Demographic Segmentation

Demographics

Demographic segmentation divides the market into segments based on age, generations, life-cycle stage, gender, income, occupation, education, religion, ethnicity. The most popular and easiest method of segmentation, almost always part of a segmentation exercise as some of the variables can be easily observed even without asking the person to disclose them. People who share the same demographic variables, often exhibit similar needs and wants. For example, as we get older, age, generation and life-cycle stage will change placing us in groups of our peers who look for similar things and experiences in life.

We have many examples of products designed for kids, teenagers, students, young professionals, families with/without kids, empty nesters, retired. Marketers must be careful not to fall into the trap of stereotypes when using age as a differentiator as many other factors play role in segmentation.

Gender is another popular variable with many companies designing their campaigns and product to appeal to individuals that identify as either men or women. Clothing, cosmetics, toys, magazines and even car insurance are some of the products focusing on one of the genders or having separate product lines for each one. Income segmentation often informs the pricing policy accompany follows.

The more affluent customers are offered the premium or luxury lines of a product or service often with added benefits of extended service and convenience. The more stripped-down versions of the products are then offered to the more value conscious, price sensitive segments of the market with lower income levels.