What Is a Target Market Analysis? (With Guide to Create One)

By Indeed Editorial Team

Published June 18, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Companies conduct market analyses when they want to sell products or services in a new market. To do this, they typically review the target audience and consumers to identify the strengths and weaknesses of entering a new market. By knowing more about these analyses, you can increase sales and successfully integrate the company's products and services into a market. In this article, we discuss the definition of analyses for target markets, review what to include in your analysis, and explore how you can create a market analysis.

What is a target market analysis?

A target market analysis is an assessment that determines how to integrate products into specific markets, where it can gain more connections with consumers. These market analyses help companies develop strategies for effective marketing techniques. The target market for companies is their primary consumer base and the consumers who are most likely to purchase products and services. You can also obtain a high-level perspective of companies with analyses for target markets, which outline opportunities and obstacles for organizations that want to enter that market. Here are the benefits associated with the analysis:

  • Identify valuable markets: You can benefit from using these analyses because they can help you determine each market's potential value to an organization. You can also discover new markets through research methods like surveys to determine whether some products or services can perform well in multiple markets.

  • Develop buyer personas: It may be beneficial to use target market analyses because you can develop a buyer persona of the ideal consumer. This can help you identify components of the company that you can optimize for specific audiences.

  • Discover gaps in the market or industry: You can obtain information about areas for improvement to help develop potential components of the market in which you can expand products or services.

  • Assess viability: You can use market viability analyses to determine whether new products or services are valuable and realistic. To do this, you can get feedback from potential consumers in the target market to determine the success of new products and services.

  • Improve company strategy: You can improve company strategies with the information obtained from target market analyses by adjusting an organization's tactics to meet the needs or demands of that market.

What to include in target market analyses

The information you choose to include in the target market analysis can determine the overall success of goals and integration of products and services into a new market. Here's a list of the components you can include in the target market analysis:

Target market

It's beneficial to include information about the target market because it informs the reader about which market you're reviewing in the analysis. This also provides you with the information required to determine the effectiveness of introducing new services and products into the target market. Here are some factors you can include when reviewing a target market:

  • Age of potential consumers

  • Gender of potential consumers

  • Income of potential consumers

  • Lifestyle of potential consumers

  • Geographical location of primary consumers

  • Preferences of consumers

  • Market size

  • Purchasing potential

  • Motivations

Related: Target Market Examples (With Considerations for Your Own)

Marketing ideas

It's beneficial to review potential marketing ideas and campaigns in your analysis because this provides you with information about whether you can attract potential buyers. This information typically contains data about the characteristics you plan to target in marketing campaigns, like the age and gender of the target audience. You can then establish how you plan to customize the campaign for the target audience.

Market testing and results

You can develop market tests like surveys and product tests to obtain information about how the target audience and market respond to the products. After you complete the testing, you can compile the data into target market analyses. This allows you to identify potential opportunities in the market and whether the products or services you want to introduce are realistic.

Related: What Is Market Positioning? How to Develop a Strategy

Lead time

The lead time refers to the amount of time required for companies to process and ship products that the customer later receives. It's beneficial to include this information in the analysis because it can help you find potential improvements to the shipment and delivery process and improve the experience for consumers. For example, if you observe an increase in wait times for customers who ordered products, you can make adjustments that help reduce the wait times for orders.

Companies can also benefit from identifying the different times for individual orders compared to bulk orders because it helps identify the efficiency of shipment processes in different circumstances. For example, you can identify whether the company experiences longer lead times when customers order in bulk.

Competitive analysis

You can benefit from identifying the competitors within the market because this provides you with information about the engagement they receive and whether you have the potential to obtain similar or stronger engagement. To conduct an analysis of competitors within the market, you can identify how they attract consumers and market their products or services. You can then develop a report that identifies how the company can outperform competitors and the potential obstacles you can face.

How to conduct target market analyses

Here's a step-by-step guide to help you conduct target market analyses effectively:

1. Conduct market research

It's important to conduct market research on the industry and ideal market because you can identify the potential obstacles related to introducing products and services into a new market. You can also identify the strengths associated with the company, its outlook, and trends. You may also want to develop visual representations of the research, like charts, graphs, and reports that summarize the data for the target audience.

Related: What Are Market Entry Strategies? (With Types and Tips)

2. Identify your overall market

When conducting your analysis, it's beneficial to identify the overall market and the demographics in which you want to insert the company's products and services. You can develop detailed descriptions for each product and service and how they can interact with the target audience. You may include all demographic features or groups with which you want to work.

3. Segment your target demographics

You can segment the market into specific divisions, which provide you with information about how products and services can impact individual components of the market. To do this, you can test products with different audiences and observe how they interact. Some companies send surveys to the members of groups to review which audiences show the most interest. You can then optimize products and marketing campaigns for these audiences.

Related: What Is a Market Segment? Definition, Benefits, and Steps

4. Select your ideal market

You can select your ideal market based on the information obtained from the product testing and segments. This requires you to consider which market and audience is ideal for delivering and selling products or services. Many companies choose the audience that reacted most favourably to the tests and surveys.

5. Make projections

You can collaborate with the sales and marketing teams to develop projected lead times and sales. To do this, you can review any data or metrics collected during the product tests and surveys. From here, it's also beneficial to generate a report for stakeholders and other members of the company that defines all projections and any obstacles you may experience. The final document you create is typically the analysis, which also discusses all resources you may require to introduce the company's products and services into new markets.

To develop a successful market analysis of the target audience, you can also consider the amount consumers might agree to pay for products. You can include this information in the analysis based on the survey data or focus groups established because it helps the company review the perceived value of products. This can also identify potential obstacles within the market. For example, if the target audience or consumers within a market typically pay less for products, it may be more difficult to insert costlier products into the market.

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