How To Write An Effective Business Plan In 10 Steps
This blog post will walk you through the steps of writing a business plan and provide you with tips for creating a practical document to help your business ...
target market
To begin, describe your <anchor>target market</anchor>. Your target market is the group of individuals you intend to sell to. Make an effort to be as precise as possible. Developing a sales and marketing plan to reach your customers will be easier if you have a good target market.
Identify your target market | business.gov.au
Identify your target market \| business.gov.au

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- Identify your target market


# Identify your target market

_Last Updated: 18 January 2024_

Identifying and understanding your customers is an essential part of your business and marketing plan. Not everyone is your potential buyer, so it’s important to have a clear understanding of your target market early on. Learn how to analyse your market and define your customer segments.

On this page

- [What is a target market?](#what-is-a-target-market)
- [Why have a target market?](#why-have-a-target-market)
- [1\. Research your market](#research-your-market)
- [2\. Segment your market](#segment-your-market)
- [3\. Define your target customers](#define-your-target-customers)

## What is a target market?

A target market is a group of potential customers that you identify to sell products or services to. Each group can be divided into smaller segments. Segments are typically grouped by age, location, income and lifestyle. Once you’ve defined your target audience, you’ll find it easier to determine where and how to market your business.

## Why have a target market?

For your business to thrive you need to know who your customer is. Knowing your customers will help you to target customers who are willing to pay for your product or service. This is a much more effective and affordable way to reach your customers and generate business. You’ll be wasting resources if you aim too broadly, or find out too late that there aren’t enough customers for your product or service.

By understanding your market you can promote your product or service more effectively to the right customer group. You will know:

- where they are
- which media channels they use
- what their buying habits are
- how to tailor your marketing to motivate them to buy your product or service.

## 1\. Research your market

To define your target market effectively you’ll need to do some research. Gathering statistics and other market research data helps you to understand your potential customers and their needs and make better marketing decisions.

[**Find out how to research your market.**\
\
Research your market](/marketing/research-your-market)

## 2\. Segment your market

Work out if your market is large enough and accessible. Then segment the market into groups of buyers with similar preferences and buying habits. For example, the athletic shoe industry is broken up into several segmented groups – first by gender, then by the activity or sport.

Once you’ve identified your market segments, you can define your ideal customer for each segment.

## 3\. Define your target customers

To define your target customers, ask yourself the following questions:

### Who your customers are

- Are your target customers male or female?
- How old are they?
- Where do they live?
- What is their marital status?
- Do they have children? How old are their children?
- What is their education level?
- What do they do for a living?
- What is their average income?

### Customer interests and buying habits

- What motivates a customer to make a purchase?
- What are your customers’ common interests?
- Who makes the buying decisions?
- How often do they purchase a product?
- Do they shop online or prefer to see their product before they buy?
- How long does it take them to make a buying decision?
- What form of media does your target rely on for information?
- How far do they travel to make a purchase?
- What other products do they buy?

Then target your marketing efforts to explain how your product and service will fit into their lifestyle and how it best meets their needs.

## Read next

[**Find out how to develop a marketing plan for your business.**\
\
Develop your marketing plan](/planning/business-plans/develop-your-marketing-plan) [**Learn how to market your business.**\
\
Business marketing](/marketing/business-marketing)

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