What is demographic segmentation?
Demographic segmentation is made up of two words. The word demography is derived from the Greek word “demos,” meaning people and the English word “graphy,” which means “the study of.” When these two words are combined, they mean “the study of people.”
In market research, however, there is a slight deviation in the usage of the word. Marketing defines people who form a specific market for a product or a service based on demographics. It is essential to know demographics to study the market space.
Demographic segmentation definition
Demographic segmentation is defined as a market segmentation method based on variables such as age, gender, income, etc. This segmentation helps organizations understand consumer behavior accurately that in turn, helps them perform better.
Demographic attributes like age, sex, gender, religion, and educational qualification, play an essential role in research. Whether it’s to launch a new product or introducing changes or implementing new services, businesses need to stay on board and up to date with this ever-changing market. Therefore, the study of how population-based demographic segmentation behaves towards changes in products or services is essential. This aspect helps businesses stay ahead of their competitors and perform better.
Demographic segmentation variables
You can consider various variables while conducting demographic market segmentation. Here are the most commonly used demographic segmentation variables:
1. Demographic segmentation based on age: One of the most critical variables for demographic segmentation in marketing is age. A generation is a set of people born around the same time in history and grew up with a similar kind of experience with specific geographic segmentation.
For example, baby boomers are those born between 1946 and 1964 in the United States. The people born in this generation have specific similar characteristics and thought processes. Generation X, followed by baby boomers, are born between 1965 and 1981.
If market researchers reach out to baby boomers and generation X with the same strategic planning, asking the same questions, there is a likelihood that they may end up having inconclusive results.
2. Demographic segmentation based on gender: Men and women have distinctive differences in their outlook and how they perceive how the market functions. Even the market researchers are very clear about the difference in both genders’ thought process, so they manufacture gender-specific products.
Perfumes, clothes, footwear to even cars, and gender specificity that product manufacturers understand and cater to specific needs.
3. Demographic segmentation based on income: Income is also one of the crucial variables, as it decides the product’s pricing. Most product manufacturers keep in mind the income demographic segment while putting a price tag on the product.
However, other manufacturers cater to only the higher-income segment of society. Cars, technology, clothes, etc. are made more specific to these segments as they prefer luxury over anything else.
4. Demographic segmentation based on religion, race, and nationality: Alcoholic beverages have limited to no reach in the middle eastern countries, leaving scope for non-alcoholic drinks or fizzy drinks because of the hot climate. Brands across the globe have wide-scale advertising campaigns.
But they haven’t just stopped there. With the increase in international business, these brands have come up with campaigns that are best suited to religious beliefs, and even nationality, and made sure that no sentiments are hurt. With the increase in the business’ geographic area, there is also an increase in demographic market segmentation based on religion, race, and nationality.
Importance of demographic segmentation in marketing
Why is demographic segmentation necessary? Demographics are essential in marketing and marketing research and here’s why:
Market segmentation is vital as it helps you reach your potential consumers easily. You can refine the messaging style to suit the type of audience you wish to engage by targetted market segmentation. Targeting customers accurately at the right time yields rewards. You can quickly achieve high conversation rates, boost your sales, and earth greater profits. Appropriate targeting results in brand loyalty through customer satisfaction. Demographic segmentation in marketing helps stratify individuals and is an excellent tool for mass marketing.
Free demographic segmentation template
Advantages of demographic segmentation
Here are the advantages of demographic segmentation:
1. Simple to find: It is uncomplicated and easy to use, as government census is readily available in most countries.
2. Identify potential market: When an organization looks at the demographic segmentation, it focuses on the people who are most likely to buy a product. This helps in identifying the target market.
3. Marketing: Demographic customer segmentation helps organizations in developing market outreach for better marketing activities.
Segmentation vs targeting
Don’t confuse yourselves between segmentation and targeting. They differ in research. Here are the differences between segmentation and targeting:
- A segment is a place where potential targets reside, while a target is part of the segment.
- Segmentation helps marketeers define a population and choose targets from these segments.
- You do not need a target to define a segment, but you can zero down on a target after choosing segments.
- Segmentation is the first step in the process of product promotion. Targeting is the second step that you can achieve only after performing segmentation.