Target Market vs. Market Segment: What Are the Differences?

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In 2026, we’ll be looking at the market for global digital advertising and marketing hitting $786.2 Billion, according to a GlobeNewswire report. In 2020, it was estimated to be $350 billion.

Since we’re looking at huge growth potential in this sector, it’s crucial that anyone in business needs to take their marketing efforts even more seriously. Understanding “Target Market vs. Market Segment” is one learning curve that can help you better understand the complexities of modern marketing.

In this guide, we’ll take a look at the differences between the two concepts in a simple and easy-to-understand manner. If you want to level up your marketing knowledge, read on.

Target Market vs. Market Segment

Target marketing and market segment are business concepts that companies use in their marketing strategies. The two names relate, yet they refer to 2 distinct concepts.

Market segmentation is the process of separating consumers into various groups (market segments). You can do this by age, sex, geographical location, financial status, and so much more. A company can go as far as they want segmenting the market and taking it in various directions depending on the variables they choose.

What Is a Target Market?

A target market refers to one or more of those groups (often 6-8) becoming the primary focus for a company to sell its products or services. They choose their target market through research, which often indicates more people in that target market are likely to buy their products or services than people in other segments. Thus, a company will spend the majority, if not all, of its advertising on its target market to try and maximize revenue.

Now we’ve gone through a basic explanation of both terms, let’s explore the concepts a little further, one by one:

Market Segment Guide

To understand the term market segment, you have to understand the process of market segmentation. Nowadays, there are many ways of segmenting the market. For instance, you can conduct

  • Demographic segmentation
  • Geographic segmentation
  • Psychographic segmentation
  • Firmographic segmentation
  • Behavioral segmentation

A business may segment its demographics with variables such as age, ethnicity, educational level, marital status, and homeownership, as some examples. In terms of marketing, we’re talking more about the practical differences in consumers. To get more of an idea of demographic variables, check out the U.S. Census Bureau.

Geographic segmentation can be a part of demographics, but it has its own category due to the strong influence it can have in marketing. After all, if you are a local business, what use is it to start a nationwide ad campaign?

Psychographic segmentation relates to variables such as a person’s beliefs, lifestyle choices, values, and perceived social status. You might also add here people’s opinions and habitual activities.

Firmographics is all about variables in the B2B world. If a company wants to sell to other companies it has to distinguish them, much like other businesses do with consumers. So one firmographic variable could be company market caps and another might be business descriptions.

Behavioral segmentation is mostly concerned with defining variables to do with people’s interactions and patterns with businesses. So you could say the amount of times someone goes on a website is a variable.

As you can see, market segmentation can get complex. You should also know that many segments influence each other. Yet, the overall idea of it is to gain some definable data to help create a target market.

Target Market Guide

Once a company has segmented the market, it then has to decide which market segments it wants to focus on. In some cases, a company might just target one segment. Yet, these days, targeting one segment isn’t so viable.

When a company targets one segment as its target market, it often has to compete with so many others within it. It’s because, in developed capitalist economies, there are so many players trying to do the same thing.

Thus, it makes more sense to narrow down the target market to multiple market segments. By doing this, it lowers the number of consumers a business can target, yet those consumers may be more relevant for the business to engage with.

Target Market Example

For example, if you just targeted 30-year-old women with the aim of selling them a typical blouse, you wouldn’t really stand a chance of getting anywhere. This market is likely saturated beyond belief with established businesses that fulfill that need.

You could, however, target 30-year-old women who like horse-riding, live in Texas, and are pro-Trump. Now you’ve narrowed down your target audience and with that same typical blouse, could have more impact with your advertising on that particular target market.

Of course, we’ve just run through a very rudimentary example above. There are other factors to consider when thinking about your target market. One of the most important things is to make sure your company message, products or services, and target market align.

it’s also important for companies to keep evaluating their target market to see if there’s any scope to perform better. In some cases, this means a company has to back to the drawing board and even segment the market in a new way. After all, the world is rapidly evolving, and there might be new market segmentations appear that were never apparent not so long ago.

New technology like the Metaverse may change the way businesses think about segmenting the market. Blockchain and DeFi-related technologies may also change the landscape. And digital marketing services are sure to have more influence on business activity too.

Two Important Marketing Principles Explained

We hope that the target market vs. market segment question is answered for you to a certain extent now. In summary, market segments refer to when a business will categorize consumers into different groups for marketing purposes. A target market is made up of market segments that a business wants to focus its marketing efforts on.

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