What Is Demographic Segmentation? Definition of Demographic Segmentation, Demographic Segmentation Meaning and Concept
Demographic segmentation is dividing the market into groups of consumers based on demographic variables. Using variables such as age, sex, family size and life cycle, income level, race, occupation, educational level and nationality.
In effect, demographic variables are important population data that can be used to create consumer profiles . These variables are widely used in market segmentation because they are so easy to measure. In addition, they are related to demand, which is a very important aspect for any company.
Therefore, demographic variables are the most commonly used in the market segmentation process. Since they are the easiest variables to identify and measure.
Demographic variables used in segmentation
The most used variables in demographic segmentation are:
Of course, age makes it possible to divide the market into segments that have similar interests, wants, and needs. Age allows us to divide the market into groups that we can classify as children, adolescents, youth, adults and older adults.
Indeed, age is decisive in knowing how to direct the products and the type of advertising that will be used. For example, if the population of older adults predominates, products such as medicines, nutritional supplements, adult diapers, among some that we can mention, should be offered.
It should be noted that the needs and desires of consumers change with age. The playful needs of a child make companies design products such as toys. But this need changes throughout the life cycle of people
In this case, the market is divided taking the sex of the people as a reference. Men and women behave differently in the market and have different preferences when buying.
To be sure, there are some companies that direct their products to a non-sex target group, as is the case with food. But in other cases their products are intended for a specific genre. Especially in products such as perfumes, cosmetics, clothing, among some of the most important.
3. Family size
While, the structure and size of the family is also important to design products and communication strategies. In general, a large family will prefer products that give them high performance and that have a favorable price. However, small families prefer high-quality, higher-priced products. This is because their income is used to satisfy a smaller number of members.
4. Family life cycle
On the other hand, the family life cycle refers to a family going through different stages. It starts with the couple joining, then the couple with children. In the initial phases the children are babies, then they become children and later adolescents.
Finally, the children become young of marriageable age. Therefore, they leave the parental home and family. And lastly, they end their life cycle with just the parent set. The important thing for marketing is that each stage of the family's life cycle implies different choices regarding the products they buy and the quantities they demand. Here people can be classified as single, married without children, married with children, divorced, widowed, etc.
5. Income level
Naturally, income level is another variable in demographic segmentation. Help companies develop pricing strategies for their products and brands. Designing and targeting moderately priced products and brands for low-income people. While for high income market groups they launch higher quality and high priced products.
It should also be noted that it is a very useful variable in product segmentation, especially in financial, travel and automobile markets. Some companies prefer to target low-income segments because they have less competitive pressure and customers are more loyal. Others, for their part, prefer to target the high-income segment, as is the case with successful brands such as Gucci, Rolex and Mont Blanc.
Likewise, occupation is a variable widely used by companies to direct their products to the market. This demographic variable allows directing, for example, instruments for use by dentists. Similarly technological equipment for systems engineers and so we could find many more cases.
That is, the type of work that a person performs influences their consumption behavior when making choices in the market.
7. Educational level
The educational level of people is an important aspect in the way people make their purchase choices in the market. Reason why companies must have this information to help them better respond to customer requirements.
In reality, the educational level reflects the degree of knowledge that one has about something. People consume what they know and what they like. The higher the educational level of the consumer, the more knowledge they usually have about the products, which is why they are more demanding to choose and consume.
8. Religion, race and nationality
Certainly, religion is the set of beliefs and values of a group of people. Race includes groups of people who possess certain phenotypic characteristics related to their genetic traits and their environment. While nationality represents the belonging of a group of people to a nation, this makes them have common political rights and obligations.
So religion, race, and nationality are important factors that should be considered in demographic segmentation. Since they offer important data so that companies can form groups of consumers with certain homogeneous and particular characteristics.
Benefits of using demographic targeting
The main benefits of its use are:
- Allows you to find business opportunities . Which originate when finding unsatisfied needs in the groups of the different market segments.
- It helps to define more efficiently the market target group. Allowing to identify the most direct competitors.
- It facilitates the adaptation of products and marketing strategies to each market segment. With this, the company achieves that its customers and consumers are more loyal.
- It enables the company to allocate marketing resources more efficiently and maximize their use.
demographic segmentation benefits
To finish, we can say that segmentation based on demographic variables is widely used by companies. Since it is an easy way to group your consumers by reference to important population data such as age, sex, size and life cycle of the family, income level, race, occupation, educational level and nationality. Variables that are very easy to measure to estimate the size of the market and to be able to adapt the products and strategies that allow each target group to be reached effectively.