely targets an educated, older, affluent crowd with an appreciation for modern art and design.

What are market segments?

Market segments are subgroups within a larger market that share specific characteristics and needs. These characteristics can include demographics, lifestyle, interests, behavior and purchasing patterns. By identifying and understanding these segments, businesses can tailor their marketing messages, products and services to better resonate with each group. This allows for more targeted and effective marketing efforts.

Target market FAQ

How detailed should a target market be.

The level of detail for a target market depends on your specific business and goals. However, it should be defined enough to create targeted marketing campaigns and avoid wasting resources. Consider including demographic information (age, gender, income, etc.), psychographics (lifestyle, values, interests), and behavioral factors (purchasing habits, media consumption). While details are important, avoid over-segmentation, as it can limit your reach and marketing effectiveness.

What is an example of a target market?

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How To Define Your Target Market in 7 Steps

• Written by Bryan Philips
• Topic: Digital Marketing
• 19 minutes read

Customers are the lifeblood of any business, and knowing them is vital to your digital marketing strategy . You must ask yourself, “Who would be a good fit for my product? And what are their interests and priorities?” These questions might help you decide which contracts you’re most likely to win. But, precisely, how do you identify a target market, and what exactly is it?

Let’s look at what a target market is, analyze, see some helpful examples and go through target market segmentation.

Target Market Definition

A target market is a group of people for whom your products and services are intended. Typically, it’s established by industry, representing a specific part of the larger market that the sector covers. It’s usually determined by behavioral patterns, geographic location, and demographic variables.

Let’s assume you’ve developed a B2B software product that automates the calculation of sales commissions. You’d presumably concentrate on businesses that pay cash incentives with more than 20 salespeople in this scenario.

You’re well-versed in your industry, but there’s no one-size-fits-all mold for the companies that operate within it. If you were attempting to target a market for your product, start with company qualities such as scale.

A targeting strategy is a long-term approach that focuses on your ideal customer’s demographic, psychographic, and behavioral variables to improve sales performance. To do so, you must first figure out who your target market is and what they want from you.

For example, suppose you’re a B2B SaaS company with less than 100 employees selling to a Fortune 1000 company. In that case, this isn’t the same thing as it is for a large telecommunications corporation with millions of customers. You’d want to know exactly how big your ideal client’s business was to get started on a target market analysis.

How to Analyze Your Audience

To properly grasp your target audience, you must first conduct some research. You’ll design a marketing plan that works if you know who your products and services are and how to locate them.

Analyze Your Niche

Whatever you’re offering, it’s most valuable to a very particular set of people. Take a look at what you’re selling and why you’re selling it to understand your niche. This will assist you in not only determining what you have to offer and why your potential customer would want to buy it. Consider the following questions:

• What purpose does your product or service serve?
• Is there anything wrong with their life that your product or service could help them solve?
• What are the advantages of buying your goods or service? How does it benefit your potential consumer’s life?

Return to these answers whenever you’re lost in the minutia of your target market study. Allow them to be your guide while conducting your research.

Know Your Existing Customers

If you’re already generating a profit in your business, that means you have immediate access to your target audience. After all, since your present clients have already purchased with you, you can reasonably assume they convert.

You may target more people similar to your current clientele with your marketing strategy once you recognize them. Examine your customer base for any patterns in their characteristics, such as demographic or psychographic data like:

• Age  – What is the typical age range of your existing customers? This information will come in handy when determining your target segment for social media advertisements.
• Gender  – Are your customers primarily male or female? This may assist you in better comprehending their distinct requirements and desires, which may be gender-specific.
• Income  – What is the maximum amount of money your consumers can spend on your goods or services? Are they able to make repeat purchases, or do they need to save up for your product? Are there any financial restrictions in place that you must consider?
• Location  – What time zone are your customers in, and where do they live? What cultural issues do they face that are particular to their region (for example, advertisements for American football versus real football)?
• Behavior  – How do your consumers spend their time online? Which websites or brands do they follow, and which social media platform do they prefer? What material do your customers enjoy, and can you utilize it in your content marketing plan?
• Lifestyle  – What hobbies or activities do your consumers enjoy? What goods or services do they require to pursue those interests?
• Values  – What are the beliefs and values of your target audience? Is there a link between their brand loyalty and these beliefs and values?

This is the stage of developing a buyer persona. Start by dividing your target market into several target customers, also known as buyer personas.

Perhaps your target market is midsized firms wanting to buy sales performance management software. You might categorize your target consumers into several categories: finance department executives, sales leaders, founders, or CEOs.

What if I don’t have any customers?

No sweat! Check out the competition and their clients’ testimonials. From there, you’ll be able to reverse engineer a buyer persona for your own business. It also doesn’t hurt to reach out to these people for a 1:1 to discuss their opinions on your product’s niche.

Access Your Analytics

Knowing what content to post and where to publish it is critical to employ ads or create a digital marketing plan. This is simple to figure out by looking at what type of material attracts people to your website or social media profile and engages with your content.

You’ll find may find a wealth of data in your website’s analytics dashboard, as well as on its social media platforms. Here are some of the apps we recommend using:

• Search Engine Optimization: SEMrush
• LinkedIn: Shield
• Social Media: Reportei

Know Your Competition

Examine your competition to see who they’re aiming at. Take a look at their customer base to see if you can find a missing segment of the market that they may be neglecting.

Conducting a competitive analysis is the most effective approach to do so. You’ll research to figure out who your competitors are, what they have to offer, and even how they sell. Visit their website, blog, social media accounts, and advertisements in order of preference to see if you can figure out their target market strategy. Consider the following while investigating:

• Can you figure out how they have segmented their clients?
• What is their ideal customer profile?
• Do they have a particular target industry or many different ones? What is it/are they, and why do you want to know about them?
• What methods do they use for marketing their goods? What types of language do they utilize? What product characteristics are highlighted in their advertisements?
• What is their typical publishing frequency? Do they send or publish emails regularly?

Looking at your competition can assist you in identifying target market gaps that you may address. Are there any markets where they aren’t paying attention to?

This may encourage you to expand into new markets or develop new goods to cater to a different sector.

Product Features And Benefits

When conducting a target audience analysis, you should invest time to figure out what motivates potential consumers to buy your goods.

This is after you’ve determined who your target audience is and before you begin making efforts to reach them. The aim is to:

• Demand Generation is to use distribution channels and provide people content that educates, informs, and changes their perceptions before they need a solution to their problems.
• Lead Generation is to catch them in the decision-making process while they’re still trying to decide whether or not they want to buy anything.

The best approach is to demonstrate how your solutions or services may help them improve their lives.

Many marketers talk about this in terms of product features vs. product benefits. The product feature is what the item or service is or performs. The result, as well as its influence on your potential consumers, is known as the benefit.

Let’s use Performio (Sales Performance Management Software) as an example; one of the product’s features is “Performance Reporting and Dashboards” and the benefits are “better motivate your sales teams and agents by showing them all their performance metrics.”

What do their customers think?

Do salespeople really find Performio easy to use? YES! Performio delivers on its promise to help reps improve and track performance.

Customers are more inclined to buy your product if you demonstrate how it will benefit them. Better marketing, in a nutshell, improves your sales velocity and lowers customer acquisition costs.

If you aren’t yet clear on your product’s benefits, now is the time to make a list. Make a list of your top items that you plan to advertise with Facebook and Instagram ads.

Not only will this approach assist you in selling your items, but it will also aid you in identifying your target audience.

As in the case with Performio, the product has customers spending less time paying for performance and more time driving performance. Their target audience is businesses that are high-growth or enterprise organizations.

You’ll discover more about your target consumer if you grasp how your product benefits them.

Validate Value Proposition

Now that you’ve finished your audience study and have a clear image of who your target consumer is, it’s time to start advertising. Though search engine optimization (SEO) is the most effective marketing approach with the greatest return on investment, producing ads allows you to make quick progress while also providing you with a wealth of information.

You can start running Facebook and Instagram advertising quickly with Facebook Ads Manager. And if you’re not sure where to start placing advertisements, check out Audience Insights to see how your target audience compares to real-world Facebook users.

To begin, build a custom audience based on your research, then create variants of advertising for the same product.

You may also use the same ad on multiple audiences you develop with custom audiences. Spend around  $5 per ad set to see how people respond, whether they click your ads or even buy your items . The goal is to test out your advertisements and audiences until you discover the best combination that results in conversions.

Use this testing procedure regularly and with each new product you want to market. Also, if required, conduct further audience analysis to verify that your marketing is reaching the correct people.

Examples of Target Markets in Technology

Apple’s target market.

Isn’t there another company that straddles both the B2B and B2C markets? How can a company with such a broad client base identify a target market? Apple is the textbook example of innovation and product design.

But how does this relate to locating a target market? With so many different products, Apple has something for everyone. Here are two of their target markets:

• Consumers:  Apple still pays attention to technology enthusiasts, who have been with the brand for decades. By introducing new technology categories (including wearables, Apple TVs, and HomePods), Apple has demonstrated that it still provides value to this group. There’s also an ecosystem play in which having a set of Apple devices allows for greater interoperability among your tech.
• Pro Users:  Apple had seemingly forgotten why people bought the MacBook Pro in the first place, and professionals were delighted to remind it. Five years later, Apple has delivered on everything those pros said they wanted.

Apple does not appear to exclude many people from its target market. It has positioned itself to benefit both customers and businesses – even with the same items as the iPad. Its success can be attributed to its management’s ability to grasp the value of each part rather than excluding people from them.

Facebook’s Target Market

The focus market for Facebook has changed over time. The company targeted college students in the United States in its early years. Facebook now targets a broader market and is viewed as a social media network primarily utilized by middle-aged (25-34 years) mobile using adults in 157 countries.

IBM’s Target Market

IBM is changing part of its sales organization to target the small-to-midsized business sector better. IBM will break down its Systems and Technology Group (STG) into two separate sales teams: selling to large enterprise customers and selling to SMBs. They are classified as company clients with fewer than 1,000 employees.

Atlassian’s Target Market

Atlassian’s suite of collaboration tools is designed to assist developers and product leaders in taking their projects from concept to completion. On their “Customers” page, you’ll discover that it serves a variety of industries.

Like other large firms, Atlassian uses target market segmentation to analyze various markets and distinguish between its distinct value propositions, language, and values. When we look at one sector, such as retail, we find that they’re linked with several prominent firms – especially in terms of customer support products.

Atlassian can work with almost any developer, but it recognizes the market segment in which its value proposition varies. Even the same product for two different client types generates varying levels of value.

Netflix’s Target Market

Rather than attempting to reach their target market through one-size-fits-all advertising, Netflix took a different tack: fostering relationships with renowned creators and building customer loyalty.

They constantly research their customers and give them precisely what they want. Netflix, for example, has notoriously leaned into its audience and pivoted when needed by offering a wide range of streaming services.

They also allow word-of-mouth marketing to power their sales by letting it do so.

Types of Target Market Segmentation

The process of categorizing your target audience into smaller, more focused groups (or segments) is known as target market segmentation. It’s a broad idea that can take on many shapes and forms, including:

• Firmographic segmentation:  B2B sales specifically, B2B companies are divided based on characteristics like company size or the number of employees.
• Technographic segmentation:  Dividing your target market according to what types of technology they have purchased.
• Geographic segmentation:  Dividing your target market according to geographic boundaries.
• Demographic segmentation:  Dividing your target market into groups based on variables such as income, education, race, gender, or profession.
• Behavioral segmentation:  Dividing your target market into segments based on behavioral biases and decision-making habits.
• Psychographic segmentation:  Dividing your market into groups based on personality traits, values, or beliefs.

Firmographic Segmentation

The practice of dividing clients into groups based on similar corporate or organization characteristics is known as firmographic segmentation. Firmographic data is collected and assessed in the same way as other sorts of segmentation to understand the needs and wants of the target audience.

The most common factors of firmographic segmentation are:

• Company Size or Department Size
• Company Structure
• Annual Revenue of Funding Round
• Growth Rate

Mapping your competitors’ business pages to understand their marketing and advertising efforts, as well as the company’s tone of voice, is an excellent way to begin analyzing how you might improve. By targeting a firm based on its name (or trade name), you can find out what it does and learn more about potential customers through their social media feeds without having to seek them out one by one.

Like demographic segmentation, Firmographic segmentation provides essential insights about prospects to shape and advance company policies. However, firms employing firmographic segmentation should consider that demographic segmentation is a crucial division.

Firmographics are concerned with analyzing consumer behaviors and preferences. Their main goal is to assist businesses in segmenting prospective B2B customers into relevant categories. Salespeople and marketers may save time and money by having access to pre-segmented client data on each potential customer’s size, location, or revenue classification. Here are a few reasons why firmographic segmentation is proper:

Better Resource Allocation

Firmographics may be readily added to the marketing process at a low cost, allowing marketers to meet their marketing objectives without spending much money.

It also helps you save time. Marketers may spend a significant amount of time learning about metrics at first. However, adopting firmographics will help them avoid wasting hours on unproductive leads in the long run by allowing them to skip learning about metrics for now. Instead, they’ll focus their efforts on prospects who are more qualified.

Better Interaction with Customers

Like any other form of segmentation, it may aid companies in developing a more personalized marketing strategy for their clients by drawing their attention.

Customizing communications and strategies is one of the many ways that Internet-based firms may improve consumer interactions and services by connecting more efficiently with their customers.

Higher ROI and Better Targeting

Companies that want to sell products or services to the B2B market should understand the firmographic data, such as size, structure, and market size. As a result, sales and revenue will increase.

Technographic Segmentation

Technology companies can learn a lot from Technographics data. A person’s technographic profile is the sum of their technology ownership and use.

The data is particularly beneficial for B2B software and technological firms. While other sectors might be evaluated on various actions, technology features are most advantageous to these businesses in qualifying ideal-fit leads.

The Technographics measure the use of technology to reach consumers, especially in young adulthood. The Technographics are frequently confused with the similarly named Technological age group. Most data providers rely on a mix of data mining and curation to acquire information about people’s technological usage. Users may then segment their audience based on specific verticals.

Individuals may be classified into six distinct technographic profiles. These six types are regarded as a ladder, with each rung representing a progressively deeper relationship with technology. Individual technographic profiles range from least to most active, including:

• Inactives:  People with zero engagement. They don’t create content and have no intention of engaging with everyone else.
• Spectators:  People who don’t create content but will happily observe. Think people who consume content like videos, podcasts, and blog posts – without maintaining their social profile.
• Joiners:  People who maintain their online presence but do not distribute content.
• Collectors:  People who have a steady stream of content they consume and are beginning to engage, e.g., Likes, Tags, and Shares.
• Critics:  People who contribute their opinions to the content that others have created, e.g., leaving a comment to offering their contributions to a forum.
• Conversationalists:  People who can distribute content to a broad enough audience that creates engagement.
• Creators:  People who develop and distribute the content consumed by the technographic profiles beneath them.

Technographic segmentation may be pretty beneficial in a variety of ways thus far. There are several ways for businesses to use technographic segmentation. The most excellent method will be determined by the company’s target audience, industry, and sales strategy. Here are a few examples of technographic segmentation:

Anticipating and timing prospect needs

Knowing when a firm uses particular hardware or software might signal the need for contact if you provide professional services. Instead of guessing what tools a firm is using or sending out your outreach at random, technographic data ensures that you have all the necessary information to make a compelling sales call.

Improving sales efforts.

The Technographic data can significantly enhance the entire sales process. Your team may better prioritize their leads, reject poor-fit possibilities, and simplify outreach operations by thoroughly comprehending both your clients’ and prospects’ technology ownership and usage.

Anticipating and overcoming sales barriers.

With a firm grasp on your prospects’ technology infrastructure, you can enter any sales discussion with a clear view of their current state. If you’ve noticed recurring sales difficulties or questions that specific hardware or software users tend to ask, you may anticipate them ahead of time.

Enter and expand new markets.

Technographics may reveal potential overlap you weren’t aware of before. Assume you spent a long time working in one industry and then discovered that the same technological platform is also used in another, completely unrelated sector. It would appear natural for you to look into possibilities since it makes sense.

Gain a competitive advantage.

Technographic data may help you catch up with the competition in today’s noisy environment. More profound knowledge of your target consumers’ technology stack can help you deliver a more personalized, frictionless sales process that you couldn’t otherwise offer.

Improving marketing messaging.

You can produce highly targeted marketing messaging that your audience identifies with if you have a thorough knowledge of your prospects and customers. Instead of making expansive claims or using broad phrases about the types of goods a prospect purchases, you may get more specific in terms of their experiences and pain spots. As a result, you’ll see improved marketing conversions.

Geographic Segmentation

The most basic type of market segmentation is geographic segmentation, which may be the simplest to understand. However, there are still a lot of applications for it that firms never consider.

Depending on your needs as a business, the size of the area you target should vary. On average, the larger the company, the bigger the places you’ll be targeting. After all, targeting each postcode separately wasn’t cost-effective when many more people might benefit from your content.

In total, six factors have to be considered while geographic segmentation is implemented:

• Location (country, state, city, ZIP code)
• Climate and season
• Cultural preferences
• Population type and density (urban, suburban, exurban, or rural)

What’s excellent about Geographic Segmentation is:

• Easy to implement – requires fewer data points.
• Higher product relevancy – which improves user experience and builds trust.
• Improved advertising effectiveness – which lowers customer acquisition costs.

Demographic Segmentation

Demographic segmentation is the process of classifying buyers or end-users by measurable characteristics. Age, location, education, gender, profession, and marital status are just a few examples of such traits. This information is usually easy to come by. Most people provide their demographic data on their social media profiles openly.

There are frequently numerous stakeholders involved in the sales process at any firm. Consequently, there will likely be stakeholders with various demographic characteristics for each organization that matches your sought-after firmographic profile.

The first step in demographic segmentation is to figure out your target buyer’s firmographic profile. You can then find the demographics of specific buyers at that business from there. Many stakeholders may be involved in technology procurement decisions depending on the company’s size.

Begin by detailing the demographic characteristics of your decision-makers, influencers, and end-users. You may then target those people with customized communication through demographic segmentation.

Market segmentation may be as simple as targeting recently married, female C-suite executives in the Bay Area with an Instagram ad campaign or correspondence to 25-35-year-old engineering students on the East Coast.

Behavioral Segmentation

Behavioral segmentation is a marketing method that categorizes consumers into segments based on their behaviors when interacting with a firm or website.

Customers can be grouped in a variety of ways. For example, you might want to group them by:

• Attitude towards your brand, product, or service,
• How they use or interact with your app, website, or product,
• Overall understanding and knowledge of your brand, application, product, service,
• Purchasing tendencies, such as on buying discounted items or on special occasions.

Targeting customers based on behavioral data or non-traditional demographic and geographic segmentation methods extend marketing campaigns’ effectiveness.

At the very least, behavioral segmentation provides marketers and company owners with a more thorough knowledge of their target audience, allowing them to customize products or services to fit specific customer requirements.

The benefits of behavioral segmentation are:

• Identifies the most engaged users – so you can focus on those most likely to make a purchase.
• Improves messaging accuracy – so you can optimize your advertising budget and reduce customer acquisition costs.
• Provides refined personalized experiences – to offer better customer experiences.
• Builds brand loyalty – to help retain your client and build a community of evangelists to attract even more customers.

Psychographic Segmentation

Another method for organizing prospects and customers is psychographic segmentation. The following are some examples of psychological characteristics:

• Personality traits

Data from your customer’s personalities can be used to supplement demographic information to provide a more comprehensive picture of your potential clients and their buying practices. This allows you to develop more effective messaging and anticipate your prospects’ requirements more accurately.

Today, virtually all users’ online activities are monitored and categorized. You may obtain insights about your target audience by utilizing this data. Simply “liking” a few Facebook pages, for example, might reveal your political affiliation, family life, personal interests, religious beliefs, and more.

The ability to develop targeted, emotive messaging to connect with and engage their audience on the right platforms at the right moment is a benefit of organizations that employ psychographic segmentation.

Target is one of the most famous brands to employ psychographic segmentation. Their researchers noticed a few essential purchasing behaviors shared by pregnant women, such as stocking up on more supplements early in their pregnancy, buying unscented lotion in their second trimester, and so on. Once they established these trends, Target monitored other consumers making similar purchases and began sending tailored advertising their way.

As Target did above, brands used to be restricted to obtaining psychographic data from their purchasing or through lengthy questionnaires. Thanks to big data, several psychographic segmentation tools are available today, allowing you to access this information immediately.

How Sales and Marketing Teams Can Use Target Markets

Segmentation poses several advantages for salespeople. When conducting most sales process phases, you get a leg up if you know who will be most receptive to your product or service.

One of the most important reasons for this is that effective segmentation might significantly help prospecting. Suppose your SDRs have a good understanding of which sort of consumers are interested in your product. In that case, cold leads can become a little warmer – allowing those reps to make more thoughtfully planned use of your sales messaging when interacting with prospects.

Beyond that, segmentation may also assist with lead qualification. Knowing whether a prospect fulfills the requirements of a high-converting category gives reps an early advantage during that process.

You need a method for identifying a prospect who needs your product or service from one who doesn’t have the cognitive capabilities, where you are, or economic conditions to get anything out of it. Target market segmentation is the answer.

Target markets provide salespeople with the knowledge to break into new areas and sell successfully to them. Suppose you’re not keeping up with any developing markets that require your product or service. In that case, you may run into trouble regarding your sales potential and miss out on highly lucrative business possibilities.

One of the most basic principles of practical sales efforts is to understand your target markets inside and out. If you don’t conduct thorough research, pursue, and improve your knowledge of your target markets, you’re missing out on sales and putting yourself in a bind with your business potential.

Target Market FAQs

A target market is a specific group of people or businesses that a company aims to sell its products or services to, based on shared characteristics, needs, or interests.

Companies determine their target market by researching and analyzing factors like their niche, the preferences of their current customers, market trends, and competitors. The goal is to identify the group most likely to purchase the company's offerings.

The primary target market is crucial because it's the main group of consumers or businesses that a company focuses its marketing and sales efforts on. This group represents the largest potential customer base and is most likely to buy the product or service.

Yes, businesses can segment their target markets based on various criteria, including demographic, geographic, psychographic, behavioral, and firmographic. Each type focuses on different characteristics, such as age, location, lifestyle, buying behavior, or company specifics.

A targeted market segment is a subgroup within the larger market that shares specific characteristics or needs. Companies identify these segments through research and analysis and then tailor their marketing strategies to appeal to this group.

The two primary activities businesses use to reach their target market are demand generation and lead generation. Demand generation educates and informs potential customers, while lead generation captures potential customers during their decision-making process.

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Performing a Strategic Business Plan Market Analysis

Before getting too far down the road with your business planning process , you will need to complete a thorough market analysis based on the research you did in deciding to launch your business.

Your market analysis not only provides an overview of your industry, but also the conclusions you were able to draw from your market research findings. While there is no absolute method for including a market analysis, under most circumstances you are going to want to include most or all of the following points as you create this valuable section of your plan:

Business Plan Market Analysis

Business plan swot analysis, customizing your business plan, your business plan should communicate to investors, business planning mistakes to avoid, crafting a strategic business plan.

1. Industry description and outlook

Regardless of how you decide to proceed with your market analysis, you will almost certainly want to start this section of your business plan with a description of your company’s industry. Research your industry’s growth and note its current scope. Then, discuss some of the business characteristics of your industry, such as its projected growth rate. Include the major customer segments.

2. Introduce your target market

Once you have described the overall industry and marketplace, next indicate how you have narrowed down your target market to a workable size. One of the biggest errors new business owners make is in keeping their target market too broad, which leaves them in the impossible position of trying to meet the needs of too many diverse customer groups. This obviously runs the risk of stretching limited resources too thin.

3. Distinguish target customer characteristics

Next, describe the critical needs of your targeted customer base and to what extent–and by whom–these needs are currently being met. This is also the place to detail the demographics of your customer group. If there are cyclical purchasing trends, including seasonal buying, this is the place to note them as well.

4. Target market size and growth

You will also want to include additional details about the size of your targeted market. Conduct sufficient research to provide data on total annual purchases within your targeted marketplace. In addition, do sufficient research to create a reasonable forecast of market growth.

5. Market share percentage

Once you have described the size and potential growth for your targeted market, next identify the market share percentage and number of customers you believe you will be able to gain within a defined demographic area. Include justification for the numbers you come up with.

6. Pricing and gross margin targets

Explain your pricing strategy, gross margin levels and any special pricing schemes you plan to use, such as discounts.

7. Competitive analysis

Finally, identify your competitors and their targeted markets. Also, make note of any indirect or secondary competitors impacting your target markets. Include information on their current marketshare as well as what you perceive as their strengths and weaknesses.

8.  Barriers and regulatory restrictions

Discuss any barriers to entering the market that you have identified. These might include technology changes, unusually high investment costs, lack of qualified personnel, and other hurdles. In some cases, there may be regulatory restrictions impacting your business. In that case, describe how you plan to comply with these regulations.

Your market analysis forms a key part of your business plan. Interpreting your market research results in a clear and concise manner will provide a strong foundation for your overall plan.

Unfortunately, the SWOT (Strengths, Weaknesses, Opportunities & Threats) analysis is one of the more cliched components of any business plan. While the cliche exists, the exercise of running through the components of a thorough SWOT is helpful for any business, regardless of its “stage.” Furthermore, including a SWOT (or at least some form of one) in a business plan has become somewhat of an expectation among private equity investors who might fund your business.

Internal Analysis

The S.W. portion of your SWOT encompasses an  internal  analysis of the strength of the business including the plan itself, the ability of management to execute and the robustness of any intellectual property or tacit knowledge held by the company. It’s a visceral look at the businesses’ ability to succeed. For some individuals, it can be difficult to find personal and business strengths within yourself or your own organization. In the case of entrepreneurs, I’ve always found the opposite to be the case.

In many startup venture, it can be difficult to avoid what could be called “startup bias.” From the founders’ perspective, the bias generally leans toward the “we’ll never fail.” From the perspective of investors a bias will lean more on the side of “you’ll probably fail.”

Like strengths, weaknesses are always internal. Weaknesses can be as simple as understanding a gap in talent to finding highly-deleterious legal blockades to your product or service. Full-fledged analysis is helpful to understand the chinks in the proverbial armor, whether large or small.

An Industry View 

The O.T. portion of your business plan comes from the 30,000 foot-level. It represents an industry view, an in-depth look at where the Blue Ocean of opportunity truly exists. In some instances, it a story told about how a product or service provides such an innovative leap that the company can easily capture low-hanging fruit and gain an advantage–some might call it first movers.

But where low-hanging fruit exists, competition is sure to follow. Since the term “first mover’s advantage” has been effectively written-off as a misnomer, threats must remain extremely credible to the livelihood of your organization. Understanding existing and potential threats can also paint a preemptive picture for planning on how to deal with them even before they may arise in the future–an extremely helpful exercise for the entrepreneur.

 Not Just for Startups

SWOTs are developed for all types of business plans, not just startups. They are particularly helpful for the company looking to launch a new product or service or seeking of potential opportunities and problems inherent in entering new markets with an existing product. Plans may help to clarify the direction of an existing business or justify lofty future growth assumptions in the case of a merger or acquisition. In short, SWOT is universal in its business application, just be careful not to overuse or abuse it.

My personal suggestion: don’t spell out S, W, O, T in the plan itself, but include the meat and potatoes of a typical SWOT, complete with an in-depth dive into how the company will most-likely succeed and how it will possibly fail. Ultimately, the goal of your analysis is for both internal managers and potential external investors or buyers go gain a deep understanding into the potential risks and rewards inherent in the company.

Developing a business plan is an important part of owning and operating a business, but if you think of the process only as a means of attracting investment or guiding you through startup, you are ignoring the many other ways a business plan becomes essential to the success of your business.

Here are a few examples of business plan needs throughout the life of your business:

When thinking about the need for a business plan, a business launch is usually the first thing that comes to mind. This popular type of business plan differentiates itself from other types due to its focus on describing the company, explaining the products or services your business will provide, marketing analysis and plan and financial projections, including cash flow projections, profit, expenses and income.

Also an internal plan, this type of business plan is often viewed as the natural successor to a business launch plan and includes some of the same components, but updated. Your operations plan should map out company operations for the coming year and include specifics regarding individual employee roles and responsibilities.

Internal project analysis

Unlike the business launch plan, this business plan is narrow in its approach and developed to provide projections for internal business decision-making. Its purpose it to evaluate a proposed project or action. Your financial analysis should include any additional personnel costs, technology needs and operating expenses. Include the project’s capital needs and assumptions for repayment. You will also want to include a marketing plan specifically targeting the proposed project.

The primary function of your strategic business plan is to focus on your company’s vision, mission, goals and action plan for achieving them, including timeline. This plan should also define critical success factor. A hallmark of this type of business plan is that it cuts across all department to provide the big picture for your business. Often, advisory boards are more involved in development of this type of business plan over any other.

Also known as a growth plan, this customized business plan may be written for either internal or external purposes. Whether internal or external, financial projections will be the primary focus. A plan meant to attract outside investors, however, will also need to include background information on the company and its operations to-date to provide potential investors with the details necessary to make a decision. If your expansion does not involve outside capital and will only be used internally, there is no need to include obvious company details.

Feasibility plan

A feasibility plan includes elements of both project analysis plans and expansion plans. However, a feasibility plan’s primary purpose is just as its name implies: to establish the feasibility of a proposed business venture and make recommendations for moving forward (or not). This type of plan focuses on demand for the proposed product or services made possible by the new venture. A feasibility plan will also include capital needs and profit projections in formulating recommendations.

Most small business startups can benefit from outside acquisition financing and most often, at least a portion of that funding will come in the form of business loans. As you ready your business plan for review by a lender, your focus is likely on the financial projections in your plan. But don’t sell other areas short. Your management competency, market outlook and assets are just a few of the other components that will be scrutinized.

Here are some of the factors your lender will consider when making the decision whether to provide you with a business loan.

Management Experience

Your potential lender is going to want assurances you have the necessary expertise onboard. Be sure your plan details your education and experience, as well as that of your management team. In addition, include information on your board officers and advisors, if applicable. Your plan should communicate a high level of both competency and commitment.

Marketing Analysis

Your lender is going to want to understand your business, your competitors, your customers and the industry in which your business will operate. Completing a thorough market analysis as part of your business plan before applying for a loan will provide this necessary information to your lender.

Your lender is going to want collateral in the form of personal and business assets that could be sold for cash if your business does not meet its financial goals. Identifying all your business assets within your business plan provides a listing of potential collateral for your lender to consider. Keep in mind, however, that the value of most of your assets will be discounted from market value when viewed as collateral. The lender will also determine your collateral coverage ratio, calculated by dividing the total discounted collateral value by the amount of your loan request. Both collateral and projected cash flow are taken into account when determining your ability to repay a loan.

Debt-to-Equity Ratio

The more you are able to invest in your business, the easier it will be to obtain financing. New businesses will most often use a combination of equity financing and debt financing. Be sure your business plan describes in detail all anticipated outside funding. Your lender will want to review your plan to determine if your request for debt financing keeps your debt-to-equity ratio within acceptable limits.  If your debt-to-equity ratio dictates, seek additional equity investment before requesting a loan.

There are a lot of steps to take when launching a new business or embarking on a new product venture, but writing your business plan is probably one of the most important.

However, there are many common missteps that can occur when putting together a business plan. Number one on the list is the biggest error you can make:  thinking you don’t need a formal business plan at all. This is often the mindset when a business owner isn’t seeking outside investment. But a business plan does more than attract investment. The business planning process itself will help you determine if your great idea is truly a viable business . It’s the single most important step you will take in becoming an entrepreneur.

Here are five more typical–but avoidable–errors that harm the process:

1. Failing to acknowledge competition

In your pursuit to show your business idea in the best possible light to investors, it can be easy to gloss over the competition. But that would be doing yourself a disservice. One of the purposes of your business plan is to do the necessary research to determine if your business idea can be transformed into a viable business. Not digging deeply enough when researching competitors will make investors wary of your ability to succeed.

2. Being amateurish

It may sound like one of the least important things to worry about, but how well your plan is written and how it is presented in final printed form are important. You don’t want an important investor to get a few pages into your plan and start to doze off or find it riddled with grammatical errors. Unless you are a professional writer, invest in a professional business plan writer or consultant. Likewise, an eye-catching, well-designed logo for your new business gracing the cover of your business plan will give a professional finish.

3. Being inconsistent

Business plans con be complicated. It is common to rewrite some portions and not others. But be sure to read the final version several times over, enlisting friends or trusted colleagues to review it as well, to avoid any errors or inconsistencies. Don’t make a financial assumption in one section of your plan, then turn around and contradict it later in the document.

4. Too much hype

You might think your business idea is the next great thing, but you need to back up that kind of enthusiasm with hard research, not a bunch of hype and hyperbole. Peppering your business plan with too many meaningless superlatives like “greatest” and “incredible” doesn’t add anything of substance. Instead, rely on the thoroughness of your market research and analysis to “wow” readers.

5. Poor quality research

Doing thorough research and analysis is not something you can fake. An investor will immediately identify “fluff” in place of facts. Again, if this is not your forte, hire a consultant to provide some assistance based on your knowledge and experience.

There are plenty of land mines to avoid as you go through one of the most important steps for launching a business. These are just a few of the mistakes to avoid in bringing your plan to fruition.

These components of your business plan are not the only areas a lender will want to review closely, nor will everything your lender consider be addressed by your business plan. For example, you will also want to check your personal credit report before applying for a loan.

Your business will not have a proven financial track record at its launch, but you can boost a lender’s confidence in its credit worthiness by providing a detailed business plan that uses market analysis, management expertise, assets and financial projections to clearly communicate the ability of your business to repay its loan.

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What Is a Marketing Plan?

Understanding marketing plans, how to write a marketing plan, marketing plan vs. business plan.

• Marketing Plan FAQs

The Bottom Line

• Marketing Essentials

What Is a Marketing Plan? Types and How to Write One

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

Investopedia / Zoe Hansen

A marketing plan is an operational document that outlines an advertising strategy that an organization will implement to generate leads and reach its target market . A marketing plan details the outreach and PR campaigns to be undertaken over a period, including how the company will measure the effect of these initiatives. The functions and components of a marketing plan include the following:

• Market research to support pricing decisions and new market entries
• Tailored messaging that targets certain demographics and geographic areas
• Platform selection for product and service promotion: digital, radio, Internet, trade magazines, and the mix of those platforms for each campaign
• Metrics that measure the results of marketing efforts and their reporting timelines

A marketing plan is based on a company’s overall marketing strategy.

Key Takeaways

• The marketing plan details the strategy that a company will use to market its products to customers.
• The plan identifies the target market, the value proposition of the brand or the product, the campaigns to be initiated, and the metrics to be used to assess the effectiveness of marketing initiatives.
• The marketing plan should be adjusted on an ongoing basis based on the findings from the metrics that show which efforts are having an impact and which are not.
• Digital marketing shows results in near real-time, whereas TV ads require rotation to realize any level of market penetration.
• A marketing plan is part of a business plan, which describes all of the important aspects of a business, such as its goals, values, mission statement, budget, and strategies.

The terms marketing plan and marketing strategy are often used interchangeably because a marketing plan is developed based on an overarching strategic framework. In some cases, the strategy and the plan may be incorporated into one document, particularly for smaller companies that may only run one or two major campaigns in a year. The plan outlines marketing activities on a monthly, quarterly, or annual basis while the marketing strategy outlines the overall value proposition.

Types of Marketing Plans

There are a variety of different marketing plans that suit different businesses and different business needs.

New Product Launch: This is a marketing plan that outlines how a new product will enter the market, who it will target, and in what way advertising will be done.

Social Media: A social media marketing plan focuses on the advertising strategies on different social media platforms and how to engage with the users on these platforms.

Time-Based: Time-based marketing plans, such as those that are executed quarterly or annually, focus on the time of the year, the current condition of the business, and the best strategies in that period.

Mission and Value Proposition

A marketing plan considers the value proposition of a business. The value proposition is the overall promise of value to be delivered to the customer and is a statement that appears front and center of the company website or any branding materials.

The value proposition should state how a product or brand solves the customer's problem, the benefits of the product or brand, and why the customer should buy from this company and not another. The marketing plan is based on this value proposition to the customer.

Establishing your key performance indicators (KPIs) will allow you to measure the success of your marketing plan in relation to your company's value proposition. For example, if your goal is to engage with a certain demographic in a certain region, you can track social media and website visits.

The most effective digital marketing techniques in 2020 according to marketers are content marketing and marketing automation.

Identify Your Target Market

The marketing plan identifies the target market for a product or brand. Market research is often the basis for a target market and marketing channel decisions. For example, whether the company will advertise on the radio, on social media, through online ads, or on regional TV. 

Knowing who you want to sell to and why is an extremely critical component of any business plan. It allows you to focus your business and measure its success. Different demographics have different tastes and needs, knowing what your target market is will help you market to them.

Strategy and Execution

The marketing plan includes the rationale for these decisions. The plan should focus on the creation, timing, scheduling, and placement of specific campaigns. The plan will include the metrics that will measure the outcomes of your marketing efforts. For example, will you advertise on the radio or on social media? What time will you air advertisements if they are on the radio or TV? The strategy may include flighting scheduling , which includes the times when you can make the most of your advertising dollars.

Set Your Budget

A marketing plan costs money. Knowing your budget for a marketing plan will allow you to create a suitable plan within that context, stick to it, and prevent runaway costs. It will also help you allocate to different areas of your marketing plan.

Adjust Your Plan

A marketing plan can be adjusted at any point based on the results from the metrics. If digital ads are performing better than expected, for example, the budget for a campaign can be adjusted to fund a higher-performing platform or the company can initiate a new budget. The challenge for marketing leaders is to ensure that every platform has sufficient time to show results.

Without the correct metrics to assess the impact of outreach and marketing efforts, an organization will not know which campaigns to repeat and which ones to drop; maintaining ineffective initiatives will unnecessarily increase marketing costs.

Digital marketing shows results in near real-time, whereas TV ads require rotation to realize any level of market penetration. In the traditional marketing mix model, a marketing plan would fall under the category of "promotion," which is one of the four Ps , a term coined by Neil Borden to describe the marketing mix of product, price, promotion, and place.

A business plan details how a business will operate and function in its entirety. A business plan is a roadmap for a business. It will cover the goals, missions , values, financials, and strategies that the business will use in day-to-day operations and in the achievement of its objectives.

A business plan will include an executive summary, the products and services sold, a marketing analysis, a marketing strategy, financial planning, and a budget , to name but a few items.

As mentioned, a business plan will include a marketing plan, which focuses on creating a marketing strategy on how to bring awareness to the public of the company's product or service, how to reach the target market, and generate sales.

Example of a Marketing Plan

John came up with a new business idea that he believes is a niche offering in the market. He decides to start a business and his first step is creating a business plan that outlines all of the objectives, goals, values, pitfalls, and finances of his company.

John is able to raise enough capital from friends and family to get started, hires a few employees, and eventually creates his product. He now has to start selling his product and generate sales to keep his business operating.

To achieve this, John, with the help of a marketing company, creates a marketing plan. The marketing plan consists of market research that details the target market for John's product, which is recently retired men.

The marketing plan then comes up with the best methods of reaching this target market. The marketing plan stresses radio and television as opposed to social media as older, retired men use social media less than traditional forms of media, according to the market research that was conducted.

The ads are tailored to the target market, showing how John's product will benefit their lives, particularly when compared to market alternatives. Once the marketing plan has been executed, the marketing team analyzes how the efforts translate into sales.

What Is a Marketing Plan Template?

A marketing plan template is a document that an individual can use to create a marketing plan. The marketing plan template will contain all the important elements and the various needed language with blank sections. A user can insert their own information related to their business in the blank sections to ultimately create their own marketing plan.

What Is an Executive Summary in a Marketing Plan?

The executive summary of a marketing plan provides a brief overview of the entire marketing plan. The executive summary will contain the key findings of the market research, the company's objectives, marketing goals, an overview of the marketing trends, the description of the product or service being marketed, information on the target market, and how to financially plan for the marketing plan.

What Is a Top-Down Marketing Strategy?

A top-down marketing strategy is a traditional marketing strategy. This is where a business determines who it should sell to and how, and the customer base is largely passive and spurred to take action once they hear the advertisement. For example, a top-down marketing strategy would include ads on radio or television. Top-down marketing strategies are usually determined by the executives of a firm. It usually consists of what a firm desires to do and then determining a way to do it.

What Is a Bottom-Up Marketing Strategy?

A bottom-up marketing strategy focuses on discovering a workable strategy and then building on that strategy to create an impactful advertising campaign. Today's consumer wants to relate to a product or service in a meaningful way and a bottom-up marketing strategy is better suited to this. A bottom-up marketing strategy should focus on the target market and how better to create value for them.

How Much Does a Marketing Plan Cost?

The cost of a marketing plan will vary based on the company, the complexity, and the length of the overall strategy. The cost can range anywhere from $10,000 to $40,000.

A marketing plan is the advertising strategy that a business will implement to sell its product or service. The marketing plan will help determine who the target market is, how best to reach them, at what price point the product or service should be sold, and how the company will measure its efforts.

Constantly monitoring and adjusting a market plan is an important part of running a business as it shows what are the best and worst ways to generate sales. Without a successful marketing plan, a business may not be able to continue operating for very long.

Statista. " Most Effective Digital Marketing Techniques According to Marketers Worldwide in 2020 ."

Laire. " How Much Does a Marketing Plan Cost? "

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2.3 Purpose and Structure of the Marketing Plan

Learning outcomes.

By the end of this section, you will be able to:

• 1 Explain the purpose of a marketing plan.
• 2 List and discuss elements that should be included in a marketing plan.

Purpose and Structure of a Marketing Plan

A company’s marketing plan ( Figure 2.10 ) is without a doubt one of the most important planning tools in business. You might think that it’s an activity that generates an impressive, colorful document that sits in a desk drawer until the next time it gets revised, but you’d be wrong.

If you’re a new business seeking funding, the bank will want to see and understand your marketing plan before parting with funds. If you have an existing business that you want to grow, investors will likely go over your marketing plan with a fine-tooth comb to understand how additional funding will generate a positive return. Even if you’re not seeking external funding, you still need a marketing plan to help you establish and achieve your sales and marketing goals in the most effective manner. That’s because the marketing plan will set forth the specific actions that marketing team members need to take in order to reach target customers, build brand awareness, and of course, generate increased revenue.

If you like sports analogies, think about marketing plans as being akin to playbooks in football. A football playbook sets forth what needs to be done to win the game. The playbook breaks the team’s strategy into actionable plays and defines who is responsible for what in order to win the game. That’s exactly the purpose of a marketing plan as well!

Structure of a Marketing Plan

Do a quick Internet search on “structure of a marketing plan,” and you’ll get countless results. To make this even more confusing, there is little agreement within marketing about the precise structure of a marketing plan. Some marketing “experts” argue for 10 components, others for 5 or 6 components. For our purposes in this book, we’re going to use a 12-element marketing plan comprising the elements shown in Figure 2.11 , each of which will be discussed in detail.

If your professor has assigned the semester-long marketing plan template assignment, these next sections will provide you with excellent guidance for completing each of the sections. So let’s dive right in.

Executive Summary

As the name suggests, the executive summary of your marketing plan provides those who will be reviewing your plan with a brief overview (usually one to two pages). It’s going to give the reader a quick synopsis of the main parts of the plan—an overview of what your company has done, what it plans to do, and how it plans to do it.

Think of the executive summary as being an “elevator pitch” of the plan. If you’re not familiar with elevator pitches, they’re persuasive, concise introductions that provide the listener with the information they need to know within just a short period of time—usually the length of the average elevator ride.

The executive summary of your marketing plan should succinctly cover the main parts of the plan. It should contain information about the company, brand, products/services, the market itself, and the overall marketing direction of the company.

It’s important to keep in mind that a marketing plan is typically written in sections separated by headings or subheadings. That’s not the case with the executive summary. You’ll write the executive summary as a series of paragraphs, and each paragraph will focus on a different section of the marketing plan.

Instead of talking about the executive summary strictly in abstract terms, let’s see how this plays out in an example.

This marketing plan is presented for ABC Company, a manufacturer of electronic components for a variety of industries. We have developed a new product for the health care industry, and this marketing plan will demonstrate that ABC Company has a unique opportunity to expand into this dynamic, growing market.

ABC Company was founded in 2002 and is based in Park City, Utah. The company produces electronic components for a variety of industries. When the company was founded, it produced electronic apparatuses primarily for the automotive industry. Its product line has expanded over the past 20+ years to include electronic apparatuses for the appliance and heating, ventilating, and cooling (HVAC) industries. Key Team Members: Khadija Simone, founder and CEO—Khadija has over 30 years of experience in the electronic apparatus industry, having managed divisions of two Fortune 500 companies before founding ABC Company. Khadija has a BS in electrical engineering from Purdue University and a master of business administration from the University of Chicago. Tanasha Turner, vice president of marketing—Tanasha has 20 years of sales and business development experience from working with several start-up companies that she helped grow into large businesses. She joined ABC Company in 2016 and has spearheaded the entry of the company into the appliance industry. Tanasha has a BA in marketing from the University of Pennsylvania and a master’s in business marketing from California Coast University.

There are several large players in the electronic apparatus industry, including EAC Industries and Antwell Industries, as well as a few smaller companies that sell similar products to the automotive, appliance, and HVAC industries. The rapid pace of innovations in the industry is stimulating demand for newer and faster apparatuses. Digital technologies such as 5G mobile communication networks and 3D printing are expected to aid in the development of innovative electronic apparatuses.

As noted above, ABC Company has created a new electronic apparatus for the health care industry. The success of this product would provide the company with an inroad to a new industry that uses the sophisticated technology developed by the company. This new product would provide the health care industry with improved efficiencies and cost savings vis-à-vis those that are offered by existing products on the market. Although there are similar products designed for other industries, there are currently no competitors for this type of product designed specifically for the health care industry.

The target market for ABC Company’s new product is large health care providers, including hospitals, research laboratories, and clinics. This marketing plan will outline its campaign to reach this target market through a combination of direct sales and social media marketing.

ABC Company has experienced significant sales growth in the appliance and HVAC industries since the company’s inception in 2002. Its sales revenue from these industries last year exceeded $23.4 million. Our marketing budget for the coming year in connection with entry into the health care industry is estimated to be $150,000.

ABC Company has developed a marketing plan that will enable it to quickly make inroads into the health care industry and become the premier provider of electronic apparatuses to this growing market. We intend to use our experience and expertise in selling to the appliance and HVAC industries to showcase how this electronic apparatus can benefit the health care industry.

Mission Statement

The next section of your marketing plan will be the mission statement of your company. You’ll recall from Section 2.1 that a mission statement is an action statement that clearly and concisely declares the purpose of the organization and how it serves its customers. It defines the what, why, and who of the organization. Once again, a picture (or in this case, an example) is worth a thousand words. Earlier in this chapter, we examined the mission statements of a couple of well-known businesses, so let’s take a look at some mission statements for some other well-known companies:

• Pinterest : “Help people discover the things they love, and inspire them to go do those things in their daily lives” 52
• Spotify : “To unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it” 53
• BBC : “To act in the public interest, serving all audiences through the provision of impartial, high-quality and distinctive output and services which inform, educate and entertain” 54

Keep in mind that most mission statements are one to three sentences, almost never exceeding 150 words. You want to be succinct in letting people know what you do and who you do it for.

But how do you write a mission statement? You might start out by asking yourself four fundamental questions—what does the company do, how does it do it, who does it do it for, and why does it do what it does? The answers to these questions will likely give you enough information to synthesize and condense it into a meaningful mission statement. Remember that your mission statement should be more than just a meaningless string of “feel good” business jargon. It should be ambitious but realistic. It should be clear and concise. It should be focused on what the company does for its customers. Finally, it should keep employees focused on the organization’s objectives.

SWOT Analysis

The next section in your marketing plan will include a SWOT analysis. We’ve covered the concept of a SWOT analysis in some detail earlier in this chapter, so we won’t review it here. Suffice it to say that the SWOT analysis as part of your marketing plan is crucial in identifying key internal and external influences in your company’s current position so that you can take advantage of the strengths and opportunities, mitigate the threats, and address your internal weaknesses.

Objectives and Issues

As noted earlier in this chapter, marketing plan objectives should be SMART—specific, measurable, actionable, realistic, and time-bound. Within your marketing plan, these objectives should be written in such a manner that they communicate precisely what needs to be achieved and who is responsible for each activity. For example, if you were writing this section of the marketing plan for ABC Company, an objective statement such as “Increase revenue by introducing a new product in the health care industry” would be too generic and not actionable. How much do you want to increase market share and during what time period? A better objective may be “Generate $1.7 million in sales in the health care industry by the end of the next fiscal year.” Remember that writing specific goals and objectives can help you more clearly define and address the issues outlined in your marketing plan. You should also keep in mind that the marketing plan objectives aren’t limited to just revenue. You may have objectives like increasing leads, in-store foot traffic, conversion rates, etc. Just make certain that each of these objectives is SMART.

Market Segmentation and Target Market

Essentially, what you will define in this section of the marketing plan is your target audience and your most likely buyers. We will cover market segmentation and targeting in more detail later in this textbook, but we’ll give you a sneak peek into these concepts. Market segmentation is the process of dividing a target market into smaller, more defined categories of people or businesses with common needs and/or wants who are expected to respond similarly to a marketing action. Ultimately, the purpose of segmenting a market is to highlight the differences between groups of customers so that you can decide which group(s) upon which to focus your marketing efforts and resources—that’s your target market.

Your marketing plan should include a description of the market for the product or service, the segments in this market, and how the plan will address the target market strategy.

Buyer Personas

The intricacies of buyer personas will also be covered in more detail in a later chapter, but your takeaway here is that a buyer persona is a semi-fictional representation of your “ideal customer” that helps you understand and relate to the audience to which you want to market your product and/or services. Buyer personas help marketers visualize the person to whom the company is selling so that marketing messages can be fine-tuned because brands that feel “human” to their target market usually succeed in building a rapport with them, improving the brand reputation for both existing and new customers.

This section of the marketing plan should address who your buyer personas are (and you can have several). These are one-page visual profiles outlining the demographics of your ideal customer, such as age, gender, motivations, and needs. For example, let’s assume that your company sells outdoor apparel and hiking equipment. One of your buyer personas may be “On-the-go-Evan,” a Gen Z male who enjoys being outside and participating in noncompetitive sports and relies on blog posts, influencers, and reviews to get unbiased information about the equipment he needs. 55

Buyer personas aid marketers in bringing the target customer to life in a way that both inspires marketing strategies and prepares sales teams for conversations with customers that connect them in a meaningful way. How many buyer personas should you create? According to LinkedIn, although there isn’t a “magic number,” in most cases three to eight buyer personas are adequate. 56

Link to Learning

Creating buyer personas.

Creating buyer personas is an integral part of marketing, and it can be fun. For more information on steps to creating buyer personas, check out this tool from HubSpot that describes buyer personas and provides an interactive tool for creating them.

• Positioning

Similarly, positioning will be covered in more depth in a later chapter. Remember that you first will have segmented the market by dividing it into distinct groups of customers and determined which customer group(s) you want to target. Positioning now defines where your product or service fits into the marketplace and why it is better than your competitors’ products.

Product positioning is typically illustrated on a perceptual positioning map that uses two determinant attributes (those factors customers use in making their purchase decision) on the vertical and horizontal axes, and the marketer places his or her product offering on the map, along with those of the major competitors.

Once you’ve developed the map, you’ll have a clearer idea of where your product or service stands in relation to the competition. The questions to address in your marketing plan might include the following:

• Do consumer attitudes toward your product or service match what you want them to think about it?
• Do consumer attitudes toward your competitors’ products or services match what you perceive?
• Who are the competitors that consumers perceive as offering products or services that are close to yours?
• Are there holes or gaps in the map, indicating the potential for new offerings?

Creating a Perceptual Positioning Map

See an example of a perceptual positioning map as applied to the fast-food industry.

An important aspect of these maps is understanding how your products and your competition are perceived by customers, and this video shows you how to process and map this information.

Check out this example using chocolate. If you’re interested in using Excel data to create the map, watch this video example.

Current Marketing Situation

This section of your marketing plan should provide the reader with a clear description of the current state of the marketplace, including your target market and the competitive environment. It should include a synopsis of the research into and analysis of your target market, your competitors, challenges in the marketplace, and the company’s competitive differentiators. Some of the key items to address in the plan are as follows:

• Market Description. This isn’t intended to be a comprehensive list, but this section should address things like statistics about the size of your target market; whether it is growing, shrinking, or staying the same; if it is changing; and why. 57
• Product Review. The product review section of your marketing plan summarizes the main features of your company’s products, including information about sales, price, and gross margins.
• Competitive Analysis. This section should include a discussion of your top competitors and how they fare in the marketplace vis-à-vis your company’s products and/or services. This typically involves researching major competitors to glean insights into their products or services, sales, marketing tactics, product quality, pricing, market share, and distribution.

Marketing Strategy

Now let’s get to the heart of the matter. This section of the marketing plan essentially sets forth the broad marketing strategy or game plan for achieving the objectives previously set forth in the plan. It should consist of specific strategies for target markets, positioning, the marketing mix (i.e., product, price, place, and promotion), and anticipated marketing expenditure levels. 58

• Product Strategy. This is the “road map” that you’ll use to develop your product(s) or features(s), including all tasks needed to achieve the objectives set forth in the marketing plan. The product strategy essentially outlines how the product(s) or service(s) will benefit the business, what problem it will solve, and the impact that it will make on customers and the business. It’s only when this strategy has been set forth in straightforward terms that it can act as a baseline upon which you can measure success before, during, and after production. 59
• setting a price that sends the right message in terms of quality and value in the minds of your target market,
• setting a price that supports your promotion strategy (to be covered below), and
• setting a price that maximizes profit. 60
• Promotion Strategy. Your promotion strategy sets forth the tactics you intend to implement in your marketing plan in order to increase demand for your product(s) or service(s). List the methods you will use to gain awareness and interest in your product from those in your target audience. Methods of reaching potential consumers abound—company websites, social media networks, trade shows, and radio/television/website advertising. You’ll want to list the advantages and disadvantages of each method and indicate why and how much it will cost to employ the method(s) you have selected.
• Distribution Strategy. Your distribution strategy describes how customers in your target market will purchase from you. Will they buy directly from your website, from a storefront, or through distributors or retailers? What are the costs involved in this type of distribution, and why do you believe your distribution strategy will enable you to get the right product into the hands of the right consumer at the right time?

Action Programs

You’re getting to the end of the plan (finally). The marketing strategies outlined in the section above should now be translated into specific action programs that indicate what is to be done, when it is to be done, by whom it will be done, and the cost involved. The action program should list when activities will be started, reviewed, and completed.

Budgeting Concerns

The action plans outlined in the section above should enable you to make a supporting marketing budget that is essentially a projected profit-and-loss (P&L) statement. If you’ve previously taken an accounting course, you’ll know that a P&L statement summarizes the revenues, costs, and expenses incurred during a specified period.

On the revenue side, this statement should indicate that forecasted number of units to be sold during the period outlined in the marketing plan and the average net price for revenues. On the expense side, this statement should indicate the cost of production, physical distribution, and marketing expenditures. 61

Controls to Monitor Progress

Controls is the last section of the marketing plan. This section will outline the control methods that will be utilized to monitor the action programs outlined in the plan. The reason you’ll want to monitor these metrics during the time period of the marketing plan is to see where things may have fallen outside the desired range, at which time you’ll want to dig into the details, perform an analysis of the root cause of the problem(s), and make adjustments to get back on track.

Marketing Plans

There are numerous online examples of marketing plans. To be a great marketer, it would be wise to review and study marketing plans and how they tell a unique company story. Here are several to check out:

• Shopify blog: “7 Inspiring Marketing Plan Examples (and How You Can Implement Them)”
• University of Illinois
• Visit Baton Rouge
• Bizfluent example for a generic restaurant

There’s also a free marketing plan template available from HubSpot .

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

• Description of products or services being marketed
• Description of customer base and related marketing activities
• Description of company and team
• Description of market factors and trends
• Strengths and opportunities
• Weaknesses and threats
• Strengths and weaknesses
• Opportunities and threats
• A perceptual map indicates the relative strength of competitors in the market segment.
• A perceptual map indicates the relative market share and market growth of a product portfolio.
• A perceptual map illustrates product positioning vis-à-vis the competitors.
• A perceptual map displays the product, pricing, promotion, and distribution strategy of the product or service.
• Objectives and issues
• SWOT analysis
• Buyer personas
• Current marketing situation
• Target market
• Mission statement

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Parts of Business Plan and Definition

The parts of business plan and definition refer to the governing document of your company and the elements it should include. 3 min read updated on February 01, 2023

The parts of business plan and definition refer to the governing document of your company and the elements it should include. The business plan thoroughly describes your company's purpose, structure, and goals for potential partners, stakeholders, and investors.

Purpose of a Business Plan

Your business plan will be informed by the specific goals for your business. The more complex your product or service, the more complex and detailed your business plan must be. If you are using the business plan to seek investors, you'll need to provide a thorough explanation of your concept and how it fits into your industry.

Once you've drafted a plan, show it to colleagues, partners, and mentors you trust. They can provide an objective view of the business plan and indicate areas where you may need to provide more thorough information.

Executive Summary

This is the first section of your business plan and provides a quick overview of what you want to accomplish with your company. This should comprise the mission statement followed by a description of the services and/or products you provide. Use this basic outline:

• Description of the business
• Products/services
• Market/competition
• Goals and objectives
• Owner and executive qualifications
• Funding information
• Cash and earnings projections

Company Description

A more involved company description should follow the executive summary. This section details the business's key information and examines the market segment you want to capture. The company description is the "meat" of your business plan and should include information about:

• The name of your business
• The business location
• The type of business entity (proprietorship, corporation, or limited liability company (LLC))
• How your company is different from its competition
• Growth and success factors
• How the products and services you offer will solve a problem or fill a need for your desired audience

This is also where you should include operational details such as your hiring plan for the first year or two in business with job classifications and duties. You should also indicate the type of facility you will need for operations and where it will be located.

Market Analysis

This section will demonstrate your understanding of your specific market as well as your industry as a whole. Include the following information:

• Description of your target market
• Overview of industry projection
• List of all competitors with business analysis of each

Product and Service Information

Describe the products and services your business will offer, providing enough detail for those who may be unfamiliar with your industry. Indicate whether you will need to patent your product idea and/or whether a patent application is pending. You should also indicate other steps you've taken to protect intellectual property such as your business name, product names, logo, and branding identity.

If you are manufacturing a product, include information about the materials you'll need and your suppliers for those materials as well as the production process.

Financial Projections

This section demonstrates your plan to make a profit using realistic numbers with a basis in research. Although your ideas are important, you'll also need to show that you will generate enough cash flow to capture a significant market share. Elements this section of your business plan should address include:

• Initial operating costs
• First-year cash flow and sales projects
• Personal expenses
• Start-up and growth financing
• Business bank accounts and/or credit lines
• Projected timeline to a positive cash flow

Management Information

A strong management team will inspire confidence in potential lenders, investors, and partners. The purpose of this section is to make your people shine by highlighting their unique strengths. This part of your business plan should include answers to these questions:

• Who are your company-level and department-level managers?
• What are their qualifications?
• How many full-time and part-time managers do you need?
• How many employees will each manage and what are their responsibilities?
• How will you fund wages and benefits?
• What are your plans for employee training and mentorship?

Additional Information

Complete your business plan with supplemental information that will strengthen your case. Finish with a summary that restates the highlights of your plan and indicates your determination to succeed as a business owner. Attach supporting documents such as licenses, permits, patents, product diagrams, building blueprints, and letters of support from consultants and/or your accountant and attorney.

If you need help with creating a business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top five percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Oil traders working for the US firm Exxon Mobil Corp in Brussels could lose their job if they refuse to move to London, according to reports.

Under the new proposal employees moving to the UK capital would be expected to be in the office five days a week.

But traders working for the oil giant said in an internal union-led survey they did not want to move to London due to "uncompetitive" pay and a "lack of flexibility", a union statement reads, according to  Bloomberg .

Up to 37 trading employees now face having their contracts terminated as a result of this.

ExxonMobil has said it "remains open to resolving the situation".

The sports retailer is introducing tagging sprays across its stores nationwide as part of a ramping up of security measures. 

It will start using SelectaDNA sprays, which can be misted on property and criminals. 

The sprays work by leaving a synthetic DNA and UV marker which does not wash off and can be used to link assets to owners and criminals to crime scenes. 

JD Sports said the measure was in response to a significant increase in shoplifting in UK.

In particular, it said it had seen a rise in "steaming" - where large gangs run into stores, threaten staff with violence and then run off with armfuls of stolen products.

The SelectaDNA spray reportedly does not cause any harm or damage to skin, clothing or property.

Lidl plans to open hundreds more supermarkets across Britain.

The German discount chain, which is now the UK's sixth biggest supermarket, is targeting thousands of new shoppers as it continues its expansion.

It currently has about 960 stores but is targeting more than 1,100 across England, Wales and Scotland.

In the coming months, the chain will welcome shoppers to new stores across the country, from Bristol, Birmingham and Berwick in Scotland. 

In London, it will be opening new stores in Wandsworth, Fulham, Hoxton and Canning Town.

But it says it is eyeing growth in more locations. If it successfully finds a good location, it is willing to pay a finder's fee of 1.5% of the total freehold purchase price, or 10% of the first year's rent for leaseholds, which would equate to £22,500 for a completed £1.5m site purchase.

A finder's fee can be paid to any member of the public who identifies a suitable site for it to open a new store.

Richard Taylor, Lidl Great Britain's chief development officer, said the company was "continuing to invest in new locations whilst exploring innovative routes to expansion".

"As we look ahead, we're excited to welcome even more new shoppers to our existing stores, as well as those we're planning to open across the country in the coming months and years," he said.

Mortgage approvals rose to 61,300 in March - the highest number since September 2022.

They had been at 60,500 in February, according to the Bank of England.

While this is positive, industry experts are reporting that uncertainty over the direction of interest rates this year is prompting caution.

Mortgage rates have risen in the last few weeks as markets went from pricing in a base rate cut in June to thinking it may be August.

US inflation proving stubborn has led to concern here that the path to the 2% target may be bumpy - meaning the base rate may have to stay high in order to constrain spending and thus ease price rises.

Forecasts of three cuts this year from the current 5.25% have been scaled back to two.

Hina Bhudia, partner at Knight Frank Finance, said: "The sun is out and buyers are returning from their Easter break, so we'd usually expect these to be the busy weeks before the summer; however, the uncertain outlook for mortgage rates will undoubtedly weigh on activity.

"It's not just buyers that are frustrated. The lenders are eager to rebuild their businesses after a subdued 2023; however, they are constrained by stubborn inflation and the resulting impact on their cost of funding."

Following Sainsbury's boss Simon Roberts' claim that Britons like self-checkouts...

...we asked Money blog readers, and followers of our LinkedIn page , for their views.

While our inbox was filled with a lot of hate for self-checkouts, our poll of 2,613 people on LinkedIn shows that, overall, Mr Roberts was right...

We have rounded up some of your views here...

Self-checkout is the worst thing to ever happen. Standing like a child with your hand up, one person running up and down to deal with this, underpaid and understaffed. Janice Karaaziz, Money reader

I'll go out of my way to find a cashier, largely because my five-year-old will make a beeline for pressing the scales. I've noticed my local store having fewer and fewer cashiers on - and on many occasions there have been none. We need to think about inclusivity here. There will be some customers who will need a cashier for various reasons, so would expect there to always be at least one on, so stores are accessible for everyone. KaraS, LinkedIn

I try and limit my social interactions as much as possible, out of choice, so most of the time self-checkouts are convenient. Alasdair Corton, LinkedIn

They induce a level of irritation. Sometimes I can be heard answering them back. In general I choose to have my items flung at me by Lidl checkout staff. Siobhan W, LinkedIn

Self-checkout provides a great alternative to customers, especially those with smaller quantity purchases, but personally I think it's sad to see them dominate the front of Sainsbury's stores. In my opinion, it's the removal of one of the greatest ways to provide good customer service. Tom Tregay, LinkedIn

Self-checkouts are great, I will always choose to use one instead of a normal checkout. Some are easier to use than others, the Co-op and Tesco have easy-to-use interfaces whereas Morrisons is a bit more complicated. They'll evolve over time and there's always staff to help out. CG, LinkedIn

They're useful, but when they trigger a "basket check" on nearly every single shop, they begin to lose attractiveness Nicola Bradley, LinkedIn

I tend to argue with them lol. Especially when I can't get it to scan a particular item or you need approval for something so you have to wait for assistance anyway! Plus as a disabled customer I have to juggle my crutch, shopping, scanning and packing. With reduced staff in shops you can't always get the help you actually need. Elizabeth Graney, LinkedIn

Definitely not. So when I go to Sainsbury's I see a lot of older people and no way do they want to use self-checkouts. My mother lives in assisted living and all of them say they hate them. Get a grip, Simon - they are not faster, they are saving you employing more staff. I know my aunt has stood at an Asda til they put a staff member on there. Andrea Robinson, LinkedIn

Robots should never replace humans. Interaction is essential... if machines replace people no one will work, it's a crazy dangerous road. Nicola van Eerten, LinkedIn

The self-checkout is a money-saving exercise. They cut back everywhere. No staff on the shop floor to help. Paper bags in the veg section now cost 30p - for absolutely no reason. Mark, Money reader

Average advertised rents have hit a new high in the UK, according to Rightmove .

Across Britain, excluding London, the average monthly rent being asked for a property coming on the market in the first quarter of 2024 was £1,291, the property website found. This was 8.5% higher than a year earlier.

The average advertised rent in London also hit a fresh high in the first quarter of 2024 at £2,633 per month but this was just £2 higher than the average asking rent in the fourth quarter of 2023.

While average rents have climbed, the property website says there are signs that the pace of the increases is slowing.

There are also indications that more landlords are having to reduce their asking rents, particularly for bigger homes, to meet what tenants can afford.

Rightmove's director of property science, Tim Bannister, said the rental market was "no longer at peak boiling point" but it "remains at a very hot simmer".

By James Sillars , business reporter

The index rose by 0.3% to 8,174 points at the open.

Only real estate stocks were proving any kind of drag.

Among the companies leading the gainers was HSBC.

It climbed by more than 2.6% in London after the Asia-focused bank announced a rise in shareholder awards despite a slight drop in quarterly profits.

The share price reaction also reflected news that chief executive Noel Quinn is to retire - read the full story of that here ...

Among the other gainers in early dealing was Whitbread.

The Premier Inn owner's annual results revealed a sharp rise in annual profits but also a new focus on hotel investment at the expense of its restaurant brands.

That was placing 1,500 jobs at risk, it warned - read the full story here ...

By Jess Sharp , Money team

We first came across Tom McPhail when he posted this on X... 

The pensions expert appeared to be suggesting state pensions were at risk of disappearing.  

After speaking to him on the phone, he confirmed that was exactly his concern, warning something needed to be done sooner rather than later to avoid a "catastrophic" situation.  

He described state pensions as a social contract – each generation pays taxes and national insurance, which funds the pensions of today's older people, and they hope the following generation will do the same for them.

But with population growth slowing, there's a worry there may simply not be enough people to keep the system afloat in the future.  

"There's a significant demographic shift going on in the UK. It started before the Second World War, cohorts of people born in the 1930s have been experiencing significantly longer lives than was the case prior to that, so people now in their 80s are living quite a lot longer," he said. 

"But at the same time, we've got fewer children coming through. And so this exacerbates the shift in the age of the population."

He said if he was 20 today, he would be "sceptical" about the promise of a state pension because he isn't sure how it's going to be paid for.  

At the moment, the state pension system costs around £120bn a year and more than half of retired people rely on it to make up at least 50% of their income, he added.  

Over the next 50 years, Tom predicts the proportion of GDP the state spends on older people will increase from around 16% to 25%.  

"I hesitate to use the word unsustainable, but it will certainly start to look challenging," he said.  

"If we suddenly switched off the state pension or significantly reduced it, people would be in trouble, so the government can’t do that. 

"You can't keep on progressively ratcheting up a more and more generous state pension. The costs of state pensions is going to become increasingly difficult for the younger cohorts to bear."

He pointed to a few ways to potentially salvage the state pension – policy change, more babies being born or people working until they are in their 70s.  

"Politicians are going to have to make decisions about how to get out of this kind of political bind," Tom added. 

"Time and time again it's just kick the can down the road on the pension question, just put a sticking plaster on it and let the next government deal with the problem. 

"You can't keep doing that. So I would really like to see, on the other side of this forthcoming general election... whoever's in power, in collaboration with whoever's in opposition, to just really open it up to some honest conversations about where the demographics are going to take us." 

He does note there is one piece of good news: "This happens quite slowly, so we do have time on our side." 

Basically, swap rates dictate the pricing of fixed-rate mortgages.

Lenders, such as banks and building societies, borrow in order to lend.

They borrow from financial markets and often these transactions are made using Sterling Overnight Index Average (SONIA) swap rates, which can move around.

By contrast, most domestic mortgages are set on what is known as a "term" rate – in other words, the borrower knows how much interest they will be paying for a set period of time.

To avoid a situation where the SONIA rate goes above the rate it is charging borrowers, which would leave the bank or building society lending at a loss, the lender will seek to enter a "swap" arrangement which protects them from such a situation.

Under such agreements, two parties exchange cash flows with each other. The lending bank will swap the variable payments it may make to service a mortgage (which is fixed to the SONIA rate) for payments at a fixed rate. This insulates the lending bank from unexpected increases in the SONIA rate.

Once a deal is struck based on the swap rate, mortgage providers set their fixed deals for customers, with their own profit margin priced in.

How are swap rates decided?

Swap rates are based on what the markets think will happen to interest rates in the future.

When they go up, so do the rates being offered on the high street, as we have seen in the last week or two amid uncertainty over whether forecasts for a summer base rate cut are accurate.

Read other entries in our Basically... series:

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