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Demographic Segmentation 1

Demographic Segmentation

Market Segmentation Guide

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Table of Contents

Demographic literally means a segment of the population. In statistics, demographic segmentation is used to group people based on certain criteria. These criteria include age, gender, education, nationality, income, etc. Demographic segmentation is an important part of effective market research.

Demographic characteristics allow the brands to analyze the group of people and strategize advertising and marketing plans. As a result, such demographic information aids in showing messages relevant to prospective customers/consumers.

Types of demographic data are

  • Nationality
  • Education
  • Family structure
  • Income
  • Age
  • Gender
  • Religion
  • Ethnicity

Ways to collect demographic data

Although it may not be possible to get the demographic data of every individual in your customer base, you can gather enough data to build a profile.

Website analytics software

If you have an online presence and your website runs analytics software in the background, it will automatically collect data on the visitors.

The software obtains certain demographic data like gender and age and also keeps track of what they seem interested in on your website. One example of analytics software is Google Analytics that gathers data for you

Surveys

You can provide your customer base a survey with questions you need information on. You can use that data to further proceed with your strategy. However, you will need to repeat such surveys often because the demography of the consumers can change.

In a survey, you can obtain wide data but the engagement rate is low. On the other hand, analytics is a much friendlier way to collect data easily.

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Factors and Examples of Demographic Segmentation

Segmenting the market into groups with common characteristics helps companies and brands come up with advertising and marketing schemes to ensure fulfilling the needs of the target audience. 

For certain brands, some demographic data is more required than others. For instance, if you own a car company, gender is not as important as the age and income of your customer base. 

Some demographic information used by many brands and companies while conducting market research is listed as follows.

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Gender

Dividing the market based on male, female and transgender is a strategy used by most big brands. Stereotypical or not, branding based on gender seems to have worked and profits have been made by many brands.

Makeup and Fashion brands are one such example where though males may be interested, they are largely focused to attract a female audience.

For example, Sephora exclusively makes use of female models to market their products. Although there are brands such as Dollar shave club that serves for the male audience and creates products exclusively for men. Similarly, cars or bike companies mostly use male actors and occasionally female actresses to showcase their products. 

These brands don’t completely leave out an entire gender. The strategy is to display products preferred by specific genders. Such a method can give effective results while keeping your marketing budget strong.

Age

Age segmentation is another factor used to create a marketing profile. The population is mostly divided into age groups such as 5-12, 12-17, 18-25, and 26-35, and so on. 

Age-appropriate advertisement is important because it is the responsibility of the company not to advertise products that can have a bad influence on younger kids.

Toys are obviously targeted for young age groups like 12- 17, but some games also interest the mature audience. For example, UNO and Monopoly have more customers in the mature age group. Similarly, Lego although made for the younger demographic audiences has customers of a wide age range.

However, age-based advertisement mostly has an effect on the younger group because they are impressionable while the older groups are aware of what they need and what they don’t. Giving older age groups available options rather than telling them what they need to buy is a useful market research strategy.

Market Trends

Income

Income segmentation divides people into groups based on their monthly or annual income. If your company has expensive and inexpensive products, targeting your customer base with knowledge of their income can help you know who can afford the products. This way you can create a marketing scheme targeted to a specific income group.

For example, airline companies introduced three classes: economy, business, and first-class to target audiences based on their income. Similarly, hotels also use data of income backgrounds of their customers to advertise their different hotel rooms to people who can afford them.

Ethnicity

Segmentation on ethnicity, race, religion, and nationality is an important factor because people in these groups have conflicting interests and preferences.

Advertisement of products in association with the mentioned demography of the country is a factor that can positively or negatively influence the company’s profit. Moreover, messages on the advertisement should also be based on the local religion, race, customs, etc.

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Family Structure

Family requirements are different from individuals. You can target a dating app to an individual but not to couples. Newly married couples will be more interested in home furnishing to start their new life. For example, couples with children will be more receptive to childcare. Also, they will prefer entertainment for their children like amusement parks or children’s shows, or movies.

Age segmentation is another factor used to create a marketing profile. The population is mostly divided into age groups such as 5-12, 12-17, 18-25, and 26-35, and so on. 

Age-appropriate advertisement is important because it is the responsibility of the company not to advertise products that can have a bad influence on younger kids.

Toys are obviously targeted for young age groups like 12- 17, but some games also interest the mature audience. For example, UNO and Monopoly have more customers in the mature age group. Similarly, Lego although made for the younger demographic audiences has customers of a wide age range.

However, age-based advertisement mostly has an effect on the younger group because they are impressionable while the older groups are aware of what they need and what they don’t. Giving older age groups available options rather than telling them what they need to buy is a useful strategy.

Benefits of Demographic Segmentation

  • With demographic data, there is a reduced risk of loss in ROI. Companies can target interested and prospective customers which increases the ROI. 
  • You can target a specific audience and choose not to target some groups of customers based on the strategy.
  • Personalized advertising and marketing for an audience based on certain criteria can help you connect to them on a personal level. This results in an improved customer experience and creates customer loyalty through which they can connect to your brand deeply. 
  • Loyal customers build a solid base for your profile. Such a relationship can give you deep insight and understanding of what the majority of your audience prefers.
  • Demographic segmentation helps create better policies and schemes for the market and target audience. 
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Issue with Demographic Segmentation

  • Sometimes such segmentation may seem stereotypical. This may hurt the sentiment and emotion of the target group or population in general. As a result, this can harm the brand image and company.
  • Two people with common characteristics may not want the same product. For example, between two male friends of the same age, one may prefer skateboard while the other may want video-games. Therefore, it cannot single-handedly give you all the information.
  • Demographic Segmentation is one part of the bigger picture of marketing segmentation. You can make assumptions to strategize your marketing scheme and refine your advertising message, with the use of demographic segmentation. 

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