Both iron deficiency and thalassemia trait produce a microcytic, hypochromic anemia with a low MCV and a low MCHC, and both can show target cells. The smear plus the indices separate them.
In iron deficiency the marrow cannot build haemoglobin, so cells are produced with progressively less haemoglobin. The result is a population that varies in size and shape: anisocytosis and poikilocytosis are marked, the RDW is high, and the smear shows pencil cells (elongated, thin cells), occasional target cells, and a general impression of a heterogeneous population. The cells are small because each division produces a smaller cell, but they are not uniformly small.
In thalassemia trait the globin chain imbalance produces a membrane that is relatively oversized for the haemoglobin content, so the cells are small and hypochromic but the population is uniform. The RDW is normal or only mildly raised, target cells are prominent, and the smear shows a monotonous population of small cells rather than a varied one. Basophilic stippling may be present.
The practical rule: a high RDW with pencil cells and marked anisocytosis favors iron deficiency; a normal RDW with prominent target cells and a uniform microcytic population favors thalassemia trait. When the two coexist — which is common in regions where both are frequent — the RDW may be high from the iron deficiency while the target cells persist from the thalassemia, and the definitive separation requires iron studies and haemoglobin electrophoresis.