A company’s target market is the set of customers it chooses to serve out of all the possible customers it could serve in a given area. Companies that do business in more than one region or sector usually have multiple target markets.
Choosing target markets helps companies focus on the opportunities that offer the best chances of success and profitability, which is important because no business can be all things to all people.
The process of selecting target markets is called segmentation. The combination of products, pricing, places and promotions a company uses to reach its targets is its marketing mix. Segmentation and deciding on the right marketing mix both require market research—knowledge of customers’ needs, habits and pricing sensitivities.