Demographic segmentation separates your target market into specific, accessible layers of people, according to personal attributes such as geography, age, education, occupation, and income.
By taking advantage of demographic segmentation, you can launch personalized marketing campaigns to target each sub-group within the market.
But, what is demographic segmentation? Why should marketers apply it? And how? 🤔
In this article, we will together review the following topics:
- Market Segmentation
- Demographic Segmentation Definition
- Psychographic Segmentation
- Demographics vs Psychographics
- In Conclusion
The market is a vast place opened to (literally) millions of individuals with utterly different interests and needs, and yet, they all share one common thing; they are all willing to make a purchase.
A merchant cannot simply target those millions jointly, even if he desires to do so. In order to target each group of the community, marketers had to conduct a process called “Market Segmentation.”
This segmentation process follows the marketing rule “Understand the audience first, then target them,” at least based on the buyers’ purchasing power.
Demographic segmentation is a subfield of marketing segmentation strategy, it is also called “demographic marketing.”
In general, there are 4 main methods to segment the market:
- Demographic Segmentation.
- Geographic Segmentation.
- Psychographic Segmentation.
- Behavioral Segmentation.
Hereinafter, we will deal with the first method, Demographic Segmentation, with a quick detour on Psychographic Segmentation, and how to apply both of them as part of your marketing strategy.
Demographic Segmentation Definition
Demographic audience segmentation is the oldest and most frequently used method to subdivide the market into smaller layers, based on specific parameters, any community can be segmented according to these parameters as follows:
- Marital status
- Family size
- Family life cycle
- Religious conviction
- Ethnic group
- Social class
All these parameters can be applied as a single element or in conjunction, in order to segment the market.
Age is considered the universally applied variable in the purpose of demographic segmentation, as individuals falling in the same age group are expected to behave in, almost, an identical manner, and thus will express identical interests.
Youth will be having identical needs among different people, that is why we say marketers, will usually, produce, package, and promote products to different kinds of age groups.
💡 For example,
- Signal has different products for different age groups, such as Signal dental cream, and Signal kids toothpaste.
- On the basis of age only, the leading toy manufacturer Mattel has 7 age-based layers of toys. 🧸
Always, income is a major motivator in the market segments. It is grounded on the principle that the expenditure of the consumer can and shall change with the variations in income.
💡 For example,
many automotive and 2-wheeled vehicles companies, durable goods companies, financial industry companies, event-planning, clothing, skincare, and tourism companies segment their targeted market in line with the income. 💵
Roughly, according to income, the market can be segmented into high-income, upper middle income, middle income, low middle income, and low income.
It has also been found that with the increase in income, the percentage spending on food and other elementary necessities decreases; that’s why you need to take care of that.
📘 In his book, CK Prahalad “The Fortune at the Bottom of the Pyramid” has addressed the subject of the opportunities dwelling at the base of the pyramid. i.e., lower-income segments.
In the transportation industry, the success of Uber and Careem taxi are familiar examples of efficient marketing at the base of the pyramid. 🚕
Most airlines companies make use of income segmentation and have developed 4 classes: ✈️
- First Class (most expensive): free lounge access, priority check-in, special services.
- Business Class: lounge access at a fee, select a seat at the time of reservation, full voyager miles.
- Premium economy (economy class): a select seat at check-in time, cancellation fees.
- Economy Seats (lowest economy class): no extras.
Gender distinction constitutes a fundamental segment in marketing, as males have vastly different necessities from females. We are talking about clothing, cosmetics, magazines, and everything; gender makes all the difference to create its specific market.
Axe, Raymond, and Pulsar are brands meant to target male customers, while Femina, Revlon, and Prada are brands meant to target female customers. Few brands may target both genders, like Nike and Garnier, through their different products or through sub-branding.
Occupation is a significant parameter in segmenting the market. The expenditure amount and behavior of a working executive differs from a self-employed person, blue-collar employee, or businessman.
Likewise, there are professionals, like physicians, attorneys, educators, university professors, CPA accountants, brokers, learners, retailers, or housewives; have similar consumption habits within each segment.
Financial companies and banks like CitiBank, and CIBank… etc, systematically target these classes, based on their vocation, with their different schemes.
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Education also plays a vital function in segmenting. The market can be classified as illiterates, literates, high-school graduates/drop-outs, university graduates, and professionally qualified individuals.
The educated layer can have a serious impact upon the sector of mass-media, this includes, newspapers, magazines, and books. Accordingly, if more people are literate, there will be a higher demand for newspapers, magazines, and books.
Today, with the increasing literacy and education rates, the demand for these products is going up in the market.
6. Marital Status
Being single or being married, would have influences on the customer’s behavior pattern. Thus, it is highly related to market segmentation.
Generally, unmarried people tend to consume fast food and packaged food, more than their married counterparts. That is why the requirements are extremely different.
In this case, the segmentation has to be done very carefully. Alternatively, married people tend to spend more on consumer durables, cars, travel plans, and financial products.
Also, marital status is directly relevant to many businesses, like matrimonial websites, wedding planning companies, wedding videographers, that’s why “being married” is an important variable.
7. Family Size
Family size and composition is another vital parameter in demographic audience segmentation. With the advent of modernization and effective implementation of family planning procedures, the average family size is decreasing.
Earlier in Egypt, it was very usual to see 4 – 8 children in one family, an average family today would usually have 3, 2, or even one child.
The social foundation of the community is also on change, with the tendency towards the nuclear family rather than the extended family. Consequently, this will create a different demand pattern and has led to changes in the buying manners.
8. Socio-Economic Classification
Socio-Economic Classification (abbreviated SEC) is a very important parameter. It is commonly used to classify households in many countries. SEC is based upon two variables:
- Education of the main family provider.
- The number of consumer durable goods (based on a previously defined list) does the family have in possession.
For more details and information, you may refer to the UK National Statistics (the NRS Social Classes.)
9. Ethnic Segmentation
This parameter relies on the premise that consumers who belong to different ethnic groups behave and consume differently. Especially, when it comes to clothing, food, drinks, etc.
10. Family life-cycle Segmentation
The life-cycle is a sequence of stages including a combination of age, marital status, and whether there are children in the family or not. It is a significant segmentation parameter since the purchasing pattern varies according to the consumer’s own family-life cycle stage.
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Marketers have frequently noticed that individuals within the same demographic segment may behave in a quite different manner. This happens due to the differences in their personality, lifestyle, and values; actually, psychographics is all about that.
Psychographics is the discipline of utilizing behavioral analysis with the demographics to better recognize the customers. In an attempt to segment the market, marketing researchers have exerted efforts to outline lifestyle patterns for individuals.
One of the famous methods of psychographic studies is the AIO framework, which is (Activities, Interests, and Opinions) framework.
AIO framework describes the individuals’ lifestyle models, based upon the hobbies, attractions, and values within demographic parameters. Personality (buyer’s persona) is also a key parameter in market segmentation. Normally, the marketers endeavor to portray the brand personality, in a way that would resonate with the target personality.
- L’oreal signature phrase: Because You’re Worth It.
- Adidas famous line: Impossible is nothing.
- Apple’s “Think Different” and “To the Crazy Ones” created customer loyalty towards their company. It makes them proud of being part of Apple’s Family.
Demographics Vs Psychographics
As we have demonstrated above the demographics and psychographics, we can outline the differences between them:
Demographics is the oldest way to segment the market. It is somewhat limited and outdated.
Demographic segmentation depends on parameters and hard facts (quantitative parameters) about the target audience. Therefore, it is a strictly fact-based strategy.
Psychographics is the analysis of soft facts (qualitative parameters) about your audience.
Demographics can help you find WHO would buy your product, while psychographics should help you find WHY they buy.
Demographics are the externally observed features (e.g., age and gender), while psychographics are internal inclinations and attributes.
According to Young and Rubicam, psychographics should lead to a better understanding of the audience, based on the way of their thinking, interests, hobbies, and behavior.
Some marketers agree that there is a shift in today’s societies, from geo-demography to affinity. This means, individuals with homogenous values and interests are expected to demonstrate common behavior, even if they fall under different demographic classes; i.e., age, social class, genders…etc.
Demographic marketing parameters, such as age, sex, gender…etc., have a major effect on market surveys. Be it to inaugurate a new product, making variations, or introducing a new service, organizations must therefore be watchful and up to date to keep pace with the ever-changing landscape of the economy.
Therefore, the analysis of demographic segments, and how they act/react towards fluctuations in products or services is essential. Demographic marketing assists industries to respond in advance to their competitors and accomplish better results.
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