When we talk about the market, we can refer to the geographical place where buyers and sellers are or to the theoretical place where a certain supply and demand is located. The word market is often used in the area of the economy and in the area of marketing, where the term potential market is widely used. According to the marketing, the market can be classified by extension, by volume and by-product.
What is the Potential Market?
The potential market is part of the total market that a company owns (market by extension) regardless of the scope (total, partial or null) of the marketing strategy. The potential market consists exclusively of people who have the economic capacity to acquire a certain product.
What is The Target Market or Target Market?
When we talk about the target market, also known as the target market, we refer to those consumers that we have identified as ideal for our product or service. We could say then that it represents the demand for our product or service. It can also be defined as that portion of the potential market to which the company directs all its marketing efforts. The target market is also known as the target group, target audience, target market or target group.
In the advertising field, the identification of the target market or target market corresponds to the second step of the STP structure (Segmentation-Targeting-Positioning) that is used by advertising professionals. The publicist starts from the fact that a company can never satisfy the entire market through its product, therefore, after segmenting the demand, it must identify the Target or target market to subsequently design its campaign.
What is the Objective Potential Market?
The potential target market is that formed by the ideal plaintiffs of our product, who also have the economic capacity to acquire it. Identifying this potential target market will allow the company to improve the profitability of the marketing program.
The biggest challenge for the marketing department of a company is to achieve loyalty to the potential target market with your brand before the competition does. However, when the potential buyer has already been identified, we know what motivates this buyer to prefer the product of our company and, in addition, we know that he has the economic resources to pay for his price, the next step will be to design a message that transmits what we need more effectively. If we succeed, the result will reflect an increase in sales, greater profits and lower advertising costs.
We can say then that, the purpose of identifying the potential target market is to direct campaigns to strengthen the brand.
On the other hand, has identified the potential target market can make sales predictions that provide valuable information for the preparation of budgets. For example, the budget for the purchase of raw materials. An accurate forecast of sales, based on the information obtained from the target potential market, also allows forecasting of expenses, investment and financing.
Correct analysis and monitoring of the potential target market allows knowing possible changes with respect to the tastes and preferences of consumers, which will provide the necessary information to redesign products and campaigns aimed at avoiding the loss of market shares.
Characteristics of the Target Potential Market
To achieve the correct identification of the target potential market, it is necessary to analyze the groups of consumers taking into account different characteristics:
1) Demographic Characteristics: The identification is made according to sex, age, income, race, occupation, marital status, years of education, etc. The demographic characteristics are quantifiable so they can be expressed in numbers and are not subject to interpretation.
2) Psychographic Characteristics: These are subjective since they correspond to an analysis of the attitudes of the buyers, their opinions, interests or lifestyles. For example, two people can define themselves as risk-takers, but when they consult them, it can be seen that the risks they are willing to take are very different.
3) Characteristics of Behaviour: Just as people have different personal characteristics, they can also differ in consumer behaviours, that is, how they use the products and the benefits they expect from them. For example, a company that manufactures shampoo should identify and achieve mainly those people who have the habit of washing their hair every day, not so much those who do it once a week.
4) Geographical Characteristics: The place where potential buyers live is also important since it is related to characteristics such as climate and population density. For example, the needs of people who live in large houses in suburban areas are different from those of people who live in apartments in large cities.