Demographic segmentation is a market segmentation technique where an organization’s target market is segmented based on demographic variables such as age, gender, education, income, etc. It helps organizations understand who their customers are so that their needs can be addressed more effectively.
By definition, demographic segmentation is a method of market segmentation based on the target population’s age, gender, income, race, and other factors.
If we break up the word ‘demography’ we get- demos meaning people in Greek and ‘graphy’ which refers to the study of people. So, when we combine these two words, we get “the study of people.”
This is why, instead of reaching an entire market, companies can use demographic segmentation to focus their time and resources on those segments that have customers who are most likely to make purchases and are therefore most valuable to them.
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Based on different factors, there are several different variables by which demographic segmentation is done:
Age is one of the most important variables used within demographic segmentation as consumers’ preferences and needs differ significantly based on age group they fall under.
When an organization wants to target young adults or teenagers, digital marketing campaigns may prove to be most effective as they appeal to this age group.
However, older adults often prefer traditional marketing methods, such as television and magazine advertisements.
Income levels have a significant effect on consumer purchasing decisions. Those with higher-income levels may prefer high-end and luxury products. Conversely, individuals with lower income levels may prefer to get products at the best deal and are likely to choose inexpensive products/services.
Organizations that are targeting the masses, or are making everyday items, will prioritize affordability. Organizations that create luxury items, on the other hand, will target high-income customers that can afford their products. Manufacturers often take their demographic segment into account while determining their pricing strategies.
Racial and ethnic preferences may reflect differences in sentiments. This will affect the kind of marketing campaigns that will appeal to customers. Additionally, religion can also have a significant impact on customer preferences, so it is important to be aware of the religious categorization of your target market.
Individuals may identify with different areas of the gender spectrum, like feminine or masculine, and this will have a significant effect on their preferences and purchasing decisions. By understanding which gender your product or service appeals to, you can tailor your marketing campaigns accordingly to meet the needs of your consumers better.
Related: Demographic Segmentation Examples
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Luxury brands such as Dior and Gucci often market their products through luxury lifestyle magazines that appeal to high-income earners. This includes magazines such as Marie Claire and Vogue.
As sanitary napkins are predominantly purchased by those who identify as women, marketing campaigns for such products are tailored to appeal to this gender.
Based on its application, demographic segmentation has several advantages in research such as
One of the most significant advantages of demographic segmentation is that the information required is often readily available to businesses through census data. Most countries have government censuses available.
Demographic segmentation help you understand and target your consumers more effectively, which can increase the number of customers that come back to you for repeat purchases. Therefore, it can result in increased customer loyalty and retention.
Demographic segmentation helps you identify which people are most likely to make a purchase, which helps define your target market. Once you know your target market, you can tailor marketing strategies that best appeal to this segment, increasing the efficacy of your strategies.
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It is hard to accomplish business development without an unmistakable comprehension of your customers, which is the reason demographic segmentation is fundamental for organizations. To help you with this, we’ve shared various demographic segmentation models that can be utilized to segment your customers.
Voxco makes it more straightforward for you to make demographic segmentation overviews and regulate them to your interest group.
Market segmentation can be divided into the following four categories:
Demographic segmentation allows you to be more specific with your marketing strategies and can help you optimise the use of your time and resources. Once you know which customers are most likely to make purchases, you can focus on targeting them, reducing the resources that would have been required to additionally target segments that are unlikely to make purchases.
With demographic segmentation, companies reduce the risk of creating campaigns that appeal to uninterested customers. As segmentation ensures that campaigns are made to target interested customers, return on investment significantly increases.
Yes, demographic segmentation does have an effect on customer loyalty. With segmentation, businesses can tailor marketing strategies to their most valuable customers. This will ensure customers identify with your brand and be more likely to do business with you for longer periods of time.
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