Demographic Segmentation – An Understanding Of a Fundamental Marketing Concept

demographic segmentationBefore one can delve into the nitty-gritty of demographic segmentation an understanding of demographic as a fundamental aspect of marketing management is required. So often one hears marketers lamenting that the target demographic is not being catered to or that the target demographic is not responding or some such other statements. But really, what is he referring to by the phrase “target demographic?” What is a demographic after all? Why does every business plan starts and ends with the target demographic?

What Are Demographics?

The word demography has been formed by the Greek word “demos” meaning “people” and the English word “graphy” or the “study of”. Together they imply a study of the people. In marketing jargon, however, they mean a study of the people that forms a specific market for a product or service. A study of the target market and its many attributes such as age, sex, religion, income, education etc. is very important for any business. Whether it is for the purpose of launching a new product or for the purpose of doing a fresh perspective study with an aim to revamp an already existing product line-up, it is imperative that the business is up-to-date with the dynamics of an ever-changing market. If it does not do so its competitor in all probability will do it and stay ahead of it in the game.

Demographic Segmentation Based on Gender

A common parameter for demographic segmentation, gender is considered by a vast majority of businesses as a primary consideration for demographic segmentation. Products such as beauty, apparels, personal grooming, shoes and other accessories, to name a few, use gender as a basis for directing their marketing messages. The right marketing message is an essential element for every business, and can make or break the success of the company. Businesses routinely come up with different versions of their products in order to cater to specific genders. While there are some products and services that are not affected by the gender divide most try to maximize their product sales by creating a need among their target demographic by releasing different versions. E.g., a car manufacturing company may launch a series of body colors or interior colors for their models to target a specific gender. The car, although essentially have nothing to do about gender can thus become an obsession for one gender. Color is one of the primary ways in which this gender specific product designing is achieved by marketers. E.g., you wouldn’t find a high-flying male stock broker driving a small car painted hot pink. It does not go with the image nor the gender.

Advertising: How it Fuels Gender Specific Branding and Marketing

Advertisements are frequently targeted towards furthering this notion about gender specific products. Advertisements are not merely a way provide information about a product. It is certainly not just a “right to choose” as so popularized by TV commercials. It is more than that. It is a clever vehicle for maximizing a notion of ownership, a notion of identity, value and certainly gratification for customers. Advertisements are seldom aimed at everybody who  are watching TV. Almost anybody can understand by watching an advertisement that it is targeted at a specific gender and thus trying to reach out to a specific demographic of the audience. However, these messages are becoming less and less subtle each day.

Demographic Segmentation Based on Age

The second most important consideration for demographic segregation is age. A generation is usually a set of people who have been born approximately during the same time in history and have grown up to witness similar experiences. Throughout the course of history one generation has always tend to challenge believes, practices and style of the generation preceding them. In order to make themselves different from their ancestors they have developed their own form of communication, believes and way of life.

E.g., Baby Boomers, or those born between 1946 and 1964 have always shown an inclination for rejecting traditional values and have always been resentful of their leaders. But, they have always been good at multi-tasking and have also shown an inclination for use of communication devices. Notable baby boomers include two former US presidents, Bill Clinton and George W Bush, Hollywood superstars Arnold Schwarzenegger, Tom Cruise, George Clooney, Prince Charles of UK, Russian President Vladimir Putin and Dan Brown.

Generation X followed the Baby Boomers generation. Born between 1965 and 1981 this is a generation that not only challenged their leadership but they actually ignored them. Generation X has been a difficult generation to market to as they are characterized by a deep sense of self and have never given in to any attempts to categorize them. Notable Gen X personalities have been Robert Downey Jr., Charlie Sheen, Celin Dion, Shaquille O’Neal, Ronaldo and Britney Spears.

If a marketing team is trying to reach out to say, both Baby boomers as well as Generation Xers using a single commercial or marketing plan, it is certainly going to find it tough, if not entirely impossible and fruitless to achieve any real success out of that. The reason is the huge gap between the two generations, their thinking, their belief, their language and the way they see themselves fitting in society.

Additionally, with each successive generation, more and more disposable income have been made available to them. This makes youngsters about the age of 15-19 to be a very lucrative market for businesses. These target demographic can not only spend money on their but they can also influence buying decisions of those who they live with. Cover Girl and Maybelline are two such examples which have successfully used their marketing prowess to establish themselves in this market segment.

Understanding demographics based on age will be especially useful as the Baby Boomers transition into the later stages and chapters of their lives.

Demographic Segmentation Based on Income

An important factor that determines the whether a business can get a market from among a target audience is its buying power. The more the disposable income, higher is the demand for products and services. Essential commodities always have a steady demand which is backed by purchasing power. But the demand of luxury commodities depend on disposable income. High income no family group is somewhat of a dream target market for luxury commodity makers such as apparels, automobiles, accessories and alcohol because they have the highest disposable income. Segregation of the market based on their income has been the most profitable for some business ventures. Chain stores such as Walmart has made their low cost pricing model an important USP, targeting low and average income groups for decades.

Niche Segment

There is something special about small boutique stores selling more-than-average priced yet high quality products at the same time when larger retail stores seemed to engulf them with their low prices and oodles of real estate (sounds so much like the Fox Book Stores Vs Shop around the Corner story). A small custom-made chocolate store selling their ware at a corner of a busy street often tend to get a big fan following, enough to keep their creative juices following even when faced with stiff competition from a big shop.

Place of Stay

Another demographic segmentation is based on the assumption that the place where an individual lives can indicate the kind of purchasing power that he / his family possess. This theory is used in the UK to make up the ACORN system (A Classification of Residential Neighborhood). This basically segregates the residential neighborhoods in the UK and the homes that are located there. It draws the data straight out of the 10-year census data. This system is widely used to ascertain the buying power of different homes in different neighborhoods of the UK. Businesses use such residential data before creating their production and selling plans. Crafting a selling plan based on who you are and what you represent, can actually be one of the best demographic segmentations available to everybody.