CX 101: Demographic Segmentation

If you were trying to convince your family to go on a weekend trip, you likely wouldn’t use the same tactics for every family member. Your retired parents may be persuaded by the luxurious rooms at the hotel, but your brother and his spouse probably care more about the activities they could do with their kids. Your college student sibling would likely love the break from school, but they’re more concerned with affordability compared to the rest of the family.

Even within a single family, there are different types of people with different values, concerns, and priorities—now consider how much variance there is in a national or global market campaign. Personality, occupation, and life experience all affect what appeals to a certain person, which is why demographic segmentation is so important in all marketing efforts. Finding out what your audience demographic looks like will help you better understand the needs of your target customers, create more specific solutions, and market those solutions better.

There are 4 different types of segmentation: demographic, psychographic, geographic, and behavioral. Demographic segmentation is just one part of the puzzle, but an essential tool for competitive marketing, especially in the digital space. This article will go over everything you need to know about demographic segmentation and how to take your business to the next level with advanced demographic analysis technology. But first, let’s go over the basics.

What Is Demographic Segmentation?

Demographic segmentation is a method of grouping a target audience or customers by specific traits, most often by age, gender, occupation, income, socioeconomic background, and family status.

If your product or service is meant for luxury and comfort but comes with an expensive price tag, you would want to target high-income households. If your product or service is mostly bought by women, you want to be able to market to them specifically. Let’s say you sell solar panels; the demographic for your product is warmer climates, and knowing that allows you to segment that group of people and market to them while avoiding the uninterested ones. Once you’ve identified the right group, it’s much easier to target their needs and appeal to their preferences.

By dividing the market audience into smaller and more specific categories, businesses can better define who their audience is and ultimately funnel their messaging and resources into focused and effective strategies. The prospective market is clearer, current customers are more accurately advertised to, and businesses can personalize the experience of their brand for each segmented audience.

Not only can you use demographic data to identify and isolate customer groups, but you can also use demographic segmentation for UX design, brand positioning, CX, and other analytic tools that assist with business strategies. The most competitive businesses that are seeing success from their marketing efforts gather demographic data using analytics software, consumer insights, and census data.

Benefits of Using Demographic Segmentation

Using demographic segmentation isn’t just beneficial—with the rise and projection of digital marketing, understanding the traits of your target audience is becoming more essential. Here are five more benefits of using demographic segmentation to hone your target audience research.

Personalization and Relevance

When you segment your audience based on accurate demographic data, you can advertise and communicate with each group according to their preferences and values. That means your messaging, the pain points you solve, and the features you highlight can be different (and more effective) for each audience. Your products or services can be relevant to a range of audiences, but your message won’t resonate exactly the same with every person in that range. To be relevant and persuasive, a customized approach is best. 

Optimized Marketing Strategies

It may seem like going after such specific audiences limits your reach to potential customers, but the opposite is true. By segmenting your target audiences into demographic groups, you can identify common threads within each group and offer more satisfying content or ads. Targeted ads that are especially polished will also increase the visibility of your brand and products, so you will have greater volume and more impactful ads that convert for the right group.

Improved Products or Services

The more you know about the needs of your customers, the better you can serve them by offering improved products and services. For example, a company could learn through demographic analytical tools that the shaving cream they originally advertised for men is actually being bought and used by more women. This would allow the company to tune its product offering for its female audience.

Increased Customer Retention

When the customer experience is better than ever, so are customer satisfaction and loyalty. Knowing what someone needs is a powerful tool when it comes to both business and marketing. By providing improved products or services and personalized solutions, especially over time, customers will return to that company. Customized solutions also add a personal touch to your brand, which is something most customers appreciate and want more of.

Data-Driven Decision Making

It’s much easier to make a decision about what your marketing budget should go to if your audience groups are crystal clear. Instead of putting money and time towards potential customers that you aren’t sure about, you can have a strong idea of the products and solutions specific demographics need.

It’s of course important to remember that demographic information is still working off certain assumptions. However, relying on time-tested statistics gives you much more direction and surety than blindly hoping your message or offering is well received by someone. Intentional and evidence-based advertising is far more effective, which is what demographic segmentation can help with.

What Variables Are Included in Demographic Segmentation?

Many variables can be used in demographic segmentation, but here are the most common and relevant ones, depending on the industry.

• Age: People have different experiences, desires, and priorities depending on their age. You wouldn’t advertise a dentist’s office to a tween the same way you would to an adult. You also have to consider someone’s level of work and life experience, which often comes with age.
• Gender: Men and women share many needs, but there are some needs or appeals that tend to lean one way or the other. A nail salon likely gets more women customers than men, so while they may get both, they may want to focus their efforts on the women in their area. But beware of harmful stereotypes—there are plenty of sales pitches that have no need to advertise to only men or women.
• Ethnicity: Ethnic backgrounds can greatly affect something’s appeal or even its appropriateness. Many ethnic groups take great pride in the traditions of their community and culture, so it’s important to know who you’re talking to so you can actually address their unique needs.
• Income, Occupation, and Education: Money isn’t everything, but it is an important demographic factor. People in different income brackets save and spend their money differently, so to get the right eyes on your products. It’s important to consider who really wants and can afford what you’re offering. Similarly, a blue-collar worker compared to a professor at a college may even make the same amount of income but have totally different types of education and experience, so each customer type would need to be marketed to differently.
• Religion: Faith is a big part of many people’s lives, and similar to ethnic appeals, you want to be careful that you’re properly advertising to certain groups to avoid offending or alienating your target audience.
• Family Structure and Marital Status: It’s wise to look at large families compared to couples or single people. If you only advertise your product to families but your product could easily be helpful to a single person, you may be missing out on an opportunity. On the other hand, you may have a more niche market, such as a jewelry store, so couples getting engaged would be far more relevant for your marketing efforts. Children are a huge part of many parents’ lives, so it’s important to factor them in as well.
• Sexual Orientation: With such a broad spectrum of sexualities and preferences, it’s important to be inclusive to all while recognizing what a specific group of people may need or like. If a lot of your customers come from a progressive and urban city, it’s going to be important for most of them to see representation in your advertisements.
• Residence Environment and Location: Speaking of urban cities, where someone is located, whether urban or rural, plays a big role in someone’s preferences. A lot of people in the city don’t drive a car and instead use public transportation, but others that live in the country desperately need their vehicles to get to their jobs every day. How a car dealership markets its cars could drastically change based on who is looking for a car.

More Demographic Segmentation Examples

Here are some examples of demographic segmentation and how it can change the way a company approaches its audience, marketing strategies, and customer experience.

Location: Save Money and the Environment

Let’s use the solar panel example we talked about earlier. Solar companies need to mainly advertise to people in places that get a lot of sunshine. However, solar panels have many benefits, like how they save money on electricity and make less of an impact on the environment. Based on their demographic information, a solar business can adjust their messaging to what’s actually relevant to them. People that live in rural single-family homes and use a lot of electricity will be interested in the savings, while green thumbs—often living in the city—are going to appreciate the environmentally friendly attributes of solar.

Family Status: A Versatile Vehicle

If a car company has a spacious vehicle with a lot of storage and seating, it could appeal to big families who have a lot of children to get around. On the other hand, a small business owner who transports their products everywhere by themselves could also use a spacious vehicle—but the car company would need to market differently to these two potential customers. With demographic segmentation, the company could create two different advertising campaigns, one that focuses on family values and authentic family living versus a woman running her own business independently.

Diversity: Take a Walk in Their Shoes

Foot Locker, a global shoe store, used personalized customer experiences to better their service since it had a broad range of customers with a lot of customer feedback and surveys. Outside of their typical customers, they also had elderly customers, guests with disabilities, non-sneakerheads, and customers with diverse interests. By analyzing their demographic data, they were also to customize both the in-store and online customer’s journey for different demographics, which was better for the brand and the consumer.

Pearl-Plaza Can Help with Demographic Segmentation

If you’re ready to upgrade your marketing and other demographic tools, it’s time to partner with Pearl-Plaza. Pearl-Plaza has the Customer Experience Cloud that helps you perform demographic analysis and segmentation so that you can give your customers the best CX possible.

Book a demo to see how Pearl-Plaza’s CX Cloud can help you optimize demographic segmentation, improve the solutions for your customers, and make the most of your marketing funds!