Target Market Analysis: Reach the Right Audience Every Time

Given the state of the economy and with competition growing exponentially in the digital world, consumers today are much more price-conscious and are doing their due diligence and market research for the best deal before making a purchase online.

So, why wouldn’t you do the same?

In order to effectively convert prospects into users, you need to study them and understand their wants and needs. What are they looking for when they’re doing research online? Which of your competitors are they also actively browsing? Are most of your customers from a specific region or age? Where do you stand in the market at large?

These questions (and many more) can be answered with effective target market analysis. It’s the key to reaching your target audience, offering the most relevant products or services, and using messaging to compel and connect with prospects.

Keep reading, and by the end of this article, you’ll be able to conduct your own target market analysis and take your business to new heights.

What is a target market analysis?

A target market analysis identifies the group of consumers most likely to buy your product or use your service. It helps you decode your audience and find the best market opportunities.

This can be based on their demographics, location, age, gender, job function, or more. It’s an important building block of traditional audience analysis and brand building, as it aims to identify where you stand with your prospects vs. the competition.

Target market strategies look at the common ground shared by the majority of your customers to ensure you are pursuing a high-potential market rather than one with a niche audience.

Once you know who makes up your target market:

• you can tailor your messaging to their persona;
• cater marketing efforts to speak to their needs;
• and even launch new products that solve their pain points.

In addition, target market analysis helps you save time by ruling out prospective customers that don’t exactly match your target audience. For example, if your consumers are mostly young professionals who work in tech, you wouldn’t attempt to break into the 65+ market.

What should be included in a target market analysis?

Your target market analysis should be comprehensive. Your goal is to know as much as possible about your intended audience, including information about the consumers themselves and the market as a whole. Here is a list of factors we recommend also including in a target market analysis:

1. Demographic information about the consumer

Demographics should always be included in a target market strategy. Knowing exactly who your customers are and their challenges is crucial when developing marketing, advertising, and sales strategies.

Demographics are a snapshot of your audience’s observable and measurable characteristics and give you an idea of their lifestyle and buying behavior.

Audience demographics breakdown

Some target demographics you’ll include in your market analysis include:

• Age
• Gender
• Annual income
• Occupation
• Religion
• Ethnicity
• Family size
• Marital status

These are the basics that should be included in any target market analysis. Take it a few steps further by including:

2. Geographic data

The location of your target market is important – should you stay in the geo you’re already operating in or potentially venture into new ones. But it’s not just about physical location. You also need to get an idea of how your target market lives (urban, suburban, or rural setting), as well as any climate factors that might affect buying patterns (for example, long, cold winters vs. warm and sunny year-round.)

3. Lifestyle factors

Are there any habits of your target market that really stand out? What about interests and hobbies or values and beliefs? Lifestyle factors can help paint an accurate picture of who your target customer is and what’s important to them outside of buying your product. Personality traits and attitudes are vital when crafting messaging.

4. Purchasing behavior

Last but not least, you need to understand what drives your target market’s purchasing decisions. Look at product usage patterns and brand loyalty – do they seem to always stick with the same company, or are they open to trying out new products from emerging players? Is the decision-making process long or short (and with few or many decision-makers) when they make their way down the conversion funnel?

How to conduct a target market analysis

Understanding your audience is just the first step in creating a target market analysis. While you may have identified an ideal audience, the market might already be saturated with competition, and there isn’t a strong need for your goods or services.

Let’s take a look at some data to include when conducting target market strategies to make sure the market is ready for you.

Market sizing

Market sizing is all about determining the potential size of a new market – without knowing it, you can’t determine where you’d fit into the pie.

Market sizing is an important part of target market analysis as it allows you to determine your market share, estimate profit potential, decide whether to launch in a new market, and aid in the development of marketing strategies.

With Similarweb, you can efficiently conduct market research for any industry, audience segment, or custom list of companies. Learn more about how that works below.

There are a lot of metrics that go into market sizing, but the three you’re probably most familiar with are TAM, SAM, and SOM. Here’s a brief overview of each:

Total Addressable Market (TAM)

TAM looks at the entire potential value of the overall market (think, the total value of sneaker sales in the US in one year), and gives you an idea of the market’s potential demand and stability.

Serviceable Addressable Market (SAM)

SAM refers to the specific potential audience for your product or offering (in our previous example, we could narrow this down to women’s sneakers sold in the US through D2C marketing channels).

Serviceable Obtainable Market (SOM)

SOM is the proportion of SAM that you’re likely to obtain for your company. Because even though you’ve narrowed down your target market to women buying sneakers from D2C channels or players, you won’t be the only brand competing in that arena.

Learn more about calculating TAM, SAM, and SOM

Market Segmentation

Market segmentation will undoubtedly complement your target market analysis. It’s the process of dividing a specific market into groups based on shared characteristics, interests, or behaviors.

There are four types of market segmentation you can choose from when conducting a target market analysis:

1. Demographic segmentation –  breaks a market or audience down into smaller groups based on characteristics that can be easily identified by various data points, including income, occupation, location, gender, marital status, age, education, nationality, religion, etc.
2. Behavioral segmentation – splits people into groups based on habits like online spending, product usage, check-out status, benefits sought, and patterns in decision-making.
3. Firmographic segmentation – examines organizations using data points like company size, number of employees, locations, size of customer base, industry, and revenue.
4. Psychographic segmentation – Splits a market up according to personality traits, consumer interests, values, lifestyle, and opinions. The best way to conduct this type of segmentation is with a survey of customers or prospects.

Competitive analysis

Target market research isn’t complete without competitive analysis. Anytime you’re hoping to break into a new market, you have to know who already is competing there and where you stand.

When conducting target market analysis, analyze your competitors’ general information (size, location), customer (demographics, preferences), product (pricing, features), and marketing (organic search ranking, campaigns).

It’s also important to check out their website and see how their user experience compares to yours. Don’t forget to check their social media pages and ads as well so that you can compete in that arena too.

Here’s a quick demo to get you started:

Product Focus

The last step in conducting a target market analysis is to look at your product itself. At this point, you’ve collected data on your audience and relevant insights into where the market is. Now you need to understand where your product fits in and what differentiates you from everyone else.

Make sure that you conduct a price analysis of your products against your competitors so that your pricing strategy is aligned with what your target market expects.

Target market analysis examples

Let’s take a look at some target market examples. Keep in mind that when conducting your own, you want to be as specific as possible, and include more information about your competitors, product, pricing, and market size:

Example #1: Fitness Equipment Retailer Target Market Analysis

Target Market: Health-conscious individuals in the US

Demographics:

• Age: 18-65
• Gender: Male and Female

Geographics:

• Urban and suburban areas
• Areas with a culture of outdoor activities or many fitness centers

Lifestyle: 

• Health-conscious individuals who prioritize fitness
• Time-constrained individuals who prefer home workouts

Customer Needs and Pain Points:

• High-quality and durable fitness equipment
• Easy-to-use at-home setup

Market Segmentation:

• Cardio equipment, strength training, home gym setups

Here’s an example of where and how you can find all that information using Similarweb:

Example #2: Men’s Formalwear Clothing Brand Target Market Analysis

Target Market: Modern Professionals

Demographics:

• Age: 25-45
• Gender: Male
• Income: Middle to high-income
• Education: College-educated and above

Geographics:

• Urban and suburban areas
• Business districts
• Cities with a lot of working professionals

Lifestyle: 

• Modern professionals
• Individuals who attend formal events, meetings, and/or work in corporate environments
• Prefer well-tailored and comfortable apparel

Customer Needs and Pain Points:

• Stylish and contemporary formalwear options
• Affordable options, that are still durable and long-lasting
• A variety of purchasing options (for example, Buy Now, Pay Later)

Market Segmentation:

• Suits, dress shirts, footwear, accessories

Here’s an example of where and how you can find all that information using Similarweb:

Using Similarweb for all your target market analysis needs

Similarweb Digital Research Intelligence has a single, easy-to-use tool for everything you need to conduct a target market analysis. Let’s take a quick look at some of the features you could benefit from:

Market Analysis – Demographics

The demographics tab of Market Analysis gives a general overview of the gender and age distribution of any industry and breaks down each of the top websites in that category.

If the Tickets industry in the US is your target market, you’d know from this data that your audience is split fairly evenly among males and females (47% vs. 53%), and you could deduce that they are between 25-54 years old (69% of total traffic is from this age group).

Market Analysis – Players

With our Market Research tools, you can also see your biggest competitors in any given or custom industry as well as geo.

If we stick with the Tickets industry, in the US, two websites, ticketmaster.com and eventbrite.com own nearly 50% of the market share, with the remaining traffic split among other domains. While this means that the market is heavily saturated, it also shows that there isn’t a strong monopoly by any one company.

Market Analysis – Geography

Let’s say you already operate in the US, but you want to know if there is another market with potential. With our Market Intelligence Tool, you can discover the fastest-growing countries in your industry based on the performance of the top 100 websites.

In the example below, Germany has seen the most impressive traffic growth in the last six months, steadily increasing since September 2023. Japan, despite having a high traffic share, has been trending down and could be a risky market to enter or expand in.

Optimize your digital strategy with target market analysis

Effectively transforming prospects into not only paying customers but also loyal and returning ones, is key to any successful business.

To do that, you need to understand everything about your target market, from the demographics of your audience, market saturation, up-and-coming players, and everything in between.

Comprehensive and reliable target market analysis is the key to gathering the right data to make the most informed business decisions. Get started with Similarweb today, the all-in-one market research tool to help you win any market.

FAQs

What is a target market analysis? 

A target market analysis identifies the group of consumers most likely to buy your product or use your service. It provides a high-level overview, including opportunities and risks of new or existing markets.

What should I include in a target market analysis?

When conducting a target market analysis, you’ll want to include specific information about your target audience, including demographics, geographics, lifestyle choices, and purchasing behavior.

How do I conduct a target market analysis? 

When conducting a target market analysis, you’ll analyze the market size, segmentation, and competitors. Don’t forget to include data and insight about your own company, specifically focusing on your product and pricing strategy.