Demographics are the most widely used form of segmentation and take into consideration factors such as; age, gender, income, family situation, annual income, education, ethnicity. The B2B version of this, firmographics also incorporates company size, industry, job function etc. Demographics offer some of the most common and easy to interpret statistics that can be used to group entire populations.
Three use cases for Demographic Segmentation
- Embedded into marketing – One of the main benefits of demographic data is that it is easily found and will already be integrated into most marketing and advertising systems you’ll already be using. This means that if demographic data is useful to you, you can incorporate it with little expense. That means if you were selling a car you could market it as being ‘family friendly’ to parents but choose other features to promote to a single customer for example.
- Luxury targeting – For many luxury brands, its essential that they don’t waste time and effort in attracting clients who ultimately can’t afford their product. By looking at the average salaries of different areas they can establish the best places to open a physical store, and improve their advertising ROI.
- Industry Campaigns – Thinking of the B2B space, firmographic information can help firms to target specific sectors, or even drill down into specific job titles and occupations. This can dramatically increase the ROI of any marketing or advertising campaign.
Pros
Demographic segmentation is perhaps the most straightforward way of defining customer groups.
One of the major positives about this type of data is that it is relatively easy to obtain and collect. Brands are most likely are already collecting demographic data through your social media channels, google analytics or email tools like survey monkey. When considering the wider public, there are several public data sources including census data which are readily available. All of these data sources are free to use and will be easy to assess and measure.
Demographic data is certainly a good starting point when you start to consider analysis of your target market, and while it may only represent the broad strokes of who your customers are, this can still be useful when applied to advertising campaigns or through platform where more advanced targeting simply isn’t possible. We would generally consider demographics to be a ‘fall-back option’ for most brands but this is not to say it can’t be useful.
Cons
Whilst Demographic information is often a good starting point, the information is very basic and only tells you ‘who’ your customers are and nothing about what their purchasing habits look like or what their motivations are.
Demographic segmentation is prone to the criticisms of generalisation and stereotyping. Grouping people based on simple demographic information can lead to brands making blanket statements about consumers. An obvious example of this would be the common perception that people in the 65+ age demographic may be technologically challenged. Whereas, in actuality 48% of this group now has a social media profile and they are the largest growing sector of casual internet users.
Another reason that Demographics are not as informative as they may once have been is the trend towards capturing secondary markets. In recent years we have seen a wide number of sectors seek to open their product base up to as wide an audience as possible and we have seen the dissolvement of ideas such as ‘boys toys’ and ‘girls toys’ for example. As more brands seek to become unisex and appeal to wider age groups, Demographic Segmentation can no longer deliver real insight.
Demographic data is certainly a good starting point when you start to consider analysis of your target market, but Bonamy Finch have seen our segmentations move away from demographic caricatures, towards more nuanced, longer-lasting psychographic influenced studies.
