When creating an advertising and marketing plan for your small business, you need to take two key factors into account: your target market and your target audience.
While these terms might sound the same, they actually have differences—and for small businesses looking to make more sales, understanding both is key to boosting market share (especially for local brands). A target market is a broad group of potential customers who share common characteristics such as age, income, or geographic location. Meanwhile, a target audience is a specific segment within that target market identified through market research and target market segmentation.
In this guide, we’ll break down the target market vs. target audience conversation in detail; we’ll define both, explore some nuances related to each, compare them in-depth, and teach you how to identify them. Understanding the differences between your target market and your target audience will help you level up your advertising efforts and secure more customers.
What is a target market?
To effectively compare target market vs. target audience, we first need to define our key terms. Let’s start with the former.
Simply put, a target market is a large group of people you think would be most likely to buy your product or use your services.
Target markets are somewhat broad, and they typically share a common characteristic (or group of characteristics) like:
- Age range
- Household income
- Gender
- Industry or occupation
- Education level
- Geographic proximity
- Interests or hobbies
- Expertise level
- Values
- Behaviors (e.g., social media use, gym attendance, or diet)
If your brand sells a wide variety of products, you might identify your target market using a few of these characteristics. If you run a local nail salon, for instance, your target market might include people with disposable income who live near your physical location and value self-care.
If you only sell one product or service, however, your target market might be narrower. If you sell electrical supplies (like wire and conduit), for example, your target market might only include licensed electricians in your area.
Identifying your target market is the first step to advertising to the people most likely to buy your products. A local nail salon wouldn’t want to target people who live too far outside of their geographic range, and an electrical supplies company wouldn’t want to target people who work in tile installation, for instance.
Making efforts to identify your entire target market will help you optimize your marketing and advertising efforts (and spending) and boost your return on investment (ROI).
Market segmentation
The characteristics listed above (age range, household income, and so on) generally fall into one of four categories called market segments:
- Demographic segments – Demographic information includes age, gender, income, industry, and education level. Demographics are somewhat built-in to a portion of your target market—they’re things that, while they can change, are somewhat consistent over time.
- Geographic segments – Where your customer base is located matters—especially for small, local businesses with brick-and-mortar storefronts. However, if you have a strong local presence and a thriving e-commerce store that caters to a wider geographic range, consider targeting both of these groups in your marketing and advertising approach.
- Psychographic segments – Going beyond demographics, psychographic elements describe customers’ interests, expertise level, and values. For instance, a nail salon should target audiences who show an interest in self-care or value their nail health.
- Behavioral segments – In an effort to hone in on your target market, you might consider even more niche characteristics your customers share: their social media habits, how they spend their free time, and how they usually shop (i.e., online, in-person, or both).
Taking all four of these elements into account can help you develop a clear, specific picture of your target market—even if your market is somewhat large.
What is a target audience?
Now, let’s define our second key term: the target audience.
A target audience is a smaller group that fits within your target market; in other words, an audience is a segment of your market.
Small businesses might want to identify individual audiences inside their overall market to best tailor their marketing efforts to specific groups. While segmentation is the process of identifying these audiences (and we’ll break that concept down in the next section), targeting involves creating marketing and advertising materials and approaches that play to a specific audience.
A target audience shares specific characteristics—not unlike your target market. However, audiences typically share more specific traits. What might that look like?
- Age – If you run a nail salon, your target market likely includes everyone from tweens to elderly people. However, different age groups within your target market are likely looking for different things when they visit your salon—tweens might be looking for simple services (like basic manicures and pedicures), young adults may be on the hunt for more elaborate designs or specialty services (like gel or acrylic manicures), and older customers might return to their classic favorites on every visit.
- Income – Again, a nail salon might consider its entire target market to be anyone with enough disposable income to spend on self-care. However, marketing your high-value services (like full sets of elaborate, 3D gel nails) and your more affordable basics (like manicures with regular polish) might require different approaches—and an understanding of what each income group is looking for in a nail salon.
These are just two examples of more niche target audiences within a target market.
Audience segmentation
The process of identifying specific audiences inside your target market is called audience segmentation. Segmenting your market into specific audiences is crucial for small businesses, especially ahead of a marketing campaign—it can make the difference between significant engagement and lost investment.
For example, take a look at Dementia UK: a non-profit organization that recently shattered its expectations by advertising on Nextdoor.
To increase engagement with their advertising campaign, they specifically targeted seniors looking to create wills and other end-of-life documents during Free Wills Month, a period when various UK-based charities offer free will preparation services for people over the age of 55.
By zeroing in on the specific target audience looking to get their end-of-life affairs in order, they boosted their overall impressions and gained insights to support their future marketing pushes.
Key differences between target market and target audience
Let’s get into the meat of our guide about target market vs. target audience—how do they compare?
- Target markets are large, and target audiences are smaller – Let’s return to the nail salon hypothetical. While a salon’s target market might be relatively large (encompassing most people who live in a specific area), they might want to specifically advertise to individual audiences within that market: people in certain age groups or with certain budgets, for instance.
- Target markets are broad, while target audiences are niche – Your target market might represent a wide variety of characteristics: one or more geographic locations, a variety of age groups, multiple income levels, and various buying behaviors. Target audiences within your market are more niche: they’re within a small age range, live in one neighborhood near you, make enough to afford one specific service, or shop online instead of in person.
How do brands discern between their target market and target audiences? For a master class, take a look at Hoover, a well-known vacuum brand. While their target market is quite broad, they recently targeted one specific segment of their market: people who recently moved.
“New Movers” have unique needs. Perhaps they had to leave their vacuum behind during their move, or maybe they needed a new one for a move-out clean. Hoover identified these unique needs and created a targeted ad campaign specifically directed toward New Movers—a campaign that performed above expectations.
How to identify your target market
Identifying your target market is relatively simple:
- Assess your product or service – Think about your product or service—who was it made for? Who do you think might benefit from it? Who can afford to use it?
- Use analysis tools – To get a complete picture of your market, consider using tools like surveys, focus groups, or data analysis platforms to identify unexpected or previously unidentified prospects. See more on how to conduct a customer behavioral analysis.
- Test your market – To test your assessment, consider offering a promotion (such as a discount code advertised on a social media platform like Nextdoor) and gathering demographic, geographic, psychographic, and behavioral data about who took advantage of the promotion.
How to define your target audience
Identifying your target audiences is a somewhat more in-depth process. One of the best ways to segment your market into audiences is to assess your customer data. Some potential sources for that data include:
- Social media analytics – If you create a Nextdoor Business Page, you can use the platform’s built-in data collection and analysis tools to determine who is following and liking your content.
- Customer feedback – Read your customer reviews and surveys to get a feel for what your customers are looking for in your product or service. If you identify trends in the reviews, you might be able to clarify a new audience segment.
- Engagement metrics – If you have a website or e-commerce store, you can mine these sources to learn more about your visitors and their engagement. Again, trends in this data might help you formulate specific audience segments.
Hone in on your target market and audience with Nextdoor Ads Manager
Understanding target market vs. target audience is a must for any small or local business looking to make the most of their marketing and advertising efforts—and make sure their products and services continue to meet customer expectations.
While effective targeting is paramount, it isn’t always easy. Fortunately, leveraging tools like Nextdoor Ads Manager makes it simple; with just a few clicks, you can explore customer data, boost engagement, build real relationships with local customers, and grow your business.
Ready to revolutionize your local marketing and build a strong sales base? Get started with Nextdoor Ads Manager now.
Sources:
- Investopedia. Target Market: Definition, Purpose, Examples, Market Segments. https://www.investopedia.com/terms/t/target-market.asp
- Adobe. How to Find Your Target Audience in 5 Steps. https://www.adobe.com/express/learn/blog/target-audience
- Corporate Finance Institute. Market Segmentation and Targeting. https://corporatefinanceinstitute.com/resources/management/market-segmentation-and-targeting/
