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Watch: Primary and Secondary Target Markets in a Business Plan

Run time: 1:56Covers: primary and secondary target marketsTaught by: Dr. Paul Borosky, DBA, MBA

The Short Answer

What Is the Target Market Section of a Business Plan?

Answer

The target market section names the specific group of people most likely to buy from you, explains why you chose them, and shows how big that group is and how fast it is growing. It has three parts: a primary target market, a secondary target market, and growth potential.

A narrow target market does not mean those are your only customers. It means that is where your limited marketing dollars go first. Every business has more possible buyers than advertising budget.

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Picture the Buyer

How Do You Find Your Primary Target Market?

Dr. Paul sets a scene with every client. A person walks toward you. You know, without a doubt, they will buy. Now describe them.

  • What do they look like? Young or old?
  • How are they dressed? Blue collar, office worker, executive?
  • Where do they live and work?
  • Why do they need what you sell?

That person is your primary target market. Write it down in detail, then say why you picked them. The why is what convinces a lender you understand your customer.

Sample: Primary Target Market

The primary target market is young blue collar workers, specifically women between the ages of 25 and 35. This group was selected because of its strong interest in enjoying wine while socializing with friends and family.

Broad Appeal

What Is a Secondary Target Market?

The secondary target market is a second, separate group that also buys. Write it the same way as the primary: who they are and why you chose them. It shows the lender your business appeals to more than one kind of customer.

Sample: Secondary Target Market

The secondary target market is medical professionals working at the hospital across the street and in the medical offices around it. This group was selected because of its proximity to the business.

Notice the two different reasons. The primary market was chosen by lifestyle. The secondary market was chosen by location. Both are valid. Both tell the lender something useful.

Do the Math

How Do You Calculate Target Market Growth?

Lenders want to know the market is growing, not shrinking. Show it with simple math: take the size of your target market and multiply it by one plus the annual growth rate.

  1. 1

    Find the size of the market

    Say the blue collar workforce in your city is 250,000 people.

  2. 2

    Find the growth rate

    The city has grown 1.3% a year for the last five years, per the U.S. Census Bureau.

  3. 3

    Project year one

    250,000 × 1.013 = 253,250 people in the next twelve months.

  4. 4

    Project year two

    253,250 × 1.013 = 256,542 people.

Dr. Paul's Insight

The math is easy. The sources are what earn trust. Name where the workforce number and the growth rate came from, every time. A sourced assumption reads as research. An unsourced one reads as a guess.

Using AI

Can AI Help You Write the Target Market Section?

Using AI for This Step

Once you can picture the customer walking toward you, AI can turn that sketch into a full profile and estimate the size of the market and its growth rate. Ask it to show its math so you can follow it. One firm caution: AI will invent population and growth figures. Treat every number as a starting point and confirm it against a real source, such as the U.S. Census or the Bureau of Labor Statistics.

A prompt that works: Expand this ideal customer into a demographic and psychographic profile, then estimate how many of them live in [city] and the five year growth rate. Show your math and list a source for every number.

Tulsa's large airline maintenance base supports a wide supplier network, giving aviation suppliers, trainers and local services a steady customer pool. Building that into a market section is part of planning a business for Oklahoma.

Avoid These

What Are the Most Common Target Market Mistakes?

  • "Everyone is my customer." Lenders read that as "I have not done the research."
  • No reason given. Name the group and say why you chose it.
  • Skipping the secondary market. It is the easiest way to show broad appeal.
  • Growth numbers with no source. Cite the Census, the BLS, or the research you used.
  • Pasting AI numbers unchecked. Open the source and confirm every figure.

Going deeper on marketing to this group? See how to find your target market for the marketing side.

Real World Use

How an Owner Uses This Section

Coffee Shop Near a Hospital

Two markets, one growth line, three sentences each

Say an owner is opening a coffee shop a block from a regional hospital. Her primary market is remote workers ages 25 to 40 within three miles: about 18,000 people. Her secondary market is hospital staff, chosen for location.

Atlanta processes a huge share of the nation's card transactions, and many of the largest payment processors call the state home. Fintech and business service owners can build that customer base into research with the Georgia business plan writer.

County data shows the area growing 2% a year. Her growth line reads: 18,000 × 1.02 = 18,360 people next year. She cites the county source right in the sentence.

Three short paragraphs. The lender sees who buys, why, and that the market is getting bigger. These figures are an example only.

Keep Going

More Target Market Videos

The Sweet Spot: Your Target Market

Dr. Paul on narrowing your market to the buyers most likely to say yes. (1:39)

Questions

Target Market Questions Owners Ask

What should the target market section of a business plan include?
A primary target market, a secondary target market, and growth potential. Describe each group, say why you chose it, and show the market growth with a sourced number.
What is the difference between a primary and secondary target market?
The primary target market is the group most certain to buy. The secondary target market is a separate group that also buys, which shows the lender your business has broad appeal.
How do you calculate target market growth?
Multiply the size of your target market by one plus the annual growth rate. For 250,000 people growing 1.3% a year, 250,000 × 1.013 = 253,250 next year.
How narrow should a target market be?
Narrow enough that you can picture the person. A narrow target market does not limit who can buy. It tells you where to spend your marketing dollars first.
Can AI find my target market?
AI can build a customer profile and estimate market size fast. It also invents numbers. Confirm every figure against a real source like the U.S. Census before it goes in your plan.
How to Write a Business Plan in Ten Steps, Fifth Edition book cover

The target market is Step 2 of 10.

How to Write a Business Plan in Ten Steps, Fifth Edition walks through every section in order, with a full sample plan, a fill in template, and a Using AI box in each step.

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Written by Dr. Paul Borosky, DBA, MBA, current college professor, business consultant, and author with 14+ years and 1,000+ businesses served.

This page is for general educational purposes only. It is not financial, investment, legal, or tax advice.