Market segmentation is the broader concept that encompasses the idea of a target market. It involves dividing a broader market into smaller, more defined categories based on shared characteristics. For example, geodemographic segmentation divides the market based on geographic and demographic factors, helping businesses identify a target market in a specific location with specific traits.

Different types of segmentation can be used to identify a target market. Attitudinal segmentation looks at the attitudes and beliefs of consumers, while needs-based segmentation focuses on the specific needs that drive consumer behavior. Benefit segmentation identifies groups based on the benefits they seek from a product or service. Consumer profiling combines these various segmentation methods to create a detailed picture of the target market.

Once a target market is identified, businesses use positioning strategies to differentiate their products in the minds of these consumers. Competitive positioning involves analyzing competitors to find an advantageous position in the market. Positioning strategy is about crafting messages that resonate with the target market, emphasizing the unique value proposition of the product.

Lead segmentation is another related concept, which involves categorizing potential customers based on their likelihood to convert into actual buyers. Firmographics is a similar concept but applies to B2B markets, segmenting businesses based on industry, size, and other factors. Market share is an important metric that shows the percentage of a market captured by a company, reflecting the effectiveness of targeting a specific market.