The key difference between market segmentation and target market is that the market segmentation refers to the identification of specific consumer groups for the product, whereas the target market refers to the potential customers for the particular product or service.
Both market segmentation and target market are very important steps in the marketing process. Although they are similar processes, market segmentation should always take place before deciding the target market.
CONTENTS
1. Overview and Key Difference
2. What is Market Segmentation
3. What is Target Market
4. Relationship Between Market Segmentation and Target Market
5. Side by Side Comparison – Market Segmentation vs Target Market in Tabular Form
6. Summary
What is Market Segmentation?
Market segmentation is the process of dividing a market of potential customers into groups or segments depending on different characteristics. Market segmentation becomes necessary when a particular company decides to identify a specific type of consumer for their product or service.
In market segmentation, we divide the customers into small groups based on factors like age, income level or behavior. Later on, these segments are used to optimize and advertise products.
Market segmentation forms subgroups of a market based on the following factors.
- Demographics
- Needs
- Priorities
- Common interests
- Personal traits
Moreover, the above factors help us to understand the target audience.
There are several advantages of market segmentation. Firstly, businesses can strengthen their marketing strategies and improve their products and services. Additionally, market segments can affect new product development stages. For example, companies can introduce new product features from the information for different age categories or niche products for high-income levels.
Steps of Market Segmentation
1. Conducting Preliminary Research
2. Determining How To Segment the Market/ Deciding criteria
3. Designing the Study
4. Creating Customer Segments
5. Testing and Repeating
What is Target Market?
Target market is a cluster of potential customers to whom a business needs to sell products or services. Target market is a part of the total market. Consumers who belong to target market share similar characteristics like buying power, demography and income levels.
Identifying the target market is a basic step in the marketing process, and it is essential in planning the marketing strategy. Skipping this step is a waste of money and time for the company.
Businesses need to define the target market for their product as they need to understand to whom the product will appeal and who will purchase their product the best. Normally, a target market is identified once a company evaluates all possible market segments and defines which would be the most suitable, and therefore profitable to the business.
Generally, the target market is tested before launching a new product. In other words, businesses need to identify the target market in the testing phase. Once a product is released, a company needs to monitor the target market through sales tracking, customer surveys, and various other activities to understand the customers demand.
What is the Relationship Between Market Segmentation and Target Market?
Both market segmentation and target market are major concepts of a marketing plan. Furthermore, it is the foundation of a marketing strategy. They are related to each other. One has to identify the target market only after a successful identification of market segmentation. It is almost impossible to market a product before conducting market segmentation and determining a target market.
What is the Difference Between Market Segmentation and Target Market?
Market segmentation takes place when a company decides to identify the specific customer type for their product or service, while the identification of the target market takes place when the company identifies which customers have the ability to buy the product. So, this is the key difference between market segmentation and target market.
In market segmentation, it is required to research the entire market as a whole and divide consumers into separate groups depending on common characteristics. In contrast, target marketing is targeting the selected best consumer group to sell the product. Moreover, market segmentation depends on variables such as behavior, demographics (e.g., gender, age, education, and income), geography, and psychographic features, or lifestyle patterns and personality traits. However, target markets may have similar characteristics. Therefore, we can consider this as another difference between market segmentation and target market.
Summary – Market Segmentation vs Target Market
Both market segmentation and target market are very important steps in the marketing process. However, the key difference between market segmentation and target market is that the market segmentation refers to the process of identifying a specific consumer group, while the target market refers to the potential customers for a particular product or service.
Reference:
1. “What Is Market Segmentation? 5 Focus Areas for Max ROI.” Qualtrics, Available here.
Image Courtesy:
1. “Bases for segmentation” By BronHiggs (CC BY-SA 4.0) via Commons Wikimedia
2. “Circle-spoke-Diagram-Target-Market” By CS Odessa – (CC BY 4.0) via Commons Wikimedia