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Target market analysis: Why it matters and how to perform it

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No business can be all things to all people. Luckily, your business doesn’t have to be. You can focus your marketing and sales efforts on a specific target market—the group of consumers you want to have using your product the most.

To identify your ideal group of consumers and understand them fully, you’ll need to perform a target market analysis. We’ll show you how, using surveys, but first, let’s review why this type of analysis is essential in the first place.

What is target market analysis?

We define target market analysis as a study of how your product or service fits into a specific market of potential customers. Your core customer base, or target market, is the group of people you have found—through insights from your market research—that is most likely to purchase your products and services. Rather than make assumptions about what these potential customers want, like, and need, you need solid data to make sound business decisions. This is where a target market analysis comes in. By examining your target market, you’ll find out what segments to focus your marketing and advertising on and how to appeal to them.

Benefits of target market analysis

Target market analysis determines where, and how, your product fits into the real-life market. With this information, you can:

  • Determine which markets are most and least valuable to your business
  • Develop accurate buyer personas
  • Find gaps in the markets where your products might fit
  • Evaluate the viability of a new product
  • Find exciting new markets to explore
  • Build a tighter, more specific business strategy

Let’s explore these benefits using a real-world example. Say you’re starting a pie business. Performing target market analysis can help you choose the best location for your bakery, land on the optimal price point for your pies, design appealing advertisements, and place them where the right people will see them.

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Designing a target market analysis strategy

A survey that includes the right questions in the right order can make all the difference in effectively conducting target market analysis.

What to include in a target market analysis

A good target market analysis will consist of a mix of demographic and psychographic questions. These questions are intended to identify who your customers are, what they’re interested in, when they make purchase decisions, where they are located, why they buy products and services from you and your competitors, and their lifestyles and purchasing habits. Learn this information and more with your analysis.

Industry description and outlook

Start by compiling information about your industry as a whole. Statistics about size, trends, outlook, and growth potential. This will provide you with a good basic understanding of your industry and a baseline for where your company falls in the bigger picture.

Target market

As we mentioned earlier, your target market is a group that you have identified as people who are potential customers for your business. Your target market will take into account demographics such as age, gender, income, and geographical location. You are welcome to use our target market demographics survey template to help you get started.

Market test results

Analyze your market research to determine how your target market responds to various aspects of your product or service. This is crucial information to include in your target market analysis reports.

Competitive analysis

We cannot stress enough how important it is to take a detailed look at your competition. Identify your competitors and see what methods they’re using to engage the market. What segments are they appealing to? How are they advertising? What do their marketing efforts look like? Include this information in your reports to aid in identifying how you can surpass your competitors and what challenges you may encounter along the way.

How to identify your target market

You’ll need to collect both qualitative and quantitative information to identify your target market. Quantitative data are numbers, facts, and statistics about the demographics of your target market—basically, numbers that can be counted and graphed. Qualitative data include customer sentiment, attitudes, what drives them to purchase, and other psychographic information. To acquire both quantitative and qualitative data, you’ll need to do the following.

Conduct market research

Use surveys to gather information about your customers and potential customers. Find out why they are (or aren’t) shopping with you. Find your target audience with SurveyMonkey Audience to avoid having to find your survey respondents. Then, use the collected data to create customer segments based on a selected mix of demographic and psychographic characteristics.

Consider competitors

Get a clear picture of the competitive landscape. What companies offer products or services similar to yours? What are their prices like in comparison to what you charge? What is their marketing like? How do they advertise? What are they doing differently? Are they trying to attract the same customers you are? If the competition is well established and successful, you may want to avoid targeting the same customer segment.

Analyze consumer trends

A trend is defined as a general direction in which something is developing or changing. Consumer trend analysis includes data on customer satisfaction, aversions, needs, preferences, opinions, buying behavior, and more. The data is examined in relation to customers’ reactions to product trends.

The way we address the customers’ needs and desires with products and services can change frequently. These changes, or product trends, emerge when there are points of tension between what customers want and what is currently available to them. Product trends are driven by basic needs, the desire for change, and innovation. When these three components come together, customers have new expectations. 

How to perform a target market analysis

Target market analysis hinges on attaining information about your customers and potential customers. Surveys are a great way to gather demographic and psychographic information for use in your analysis. 

Gather information on target customers with target market analysis surveys

Target market analysis is an evaluation that helps you identify important characteristics of your target market for the purpose of dividing it into segments based on characteristics you’ve chosen. This assessment helps you identify the customers most likely to purchase your product as well as the best way to reach them.

Questions to ask:

Have your end goal in mind when formulating survey questions. The questions should be brief, concise, and aimed at pinpointing the information you need. 

Consumer behavior questions

Start your survey with consumer behavior questions that ask about their habits, attitudes, brand awareness, and their brand loyalties. The questions can be specific to your product or they can be general inquiries about where, when, and how the respondent shops.

Examples of consumer behavior questions:

Are you the primary decision-maker in your household for electronics purchases?

  • Yes
  • No

How do you typically find out about brands in this category? (Check all that apply.)

  • Social media
  • Television commercials
  • Recommendations from friends or family members
  • Online advertising
  • Search engine
  • In-store shopping
  • Other (please specify)

What factors are most important to you when you choose an electronics brand? (Check all that apply.)

  • Familiarity with the brand
  • Price
  • Durability
  • Online reviews
  • Customer service
  • Warranty
  • Other (please specify)

Where do you usually purchase electronics?

  • Online retailer
  • Official brand website
  • In store
  • Other (please specify)

What electronic brands do you typically buy? (Check all that apply.)

  • Sony
  • JVC
  • LG
  • Panasonic
  • Toshiba
  • Samsung
  • Apple
  • Other (please specify)
Disqualifying questions

Keep in mind that you can use your first consumer behavior question to disqualify respondents from taking your survey (if their answer makes it clear that they aren’t the right fit). For example, if we ask “how often do you purchase pie from a grocery store, bakery, or restaurant?” and the respondent says that they don’t purchase pie, we can disqualify them from taking the rest of our survey.

We call disqualifying questions “screening questions.” To learn more about using them in your surveys, check out our guide.

Examples of disqualifying questions:

If your survey is directed at the segment of your customers who own Bichon Frise puppies, you can work your way to your disqualifying question so that respondents aren’t tempted to give the answer they think you want. Some respondents may give incorrect answers to stay on the survey with the goal of collecting compensation at the end.

Which of the following do you currently own?

  • Cat 
  • Dog
  • Fish
  • Hamster
  • I don’t have pets

If they select “Dog,” your next question might be:

How old is your youngest dog?

  • Under 2 years
  • 2-4 years
  • 5-7 years
  • Over 7 years

Once you’ve established the dog is a puppy, you can narrow it down to breed:

What breed is your youngest dog:

  1. German Shepherd
  2. Golden Retriever
  3. Great Dane
  4. Bichon Frise
  5. Dalmatian
  6. None of the above

In any of these examples, if the respondent did not choose the answer directed towards your customer segment, they would be directed away from further questions and thanked for their time.

Demographic questions

Once you’ve finished asking consumer behavior questions, ask for more basic background information: age, gender, location, family, income, etc. These demographic questions are the building blocks of your buyer personas.

Want to see how these survey design tips work in action? Check out our target market demographics survey template, which you can edit to fit the specifics of your target market analysis.

Examples of demographic questions:

Gender: How do you identify?

  1. Man
  2. Non-binary
  3. Woman
  4. Prefer to self-describe below

How old are you?

  1. 18-30 years old
  2. 30-45 years old
  3. 45-57 years old
  4. 58+
  5. Prefer not to answer

Please specify your ethnicity: 

  1. Caucasian 
  2. Black
  3. Latinx/Hispanic
  4. Asian
  5. American Indian
  6. Prefer to self-describe (provide space for short answer)

What is the highest level of education you have completed?

  1. Some high school
  2. High school
  3. Associates degree
  4. Bachelor’s degree
  5. Graduate degree
  6. Prefer not to answer

What is your annual household income?

  1. Less than $30K
  2. $31K-$50K
  3. $51K-$75K
  4. $76K-$200K
  5. $200K+

What is your current employment status?

  1. Employed full-time
  2. Employed part-time
  3. Unemployed
  4. Retired
  5. Prefer not to answer

Demographic questions are quite personal, so you may choose to give your respondents a “prefer not to answer” option if you can make do without the data. Put these more sensitive questions toward the end of the survey. They are generally off-topic with the rest of the questions, and if the respondent has already answered the rest of the survey, they are more likely to respond to them.

Create market segments

Once you know your target market, it’s time to break it into smaller segments based on the criteria you’ve chosen. Your segment will likely be defined by age, social class, location, shopping habits, and specific interests.

As an example, if you were a skincare company marketing an anti-aging cream, you may want your market segment to be women over 40 years old who live in the city or suburbs and are known to spend on skincare but aren’t loyal to one particular brand. If you find that only a portion of this segment is converting to sales, you may need to look at more psychographic data to find out what is driving some of your customers to purchase and others not to so you can resegment your group.

Make projections

Using your collected data, you can make informed projections about potential sales, marketing, and advertising costs. Make sure these are outlined in detail in your reports.

Create your market analysis

Present your findings with an industry description and outlook, target market and segmentation, market research, lead times and projections, and an analysis of your competition.

Here’s a target market analysis example for a sporting goods company that wants to market its new line of fashionable athletic shoes:

Age: 18-25
Gender: Female
Income: Less than $50K annually
Lifestyle: In high school or college, single, likes to “hang out” with friends
Geographical location: Suburbs, cities
Preferences: Cares about appearance, takes risks with fashion, likes statement fashion pieces, follows fashion trends on social media, sees themselves as leaders

This is just a peek at the target market. A full target market analysis includes charts, graphs, research data, sources, industry information, and explanations of whether the new product line will or won’t be well-received and successful—and why.

Tips for surveying the right people

Now it’s time to identify your target market by putting your survey in front of as many types of potential customers as you can.

To reach the best audience for your target market analysis, follow these steps:

Narrow your pool of potential respondents

Sometimes, you already know who your buyers are or aren’t. For example, it’s pretty difficult to sell pies to someone two states away. Before you begin your target market analysis, you might need to limit your respondents by location or by some other demographic categories.

Calculate your necessary sample size

If you want statistically significant results from your target market analysis, a significant number of people need to complete your survey. To find out just how many, use our sample size calculator.

Put your survey in front of the right people 

An unbiased audience gives you the most useful survey results and the most accurate target market(s). To reach unbiased respondents, use a 3rd-party survey panel, like SurveyMonkey Audience. Our tool can collect responses from individuals who match your target audience criteria—within days.

How to analyze your survey results

The survey results are in. Now what? To identify and understand your target market, use filters and compare rules.

  • Filter your survey data to uncover your buyer persona and that of your competitors. Say you filter by the question, “which of these bakeries have the best pie?” and you select respondents who chose your business. You can then look at the rest of their responses to better understand who your persona is, how they behave, what they care about, etc. In addition, you can filter by respondents who selected a competitor and perform the same analysis to better understand their buyer persona.
  • A compare rule helps you tease out the differences between different buyer personas. Say you want to know where people who eat pie more than once a week purchase that pie versus people who eat pie less than once a month. Add a compare rule to the responses you want to compare (“more than once a week” and “less than once a month”). The compare rule will show you, side by side, how these heavy and light pie eaters answered your other questions, including those about where they eat pie.

Target market analysis requires thoughtful survey design, an unbiased audience, and careful analysis of the results using filters and Compare Rules. If you can do each of these things well, you’ll understand your target market, and ultimately succeed in developing your product, positioning it, selling it to consumers, and more.

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