Future Business Leaders of America (FBLA) Marketing Practice Test

When selecting target markets, what reduces a company's risks?

1. Selecting markets that can be clearly identified

2. Choosing the cheapest markets

3. Targeting a wide range of markets

4. Ignoring market research

The correct answer is: Selecting markets that can be clearly identified

Selecting markets that can be clearly identified reduces a company's risks because it allows businesses to understand the demographics, preferences, and needs of their potential customers. When a company has a clear picture of who its target market is, it can tailor its marketing strategies and product offerings to meet those specific needs and enhance customer satisfaction. This targeted approach minimizes the likelihood of misallocation of resources or marketing efforts that do not resonate with consumers, ultimately leading to more effective campaigns and improved returns on investment. Clearly defined target markets also enable companies to create distinct and focused messaging, which is more likely to capture the attention of the intended audience. Additionally, by understanding the characteristics and purchasing behavior of identified markets, companies can anticipate market changes and adapt accordingly, further mitigating potential risks associated with entering new markets or launching new products.