A single marketing campaign isn’t likely to appeal to everyone. What interests a single, 18-year-old college freshman will be utterly different from what attracts a 45-year-old attorney who’s married with children.
Understanding these similarities and differences allows you to isolate the market into individual categories and create specific selling points accordingly. This makes your campaigns more precise because you can focus solely on serving smaller, more refined segments—a concept known as demographic segmentation.
What is demographic segmentation?
Demographic segmentation is a precise form of audience identification based on data points like age, gender, marital status, family size, income, education, race, occupation, nationality, and/or religion. It’s among the four main types of marketing segmentation, and perhaps the most commonly used method. Instead of reaching an entire market or broad customer base, a brand uses this method to speak directly to a defined subset of the market.
Dividing the market into smaller segments, each with a common variable, allows companies to use their time and resources more efficiently. They can better understand the similarities between individuals in the audience to determine what messages they are likely to respond to. Businesses can use advertising personalization to ensure the needs of the defined group are fulfilled:
This customer segmentation method is one of the most commonly used because it’s easy to acquire through census data, analytics software, consumer insights, and more. It’s also considered by many businesses to be the most cost-effective way to divide a target market.
Why is demographic segmentation in marketing so important?
Demographic segmentation is used for targeting specific audiences. You cannot effectively communicate with an audience when you know nothing about them. And a personalized, targeted approach is essential to effectively manage your advertising spending.
Segmentation vs. targeting
Targeting is the act of providing specific, tailored content to an audience that meets a certain set of data criteria. Targeting takes segments you've developed (in this case, using demographics) and puts action behind them. For example, you can know what types of demographic segments you have in your customer base, such as girls from ages 13 to 18.
Companies reduce the risk of running campaigns to uninterested consumers, which quickly increases ROI. In fact, email marketers have witnessed a 760% increase in revenue by segmenting their email campaigns. Conversely, 85% of new product launches in the US fail to generate desired revenue due to poor segmentation.
In addition to better ROI, by using demographic segmentation to define and target audiences, you can:
Build long-lasting customer relationships
Reaching your customers on a more human level with targeted, personalized marketing creates deeper customer loyalty. It allows them to identify with your brand and feel like you are an advocate for their needs, which makes them more likely to do business with you over longer periods.
Improve your products and services
Having loyal customer relationships encourages you to look at your products and services in a new way. When you have a deeper understanding of your target audience, you can put yourself in their shoes to better serve them. If you develop fitness programs and know that a majority of your clients prefer the same type of program to be released, you’re more likely to make that happen.
Optimize your marketing strategies
Demographic segmentation allows you to get more specific with your marketing strategies. It helps clarify your vision, have more direction with future advertising plans, and optimize your resources, time, and budget. If 85% of your clients range from 20-35 years old, this is the segment you’re going to target. You'll want to make sure any cultural references in your advertising make sense to the age group. You wouldn't want to spend your time and money making sure your campaigns also make sense to seniors—that would be a waste.
Demographic segmentation variables and examples
Age is the most basic variable of them all, albeit the most important because consumer preferences continually change with age. Almost all marketing campaigns target age-specific audiences.
This variable can be viewed regarding specific age ranges or life cycle stages: babies, children, adolescents, adults, middle-age, and seniors. For example, many famous fashion designers have different collections to target other age groups. They aim certain clothing lines at specific age ranges, such as a chic fashion line at younger prospects and a more formal and elegant line at older individuals.
Age segmentation is also generation-based: baby boomers, gen X, millennials, etc. Since members within each of these individual groups were born around the same time and grew up with similar experiences, they often share similar characteristics and thought processes. Targeting baby boomers and gen X with the same offer and marketing strategy is likely to produce undesirable results because they think and act differently.
Not only do age groups and generations differ in their buying habits, but also in how they respond to advertising. They tend to have distinct ways of speaking and often spend their time on separate platforms. For example, millennials may spend most of their time on Instagram and Facebook, while seniors prefer their email inboxes.
Here’s an Instagram ad that is both age- and generation-targeted, since many millennials in their 20s and 30s use the “Wife, mom, boss” phrase:
In addition to age segmentation, Brooklyn & Barnes presumably uses gender, occupation, and family segmentation (more on these below).
Men and women generally have different likes, dislikes, needs, and thought processes. For instance, few men apply makeup, and most women don’t wear boxers. Also, women typically do most of the household grocery shopping and are more likely than men to donate to charitable causes. These are all key factors to consider when creating a campaign.
Shein has the right idea with their Facebook ad:
They created this ad specifically for women (hence the women’s swimsuits and the “for women” in the description). They purposely targeted them on Facebook for the most engagement and click-throughs.
Be careful not to assume gender stereotypes, such as considering pink a feminine color and blue a masculine color. Advertising with gender stereotypes like this could easily make your brand look sexist and cause you to miss out on or anger your target audience.
3. Income and occupation
If people can’t afford your product or service, there is no point in targeting them. After all, you wouldn’t promote a Mercedes or Ferrari to someone who can’t afford a used vehicle with more than 100,000 miles.
Income targeting lets you measure the buying power of your audience. When you know the income range of consumers, you can usually find data to support how people spend money on both the higher and lower end of the spectrum. Many companies use this data to sell different tiers of the same product, based on income level. For instance, airlines have three classes: economy, business class, and first-class.
Occupation targeting is also important since certain resources are aimed at different industries and job titles. Take this Pardot ebook display ad, for example:
When prospects click the ad, they go to a dedicated landing page to download the ebook:
Job titles are especially necessary with an account-based advertising campaign. In comparison to traditional demand gen, account-based marketing is often described as a flipped funnel approach because it inverts the process. Rather than targeting individual leads, it targets the account level. The intent is to reach highly-relevant accounts with the most revenue potential, so knowing occupation is integral.
4. Ethnicity and religion
With the tremendous increase in international business and global advertising brings an increase in segmentation based on ethnicity, race, nationality, and religion. These groups have many individual cultures that come with conflicting interests, preferences, attitudes, and beliefs. This could impact both their response to marketing and their buying habits.
Consider Coca-Cola and Pepsi. Both companies advertise globally, but localize their campaigns for each country, too. The messages are entirely different, based on local customs, religions, nationality, etc.
Another great example is McDonald's. The fast-food chain is known to change up its menu based on regional tastes, but that also impacts their ads, like in the example below from India. Many people who practice Hinduism (the predominant religion in India) observe a vegetarian diet because of their religious reverence for cows. So, of course, McDonald's adapted, even though they are a burger chain, by advertising their non-red-meat and vegetarian options.
Contrast this with a recent meal deal ad served in the United States, where religious preferences differ and beef is commonly eaten.
5. Family structure
Family makeup can be instrumental in segmentation because when a family’s dynamic changes, its needs and desires often do too. This strongly affects their buying habits and your sales process.
Single individuals tend to prioritize themselves, while newly married couples are likely prioritizing each other and their homes. Couples with several children have different needs than those who just had their first child. Large families might be more interested in low-cost household products, as compared to a couple with the same income, but without any children.
This Facebook ad presumably targets individuals who have families with small children:
Note: It also targets by geographical location, as seen in the description. Combining various types of marketing segmentation creates even more powerful, ROI-producing campaigns.
Get personal with your campaigns
You can’t please all consumers, but you can divide the larger market into unique demographic segments and then cater to each one’s needs individually.
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