If you asked this question to a business consultant, a marketer, and then a UX designer, each would answer differently. Ultimately, a target audience is just another tool and how specific it should be depends on your goal. From broadest to narrowest, here are three target audience tools and why you might choose each one.
These three metrics are a set of business forecasting tools used to understand how large your business' total market could be. Use cases include projecting growth, soliciting investment, or planning how to enter a new market.
Of the three, Total Addressable Market (TAM) is the largest. Identifying your TAM requires imagining yourself as a monopoly. In total, how many people face the problem your business solves?
From there, Serviceable Addressable Market (SAM) is the portion of your TAM who would find your solution to the aforementioned problem appealing. This takes into account factors like niche and business model.
Finally, Serviceable Obtainable Market (SOM) is the portion of your SAM that would likely choose your solution over another, taking the competitive landscape into account. It is the narrowest, most easily obtainable, and most short-term of the three metrics.
Since these values are calculated from largest to narrowest, an incorrect TAM will lead to an inaccurate SAM and SOM. Whether relying on outside market research or your own data, validating your sources will ensure that the projections are meaningful decision-making tools.
Effective branding is a long-term investment, strategized based on your business' future goals. By having a clear vision of your Serviceable Addressable Market, you can push your company to aim higher and communicate not just to those customers who you want to buy in the short term, but also for longer-term prospects. This ensures that, down the line, they already know who you are and what you stand for.
While aiming for your SAM helps guide your long-term brand awareness strategy, advertising to your SOM should have higher frequency and urgency. This aligns with the shorter-term, more acquisition-focused purpose of the Serviceable Obtainable Market.
It's easy to see that consumers who already purchase from a direct competitor would fall inside your TAM. However, many others have the same problem but handle it in less obvious ways. For example, if you sell a product to fight acne, your TAM encompasses not just those who purchase competitors' products, but also those who use DIY at-home approaches or choose not to treat it at all.
It's easy to underestimate just how vast a Total Addressable Market can be. In competitive industries, unless you are a market leader or provide an extremely disruptive solution, you may find your SOM to be a fraction of a percent of your TAM.
While brand strategy should aim towards long-term goals, individual advertising campaigns will dilute their effectiveness by targeting a broad audience. In most cases, hidden inside that larger audience are multiple distinct groups of people who will each respond better to different messaging strategies.
Target markets are tools for marketing and for developing products or services. They identify which subsections of your TAM, SAM, and SOM are worth what level of investment of your time, money, and effort.
A target market is a group of people who share particular characteristics. Typically, those characteristics are a combination of demographics--like age or income-- and psychographics-- like values or lifestyles. Most businesses have multiple target markets, and the process of dividing these out is known as segmentation. Segmenting into multiple target markets helps you serve each group of people more effectively and market to them in ways that resonate more deeply.
Target markets are a way to describe an audience, not invent one. And although numerical data is extremely valuable, customer interviews are often where the real behavioral insights occur. By hearing your customers' language and seeing their emotions, you gain a distinct human advantage. It's worth the time to listen to the people you're trying to speak to.
Two segments with identical demographics may respond to vastly different brand messaging if their motivations for purchase are different. For example, consider two individuals each purchasing an entry-level DSLR camera. Same gender, same age, same income level. One wants a new hobby-- an excuse to get outdoors more often and enjoy the scenery. The other is considering a career change and wants to see whether event photography is right for them. Same demographics, same product, vastly different reasons behind their choices. Vastly different branding to target each most effectively.
There's one major similarity between B2B services and kids' toys: the person spending the money is not the one using the purchase. In cases like these, multiple target markets work in tandem, so effective branding must speak to the motivations of both decision-makers and end users.
Once you've got your business' main target markets nailed down, consider which segments apply to which components of your marketing strategy. Your audience on Instagram has a different subset of people than those on Facebook, and the same applies to every avenue your company communicates in. Understand those differences to tailor your branding more closely to those who will view the content.
Demographic segmentation is straightforward because it is easily quantified--and sometimes it goes hand-in-hand with certain psychographic characteristics. Focusing solely on demographics, however, could mean you miss out on emotional reasons why your customers purchase. Those insights into your audience's motivations are the building blocks of strong branding.
Missing out on a segmentation opportunity can be costly. Segmentation enables your branding and messaging to grow more relevant to any given individual in your audience. People are far less likely to purchase a generic solution to a broad problem than a solution custom-made for their particular problem.
On the other hand, finer segmentation comes at a price, requiring a greater time investment if customers are grouped into more categories. If taken too far, it can also overcomplicate messaging, making campaign structure and brand management too difficult to control. The goal is to find the sweet spot based on your business' needs.
Buyer Personas are empathy tools, transforming impersonal target market segments into tangible profiles. By telling a story about who your business is communicating with, they fuel the subjective choices around messaging and branding.
Rather than encompassing an entire group of people, a buyer persona describes one individual. They give a name, a face, and a personality to a fictional customer, acting as a representative of their target market. Similarly to how an ambassador speaks for a country, a buyer persona helps your brand's messaging speak to one person rather than a group. This enables more authentic communication.
Your buyer persona should be firmly grounded in customer research and face-to-face communication with your audience. Since the buyer persona isn't an actual person, it's tempting to fill in the blanks with what we suspect or hope might be true about our audiences. If there isn't enough information available to craft a realistic persona, it should be skipped altogether--empathizing with an imaginary person is counterproductive.
Buyer personas should not include someone's life story or minute personal preferences. Focus on highlighting key characteristics, behaviors, and motivations as they relate to the problem your business solves.
To make sure it's easy for your team to reference the buyer persona while working, come up with a name that is easy to remember. Stereotypically, these are alliterative nicknames like "Fisherman Frank" or "Analyst Annie," which may help with recall, but anything sufficiently catchy should do.
Make sure that everyone who touches or represents your brand is familiar with the buyer personas and understands when and why to leverage them. This is a form of brand management, helping to keep all your brand's communication consistent.
To benefit from your buyer personas, figure out how they can be integrated into your business' culture and workflows. From strategy meetings to brainstorming prompts to feedback sessions, figure out where you could benefit from better understanding of your audience and how that integrates with what you're already doing.
Buyer personas should be reviewed periodically to make sure they're up to date. Have you learned anything new about your audience? Have your business goals or target audience shifted? Has the target market segmentation strategy changed? Buyer personas are one of the north stars of branding, so keeping them aligned in a coordinated brand strategy keeps your business on course.
