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Select your languageSuggested languages for you: Have you ever shopped online or signed up for an organization's loyalty program? If your answer is "yes", chances are the organization has made a customer profile based on your demographic characteristics (age, gender, etc.) and your behavior (how often you shop, how much you spend, etc.). Organizations create customer profiles to better tailor their offerings to you as a consumer based on your wants and needs. Consumers are placed into groups with other consumers who exhibit similar characteristics and behavior. This is the basis of segmentation. Read along to learn more about how demographic segmentation differs from other segmentation types! Demographic Segmentation DefinitionBefore we discuss the definition of demographic segmentation, let's examine why marketers segment markets. Market segmentation is essential for firms as it helps them understand their customers better and create more suitable offerings. Specifically, segmentation gives insights into customer characteristics, behavior, and preference. This allows companies to develop products that customers will appreciate. Segmentation is part of the STP model, which includes segmentation, targeting, and positioning. To learn more about the STP model, check out our explanation of Market Segmentation, Targeting, and Positioning. The main task of segmentation is to find patterns and insights from different consumer groups. Demographic, geographic, psychographic, and behavioral are common forms of segmentation. This explanation will focus on demographics. Demographic segmentation involves segmenting consumer groups based on demographic traits like age, income, and gender. When done correctly, demographic segmentation can enable a company to maximize its marketing return on investment (ROI). Demographic Market SegmentationIt is unlikely for a good or service to appeal to all consumers. As a result, marketers segment the market to make their offerings as appealing as possible for specific customer groups. One of the so-called 'rules' in segmentation is that the difference within groups (segments) should be low (e.g. consumers in a group should share similar wants and needs), and the difference between groups should be high. Due to limited resources (staff, time, and money), it is difficult for companies to tailor their offerings for each individual. That is why marketers group customers with similar traits together and market to them as a whole. That said, some companies still make custom-designed products for customers, e.g., Chanel Haute Couture or custom cars. Let's take a look at the general characteristics of an appropriate segment:
Consider a company that produces toys for children aged 4-6. The children currently playing with a particular toy will eventually outgrow it. However, there will always be younger generations of kids who will become interested in the toy. On the other hand, if a different company develops a digital version of the toy, children, in general, might become disinterested in playing with the original one.
A segment of 10,000 people has a higher return potential than a segment of 50 people. Even if only 20% of 10,000 people purchase the product, the marketer would still make higher returns than if all 50 people bought the product. It would be a waste for marketers to develop and advertise a product for a few people. Demographic Segmentation VariablesNow that we understand the goals of segmentation, let's take a closer look at the variables marketers might use to segment consumers based on demographics. Figure 1 below shows popular demographic segmentation variables. Remember that demographic segmentation is different in B2C and B2B environments. To learn more about demographic segmentation in the B2B environment, check out our explanation of Business Markets. Demographic Segmentation: AgeFirst of all, marketers can segment their customers based on age. This is a basic form of demographic segmentation built on the assumption that society ages similarly, i.e., everyone ages. Age is a simple method of segmenting customers as consumer wants and needs can change significantly with age. For example, the pharmaceutical brand Nurofen segments its customers based on age. An ibuprofen-based painkiller in a liquid format is available for children between 3 months to 9 years old. There are also a variety of Nurofen medicines available for adults in capsule and tablet format. Nurofen does this as small children, of course, need a lower dose of ibuprofen as their bodies are significantly smaller than that of adults. Similarly, a flavored liquid is easier for children to take compared to a tablet. Demographic Segmentation: Sex and GenderOn the other hand, certain companies might decide to segment their customers based on sex and gender to cater to different customer needs. Although this type of segmentation has become outdated for many product categories, it is still present in some cases. 'Pink-Tax': The Gender Bias in Market Segmentation Have you ever heard of the term 'pink-tax'? Walking through supermarkets and drugstores, you might have noticed numerous products marketed to women. These products include deodorant, shower gels, razors, etc., often branded in pink packaging. The reason why it's called a pink tax is that these products are frequently more expensive than their non-pink substitutes. For example, a well-known shaving foam brand priced its women's shaving foam 2.15 times more expensive than its men's version - the only difference being packaging and branding.1 Demographic Segmentation: Income, Education, and OccupationAnother type of demographic segmentation includes segmenting consumers based on income and education level. Marketers might deem certain complicated and technical products more appropriate for people of higher education levels. However, this concept is also related to the occupation of the individual. For example, a company specializing in selling technical SEO courses will likely target marketing professionals rather than nurse practitioners. Similarly, a consumer's income level will likely impact their purchasing patterns. It may affect the types of products they purchase and the number of times they purchase a product. For example, a corporate CEO is more likely than a student to buy expensive holidays often. On the other hand, a student might be more likely to buy store-brand grocery products, and a homemaker might be more likely to buy grocery products in large quantities. Demographic Segmentation: Religion and EthnicityLikewise, a consumer's religion and culture might influence the products they purchase. For instance, certain religious values may prohibit the consumption of caffeine, alcohol, tobacco, pork, or meat in general. As a result, marketers need to understand and consider religious differences when developing certain products. On the other hand, there are certain religious and cultural events that have recently attracted an increase in consumption during certain seasons. For instance, consumer spending on children's toys might increase during the weeks before Christmas. Life-cycle stage in demographic segmentationFinally, marketers may also consider life-cycle stages when segmenting customers. This form of demographic segmentation is similar to segmenting consumers by age; however, it may also consider the life stage the consumer is experiencing. As a result, factors like family life-cycle and family size are also considered. For example, many phone service providers offer family plans, making adding your children to your phone plan cheaper than purchasing a separate one. Similarly, grocery retailers often bundle products together in a family pack for larger households. Additionally, marketers often assume that couples, families, and single people have different purchasing patterns and behaviors. However, marketers need to avoid certain life-cycle and age-related stereotypes. An example is assuming that older people are not interested in new tech products. Although this might be the case for some, others might be happy to explore new tech gadgets and product developments. Demographic Marketing Strategies Demographic marketing strategies are essential for strategic marketing planning as they allow companies to identify individual members of their target audience based on certain features, wants, and needs. Demographic strategies also allow marketers to target their ads at customer groups that are most likely to buy their product, especially in digital environments. As a result, it enables businesses to cut down marketing costs. Demographic Segmentation ExampleBefore you go, let's look at an example of demographic segmentation. Skincare manufacturer Dove segments its customers based on various demographic factors, including age, life-cycle stage, and gender. A prominent example of demographic segmentation employed by Dove may be observed through their Dove Men+Care product line. Fig. 2. Dove Men+Care Products The brand features a variety of personal hygiene products like shampoo, body wash, face wash, and deodorant, specifically designed to target men. These products use fragrances typically associated with men and are packaged in darker bottles. Contrarily, other Dove products use more fruity and sweet scents and are packaged in lighter and neutral colors, targeted at women. Dove has also run multiple campaigns to empower women through its brand. These types of marketing communications are effective at positioning the brand as an inclusive one. On the other hand, Dove also segments its customers based on age. For example, Dove has a children's skincare brand called Dove Kids Care and one called Baby Dove, which is for even younger children. In this case, Dove differentiates consumer groups based on life-cycle, even though children are obviously not the ones purchasing the product. Demographic Segmentation - Key takeaways
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Frequently Asked Questions about Demographic SegmentationDemographic segmentation involves segmenting consumer groups based on demographic traits like age, income, or gender. Market segmentation is essential for firms as it helps them understand their customers better and cater their offerings and value proposition for interested consumer groups. Some of the segmentation criteria included in demographic segmentation include factors like age, sex, gender, income, occupation, religion, ethnicity, and life-cycle stage. Let's examine an example of demographic segmentation through the pharmaceutical industry. The brand Nurofen segments its customers based on age. An ibuprofen-based painkiller in a liquid format is available for children between 3 months to 9 years old. There are also a variety of Nurofen medicines available for adults in capsule and tablet format. Nurofen does this as small children, of course, need a lower dose of ibuprofen as their bodies are significantly smaller than that of adults. Similarly, a flavoured liquid is easier for children to take compared to a tablet. Segmentation means finding patterns and insights from different consumer groups. Demographic, geographic, psychographic, and behavioural are various forms of segmentation. Demographic segmentation involves segmenting consumer groups based on demographic traits like age, income, gender, or life stage. Demographic segmentation in consumer markets is similar to demographic segmentation in business markets, only the variables and factors differ. For example, rather than looking at the size of an industry or the number of employees in a company, marketers observe the age or occupation of consumers.
Final Demographic Segmentation Quiz
Question Segmentation allows marketers to understand customer ______, behaviour, and preference. Show answer
Question Segmentation means finding patterns and insights from different consumer groups. Show answer
Question ________, geographic, psychographic, and behavioural are various forms of segmentation. Show answer
Question _________ segmentation involves segmenting consumer groups based on demographic traits like age, income, or gender. Show answer
Question Segmentation is also part of the __________, which involves segmentation, targeting, and positioning. Show answer
Question One of the so-called 'rules' of segmentation follows the idea that the difference within groups (segments) should be _______, i.e., consumers in a group should share similar wants and needs, and the difference between groups should be _______. Show answer
Question Organisations have limited resources; therefore they cannot create tailored offerings for each individual. Show answer
Question Similarities within groups should be _______, and differences between groups should also be ________. Show answer
Question What are the four characteristics of an appropriate customer segment? Show answer Answer Customer segments should be differentiable, observable, stable, and substantial. Show question
Question _______ is a basic form of demographic segmentation built on the assumption that society ages similarly, i.e., everyone ages. Show answer
Question "A company specialising in selling technical SEO courses will likely target marketing professionals rather than nurse practitioners." This is an example of segmentation based on ______. Show answer
Question Which demographic factor might affect the types of products consumers purchase and the number of times they purchase a product? Show answer
Question Factors like family life-cycle and family size are considered as part of which type of demographic segmentation? Show answer
Question Marketers often assume that couples, families, and single people have similar purchasing patterns and behaviours. Show answer
Question Marketers try to create customer segments that are as small as possible. Show answer Discover the right content for your subjectsNo need to cheat if you have everything you need to succeed! Packed into one app!Study PlanBe perfectly prepared on time with an individual plan. QuizzesTest your knowledge with gamified quizzes. FlashcardsCreate and find flashcards in record time. NotesCreate beautiful notes faster than ever before. Study SetsHave all your study materials in one place. DocumentsUpload unlimited documents and save them online. Study AnalyticsIdentify your study strength and weaknesses. Weekly GoalsSet individual study goals and earn points reaching them. Smart RemindersStop procrastinating with our study reminders. RewardsEarn points, unlock badges and level up while studying. Magic MarkerCreate flashcards in notes completely automatically. Smart FormattingCreate the most beautiful study materials using our templates. Sign up to highlight and take notes. It’s 100% free. This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Privacy & Cookies Policy What is the difference between demographic and geographic segmentation?Demographic segmentation refers to the grouping of customers based on characteristics like age, sex, gender, race, or income level. Geographic segmentation divides customers into groups based on location like country, state, town, or climate.
What is the difference between geographic and psychographic segmentation?Psychographic segmentation – grouping customers based on their personalities and interests, including beliefs, hobbies, and life goals. Geographic segmentation – grouping customers with regards to their physical location.
What is demographics and segmentation?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.
What is the geographic segmentation?Geographic segmentation is a component that competently complements a marketing strategy to target products or services on the basis of where their consumers reside. Division in terms of countries, states, regions, cities, colleges or Areas is done to understand the audience and market a product/service accordingly.
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