Knowing your ideal target market might seem like one of many boxes to check on your “starting a business” list, but it’s arguably the most important part of the process.
Your target market underpins everything your business does, from the product you create to the marketing campaigns you build. You can’t sell to anyone and everyone. Limiting the audience you target actually improves your total number of sales, because the marketing messages you’re delivering are highly relevant.
To set up a business right, you need to know who your target market is, which means figuring out not just who they are but how they behave and what they want or need. You’ll then be able to find ways to reach them about what matters most to them while ignoring other potential customers that will never see the relevance in what you’re offering, and vice versa.
So, how do you define your target market? And more importantly, how do you turn a pretty PDF or slide deck into money for your ecommerce business? This guide shares the answers.
Table of Contents
What is a target market?
A target market is the specific group of people most likely to buy your products or services. They’re the people you should be laser focused on attracting—the type of people who return again, recommend you to their friends, and rave about you on social media.
How to define your target market
Many small business owners create products they wish they had. Take footwear brand Allbirds, for example. The brand started after its founder, Tim Brown, struggled to find shoes made with merino wool. Allbirds was created to fill the gap, with Tim being its first customer and target market.
Nevertheless, continuing on the “I am my own customer” path for too long is dangerous. Making assumptions about your target audience based on your own personal thoughts, feelings, and behaviors can kill the target market research process. What your paying customers want can vary dramatically from the product you want to create.
Say you’re anti-Facebook, and deleted your account in protest of its privacy settings. If your target market is just like you, you’d strike Facebook advertising from your marketing campaign ideas. In practice, however, you may be hampering your ability to reach a subset of your potential customers who have most things in common with you.
*You are a sample size of 1*— Corey Haines 💡 (@coreyhainesco) December 16, 2020
You do not represent your entire target market, intended audience, or customer base.
In fact, there's a good chance you behave very differently than your potential customers, so using your own behavior as a heuristic could be disastrous.
Researching multiple target markets doesn’t have to be complex if you’re just starting out, but it helps to have a minimum viable target market—the bare minimum you need to know about your ideal customer before diving in. Hiya Health co-founder Darren Litt recommends looking for answers to the following questions:
- Who will benefit the most from your product or service?
- Who’s going to be touching this product?
- Why do they need your product or service?
- What difference does this product make compared to its competitors?
Here’s how you can find the answers.
Host focus groups
Starting your market research from scratch with no existing customer data? The quickest way to get immediate feedback is to host a focus group: a group of eight to 10 people who give honest feedback on your soon-to-launch product.
You *need* to talk to people in your target market that aren't in a sales cycle.— Andrew Allsop (@AndrewAllsop) August 12, 2021
So many people rely on Sales for feedback.
People don't tell the truth when money is involved.
Advertise that you’re looking for people to take part in a research study. Give people an incentive to participate, such as a free product or $25 gift card. If you’re researching the target market for a new wine brand, for example, host a wine and cheese evening at a local vineyard. The more relaxed and engaged people are at the focus group session, the more likely they are to give honest, free-flowing answers.
Or, host the focus group online via web conferencing tools like Zoom. That way, you can invite people from all over the world without limiting research to opinions from people in a specific area.
When selecting people to join the focus group, go broad with your criteria—especially if it’s your first dip into the market research world. Remember: assumptions on who might buy your product can lead you down the wrong path. There’s always the option to niche down once you’ve excluded a specific group that definitely isn’t your target market.
At the event, ask open-ended questions like:
- What qualities do you look for in brands you purchase from?
- What would need to happen in your life for you to buy this product?
- If you don’t picture yourself buying this, who would you buy the item for as a gift?
Don’t be afraid to dive into rabbit holes. Instead of a one-way survey conversation, you can really pull on the thoughts, feelings, and stories people have to share when you’re communicating face to face (or screen to screen). Ask open-ended questions and pull out interesting parts in their response for further discussion.Plain Text
After all of these steps, it’s important to evaluate your decision. Ensure that your target audience has enough people in it, that these people will benefit from your product or service, that they can afford it, and that you are able to reach them with your message. This is the final step to finding your target market.
Survey existing customers
“Your current customers are a great resource,” says Jean Gregoire, CEO of Lovebox. She’s right: existing customers have handed over their hard-earned cash in exchange for your product. In many cases, following the money leads directly to your target market.
Jean advises, “Figure out why they’re buying from you. Do they have any similar interests? Then, look at your product or service in-depth. What key characteristics does it have? What are its features and benefits? Once you have that information, you can figure out what types of customers would benefit from your product.”
Look at the existing data in your ecommerce back end. For instance, customers will share their postal address for shipping purposes. Assemble that data in one spreadsheet to find your most popular locations.
You could also add a date of birth field to your post-purchase account creation page. Give customers a free gift or discount code on their birthday in exchange for age-related information for your target market research.
Collect more data on autopilot by adding a customer survey in your purchase confirmation emails. Keep the survey short and sweet to encourage new customers to share their feedback. Ask a mixture of demographic and psychographic questions like:
- What is your education level?
- How do you spend your free time?
- Why did you choose to buy our product?
- What was happening in your life around this time?
- Which channels did you use to discover this product?
Either way, look for common denominators in the answers you get. Thoughts, behaviors, and personality traits you see repeated are those your paying customers have in common—and your target market does too.
By taking a deep look at how your brand can help certain consumers, you’ll be able to pinpoint who those consumers are.
Keep tabs on competitors
In a crowded marketplace, knowing your competitors’ target markets can help you narrow your focus, especially if the products you’re selling are largely the same.
Toothpaste brands are a prime example. If you analyze the formulas of popular toothpastes, you’ll notice very little difference. Retailers in the space stand out with strong branding tailored toward a specific target market.
Make a list of competitors in your niche market. Find them by asking this question in your customer feedback surveys: Did you consider any other products before deciding to purchase ours? If so, who were they and what made you choose us?
While it’s highly unlikely for each of these competitors to freely share information about its audience, you can do some detective work by:
- Searching the brand’s name on social media
- Looking at influencers each brand partners with
- Investigating customer reviews and case studies
In marketing my Shopify store, Dead Sea Trading Co., I looked at my biggest competitor and used Alexa.com to determine that their target market was women ages 35 to 65+ who earn more than $100,000 per year. In order to reach this market, I started a free online book club for women in that age group and included ads for Dead Sea Trading Co., where appropriate. The results have been impressive and the traffic to my store has increased threefold since starting the book club.
While competitive analysis is a good starting point for your own target market research, the goal is to stand out from them. That’s why Justin Chan, growth manager at JuneShine, advises using this data to “find a niche market which they are overlooking.”
Justin says, “It is useful to find your own niche, because it gives you a way to stand out in the crowd. You are able to have a targeted market that looks to you for this product. At JuneShine, we have a super-specific niche of alcoholic kombucha. It mixes the want to be healthy and still enjoy a delicious beverage.”
Dive into existing research
Once you’ve got a solid understanding of the types of people in your target market, dig deeper into the thoughts, feelings, and behaviors they share through existing industry research.
The following platforms share consumer behavior trends to lean into:
McKinsey published a “State of Grocery in North America” report, which grocery store owners can use to define their target markets by focusing on those shopping for fresh fruits and vegetables.
“There are many tools to help you do a deep dive on your target audience, but keyword research can reveal more intimate and private pain points that customers or brands may not be open to talking about,” Marquis Matson, VP of Growth at Sozy, adds. “Mental health issues, relationship struggles, body image issues … these are all revealed in keyword research.”
If you know that the target market for your health supplements is women going through menopause, for example, try using Google’s autocomplete box to see related terms those people search:
But remember: target market research needs real concrete data, not assumptions. That’s why Marquis adds, “To validate the topics, I talk to the customer support and social media teams to learn about what actual customers are talking about. Listening to what customers are saying and how they’re saying it informs my strategy for all content that goes on the website.
“Once you have buying customers, then you have information about the people most likely to buy your products. That can get you pretty far in your target audience research.”
By platform or sales channel
Ecommerce brands have different target audiences across the platforms and sales channels they sell on. A retailer selling handmade goods, for example, will have different target markets for its:
- Etsy profile
- Ecommerce website
- Brick-and-mortar store
People buying through the brand’s online store will be different from those visiting its Houston brick-and-mortar store. Location is the most obvious difference: selling online opens you up to reach potential customers all over the world. You don’t get that luxury with a physical store (unless you’re in a tourist destination).
Similarly, the platforms you’re marketing your business through have varying target markets. Those who discover products through Instagram likely follow one of the many influencers using the platform to make a living. The target market for Pinterest users, however, may prioritize handmade goods over mass manufactured ones.
To define your target market for a particular platform or sales channel, repeat the steps we’ve covered. Survey existing customers who have found or purchased your products through each. Create Google Analytics segments for each referring source, then use the Ecommerce Purchase report to find the most popular products for visitors from each channel:
Or, go directly to the platform itself. Many social media platforms have features for surveying your audience, including Instagram Story polls.
You could even host a giveaway where followers win something—like a free product—in exchange for information about your target market on that channel. “Comment below why you’d like to win” is a simple conversation starter to get your followers talking.
How big should my target market be?
Calculate your target market size by doing some desk research. Lean on free resources, like the ones listed below, to tell you how many people share the same traits you’ve defined.
The US Bureau of Labor Statistics is a great resource to investigate jobs, income levels, and how people spend their free time. Statista also compiles data on how many people buy, watch, stream, or read something.
You could also use Facebook’s audience builder to see estimated sizes based on the interests, genders, and locations of your target market. (Important note: Facebook’s audience builder only includes data from its users, so you may want to avoid this technique if you’re aiming for a target market known not to use the platform.)
A common mistake marketers make when defining their target market is assuming that everyone is a customer. You may try to reach anyone and everyone with the hope they could turn into a customer if you strike your marketing message right. The total opposite occurs in reality.
If you’re unable to form a definition [of who your target market is], your marketing will come across as watered down, therefore essentially wasting money on people who have zero interest in what you’ll have to say.
The same problem occurs if you go too niche. Sure, you can reach a smaller subset of people with uber-specific and personalized marketing messages. But a target market of 100,000 people, assuming the average conversion rate of 2.86%, equals just 2,860 paying customers. If they’re buying $50 products, that results in revenue of $143,000. Repeat customers can bump that figure upward, but it’s still not generating enough revenue to transform a lifestyle business into a larger one.
There is no best practice for how big your target market should be. Certain industries are fundamentally larger than others. There are more people interested in buying groceries than there are people interested in buying Star Wars costumes, for example.
As a rough guideline, assume you’ll achieve the average market penetration rate of 2% to 6%—the percentage of your target market who purchase your product. Multiply your market size by those percentages to see the very top end of achievable revenue.
(For context: Apple claims 51.62% market share for mobile operating systems, hence why you see iOS products everywhere.)
How to segment and reach your target market
You don’t run marketing campaigns to reach your target market. That would be too broad. Segmenting your market to identify target audiences for individual campaigns is what helps you take action on your research. If you use Shopify, then Shopify Segmentation enables you to discover powerful insights about your customers.
So, break your target market down into smaller segments to create target audiences—a smaller subset of your target market who your marketing efforts are tailored to. Within those are buyer personas: fictional representatives for one target audience within your target market.
Take Great Little Trading Company’s target market for example. Its ideal customers are parents with young children. But other variables, like parents’ geographic location, child’s age, and income level, all come into play. It would be a mistake for the retailer to disregard people who are parents to young children but don’t meet all three checkboxes. They’re still its target market—just a smaller segment of it.
For common characteristics that appear in some potential customers but not others, consider them segments of your target market. Here are three popular ways to use this data for digital marketing.
Demographic target market segmentation is the process of creating personas of people with shared characteristics, such as:
- Generations (e.g., Gen X, Gen Z, Millennials, etc.)
- Income level
- Marital status
- Education level
Map out the percentage split between each demographic market segment and map your marketing budget accordingly. If you know half of your target audience is aged 40 to 65, for example, assign half of your marketing budget to campaigns tailored toward those people.
One example of [segmenting] is through paid advertising, where a company may select to only serve ads to a specific gender or a specific age range instead of all genders and age ranges. This can also be used in the form of interests where a company may choose to serve ads only to users who have displayed an interest in one or more specific fields.
Similarly, use the demographic information about each segment to personalize the marketing messages and products you’re promoting. You could create a Christmas gift guide with product recommendations for the following market segments:
- Income level. Create a gift guide of products $20 and under for those with a low income.
- Family status. Recommend personalized “World’s Best Dad” products for married parents.
- Generation. Run an Instagram advertising campaign with influencer-endorsed recommended products to Gen Z target audiences.
For a real example, look no further than Starbucks. Instead of gearing its marketing campaigns toward anyone who drinks coffee, the brand’s target market is young professionals who can afford to splash $5 on a daily coffee. We see this reflected in its TV advertisements, Facebook advertising campaigns, and TikTok videos.
It's important for ecommerce companies to define a target market so that they are not wasting time or ad spend on users who are not qualified to purchase specific products. Generally it costs money for users to see an advertisement, so businesses need to make sure that they are only advertising to the specific demographic group that is most likely to purchase their products.
Geographic segmentation refers to differences in the locations your target market is spread across, including:
- Language spoken
- Country, city, or continent
Segmenting your target market by geographical data helps you personalize the shopping experience. Research shows that 66% of consumers expect the companies they purchase from to understand their needs. It’s why marketers who segment their customer base and personalize their emails see a 760% increase in revenue.
Let’s put that into practice and cover four different ways to use localization:
- Configure Spanish translations on your Shopify store if a large segment speaks the language fluently.
- Run Facebook ads to the segment of a popular city and reference local landmarks.
- Create an Instagram shop with prices in CAD for your Canadian target market segment.
- Recommend umbrellas and raincoats to your target audience in London.
Psychographic segmentation means dividing your target market into smaller groups based on psychological traits they share, such as:
- Shopping habits
Use this psychographic segmentation to tweak the messaging you’re giving to each. At its core, strong copywriting is tailored to its target audience. Reflect each segment’s opinions, values, and interests in the copy you put in front of them.
Take cosmetics retailer LUSH, for example. Part of its target market are people who stand against animal testing and are vegan. So, on its product page, you’ll find several nods to the causes its target market would want the brand to support:
What if my target market changes?
The target market you’ve defined for your business isn’t futureproof. Products develop, consumer buying trends change—both of which impact the type of person most likely to purchase your products.
Bear in mind that running an ecommerce business requires constant refining and experimentation to help you identify your target market, even when you believe you have done so. The market, like your business, is constantly changing. The prudent business owner recognises this truth and constantly researches and modifies their tactics to meet the requirements.
—Gerrid Smith, Chief Marketing Officer at Joy Organics
So, how do you know when to pivot? “When you feel that there’s too much competition in your niche or you realize you’re not attracting enough customers to be profitable, changing the direction of your business can put you on the path to success,” says Shaunak Amin, co-founder and CEO of SnackMagic.
Shaunak’s business is a great example. “My latest venture is a direct result of the global pandemic,” he says. “As nobody was in their offices but instead quarantined at home, we knew the joy of giving, and getting, a stash of snacks would help people feel connected and boost morale during the pandemic lockdown. What began as a temporary way to save our office-lunch delivery business became a beautiful, lasting pivot.”
SnackMagic’s product shifted to address a different need within the same target market—a change that still helped the business reach its goals.
“From day one, we wanted to create a business, not necessarily a startup,” Shaunak says. “We wanted it to be an established business that has revenues, profits, losses, and unit economics from the get-go. So we used our existing runway from STADIUM to build SnackMagic. People were on our website just looking before we even launched, and our first order came within three weeks.”
The results were impressive: SnackMagic scaled from $0 to $20 million in annual recurring revenue in just eight months. “We’ve shipped thousands of SnackMagic snacks worldwide, and we’re just getting started,” Shaunak says.
Target market examples
Ready to put your research into action? Here are three examples of target markets to draw inspiration from.
It’s clear Nike’s target market is broad. However, the brand segments its target market into smaller buckets and builds personalized experiences around each. For example, its advertising strategy has content geared toward specific market segments:
- Nike customers who belong to the Black and LGBTQIA+ community are targeted via Nike’s YouTube series.
- Nike’s “Guide to Summering” advert is targeted toward a subset of Nike’s target market who are interested in traveling.
- Nike’s “Toughest Athletes” advert represents mothers interested in fitness.
While Nike is a brand that appeals to most people with a general interest in fitness, customers can’t help but feel like the brand gets them. It shows people who look, act, and feel the same way they do, through segmented advertising campaigns.
Often joked as being a “home away from home” for customers, McDonald’s also has a gigantic target market. Its online help portal even says:
“McDonald’s aims to offer a friendly, fun environment for everyone, and we mean everyone, to enjoy. This means appealing to families who love our iconic Happy Meal®, to workers grabbing breakfast on-the-go or eating in to enjoy our freshly ground coffee and free WiFi. The majority of our campaigns are communicated to everyone to ensure they have a broad reach. You may have seen us on TV or heard us on the radio!”
In the UK, the brand reaches several unique segments—like those who recently started a new job, are concerned about climate change, and spend their free time partying—with advertisements portraying people who fall into each.
Plus, instead of driving all US customers back to English-language advertisements, it translates each Facebook ad campaign into Spanish for people in that language segment:
We all know Play-Doh as the modeling clay children use to make small sculptures. But the original target market for Play-Doh might come as a surprise.
“Play-Doh was originally invented to be a wallpaper cleaner,” says Nick Saltarelli, co-founder of Mid-Day Squares. “It was invented based on an assumption of what the Kroger grocery chain believed could be a good use case for a specific target market. The product had decent success but fizzled over time.”
Nick adds, “It wasn’t until the founder’s daughter-in-law’s sister came to them with an intuitive idea she had for her nursery school students to explore their creativity, Play-Doh was born. Same product, different target market.”
Play-doh went on to be a smashing success and one of the bestselling children’s toys of all time. I believe the only difference between both ideas was that one was born of intuition.
Know who to reach—and how—with target market research
Your target market is the lifeline of your business. They’re the type of people who will put money into your bank account, become loyal customers, and refer you to their friends. But to show them you exist and convince them to make their first purchase, you need to know who they are.
Start your research by surveying existing customers, looking into your marketing analytics, spying on competitors, or hosting focus groups. Keep an eye out for trends the people most interested in your products share.
But remember: not all of your target market has to have everything in common. Find the variables that segments of your target market share—like geographical location, income level, or hobbies and interests.
Using that research for strong positioning, messaging, and targeting of your target market is the key to building marketing campaigns that do their job: driving new customers.
Illustration by Till Lauer
Target market FAQ
What is a target market?
A target market is the group of people most likely to purchase a specific product or service. It’s important for businesses to understand their target market, because members of this group are most likely to buy and recommend their products, improving the number of sales.
How do you define your target market?
- Host focus groups
- Survey existing customers
- Keep tabs on competitors
- Dive into existing research
Why is a target market important?
Target markets allow businesses to narrow the scope of their focus and manage a group of customers that are more likely to to buy their product and engage with their brand. Broad, “catch-all” marketing campaigns that attempt to appeal to everyone usually end up feeling generic to most customers.