Target Audiences and VALS Types

Target Audiences... What are they? Is it just another way that the business world stereotypes people, or is it a very useful tool to the world of marketing? Our class last Tuesday made me think about the answer to this question.
My month (may) had the retail chain HOT TOPIC. We had a lot of fun and laughs inventing Josh. I have to admit that my personal feeling very much influenced what I thought about the target customer. My stepbrother-in-law (wow that is a mouthful) is a worshiper of that retailer and a very unique person. When we were talking about our minimum wage earning wannabe rocker I couldn't help smiling to myself and seeing Jessie's face. I feel badly about seeming so cruel, and there were obviously some people in class that took offense... BUT I also couldn't shake the feeling that there was a larger reason than just my pseudo brother that made me believe we had hit the nail on the head. I mean really, a lot of people in class laughed when our group presented our theory. That laughing is a for of recognition. It meant that more people in the class saw their own Jessie than not. Now we come full circle to the question. Is it a val led tool or just another way to discriminate?
Stores like HOT TOPIC, Ann Taylor, and brands like David Yurman seem to use it pretty effectively in their favor. David Yurman, seriously, there is a very select audience who would be willing to pay that much for sterling silver. I referred to my good friend Wikipedia to get a basic definition for target audiences. Wiki says, "A target audience can be people of a certain age group, gender, marital status, etc. (ex: teenagers, females, single people, etc.) A certain combination, like men from twenty to thirty is often a target audience."