Market segments
A distinct group of customers with similar characteristics and similar wants or needs. By dividing the market into different segments, it is easier for a business to analyse which groups of customers buy the product and then to target these customers more distinctively.
Target markets
The market segment that a company aims to sell its product to, each with different marketing mixes.
Exam tip: One syllabus strand is also to be able to identify who the target market is, and what market segments a company might have in a case study.
Frequently Asked Questions: Market Segmentation vs. Target Market
A **market segment** is a broader group of potential customers who share one or more common characteristics (like demographics, geography, behavior, or psychographics). **Target market** is a *specific portion* of one or more market segments that a company decides to focus its marketing efforts on.
**Market segmentation** is the *process* of dividing a large, heterogeneous market into smaller, more manageable segments based on shared characteristics. The **target market** is the *specific outcome* of this process – the selected segment(s) that the company will serve.
**Market segmentation** is the *act of dividing* the market. **Target marketing** (or targeting) is the *act of selecting* one or more of these segments to direct marketing activities towards. Segmentation is about breaking down, targeting is about choosing who to pursue.
**Customer segments** are groups of existing or potential customers identified by shared traits. The **target market** is the specific group of customer segments (or part of a segment) that a company actively decides to focus its marketing and sales resources on for a particular product or service.
Imagine a company selling athletic shoes. They might identify several **market segments**: runners, basketball players, gym-goers, casual wearers, etc. For a new line of high-performance running shoes, their **target market** might be specifically the "serious runners" segment, focusing their marketing on that group's needs and preferred channels.
A **market segment** defines a group of people who *could* be potential customers based on characteristics. The **target audience** is a more specific group within the target market (or even a segment) that a particular marketing *message* or *campaign* is aimed at. For example, within the "serious runners" target market, a campaign for a new shoe might target the "marathon runners" audience.
