Demographic segmentation: What it is and how to use it

Demographic segmentation definition

Demographic segmentation is about understanding the makeup of your audience and drilling down to create a number of audience groups according to things like age, location, socioeconomic background, and family situation.

It helps businesses show the right advertising to the right people – for example, only people in Scotland need to receive ads about Burns Night events. This means customers get more relevant messaging, and businesses can target their resources to where they’ll be most effective.

Demographic segmentation is predominantly used in marketing, but can also be helpful for things like brand positioning, UX design, and CX too.

The goal of demographic segmentation

The goal of a good segmentation study is to divide large, heterogeneous groups into smaller target market groups that may be more responsive to a targeted product or message.

Demographic segmentation isn’t just a one-time task. Different kinds of segmentation may be useful for different brands and products, and you may find yourself segmenting your audience in different ways at different times, depending on the needs of that particular situation.

For example, if you’re doing market research ahead of launching a new family car, you’ll be very interested in the size of people’s households, the age of their children, where they live, their employment status, and their spending power. If you’re doing market research for a luxury convertible, you’ll be looking at your audience through a different lens altogether.

Demographic segmentation benefits: Why is it important?

So why is demographic segmentation important? Well, all the benefits stem from one thing: relevance. When you’re focussing your efforts more specifically on a certain type of person, there will naturally be a reduction in wasted effort and redundancy.

Here are a few specific reasons why demographic segmentation should be a key part of your marketing and product strategies:

Better-informed product development

Knowing who’s using your products or services – how many demographics there are and how they differ – is an important step in improving your offering.

If you know, for example, that most of your buyers earn a certain amount, that can inform product pricing and materials. Likewise, if you know that the majority of your audience is based in a specific timezone, you might want to scale your customer support staffing to match their waking hours.

More effective advertising and marketing

As consumers, we’re naturally more attuned to marketing material that’s relevant to us – that’s the basis of targeted advertising online, after all. So it should come as no surprise that advertising and marketing efforts designed with a specific audience type in mind will always land with more impact than a broad, more generic approach.

With demographic segmentation, you’ll be able to build out various personas that can receive different campaign materials – whether it’s a targeted ad on a social platform or a different edition of your newsletter.

Stronger customer retention

Ultimately, the more you understand your target market, the more they’ll feel like you’re offering products and services just for them. That personalisation will have a positive effect on metrics like customer satisfaction, customer loyalty, and customer retention.

Remember, though: it’s important to update your demographic segmentation data regularly, in order to keep your finger on the pulse with who your target market actually is.

Demographic segmentation examples

Demographic segmentation data is descriptive data about people and their lives. It uses markers that describe how different populations live and define themselves.

Some examples of demographic segmentation criteria are:

• Sex
• Age
• Income
• Education level
• Number of children
• Geography
• Residential environment (urban, rural, suburban)
• Ethnicity
• Sexual orientation
• Family composition
• Marital status
• Religion
• Years of work experience

eBook: How to drive profits with customer segmentation

Demographic segmentation vs market segmentation: What’s the difference?

In the simplest terms, demographic segmentation is just one of many kinds of market segmentation. These market segmentation categories can have some overlap, but each one takes other verticals or types of data into account:

Firmographic Segmentation

Firmographic Segmentation looks at organisations, rather than individuals. Firmographic segmentation describes values like company size and the number of employees, to help differentiate between addressing small and enterprise businesses.

Behavioural Segmentation

Behavioural Segmentation divides your target markets’ decision-making patterns, including previous purchases, consumption, lifestyle, and usage. For instance, younger buyers may tend to purchase a bottled body wash, while older consumer groups may lean towards soap bars.

Psychographic segmentation

Psychographic segmentation deals with the psychological aspects of consumer behaviour. Personality, value, opinion, and interest traits are described here, offering businesses the opportunity to better focus on consumers that lead specific lifestyles.

Where to find demographic segmentation data

Chances are, you already know some information about your existing and potential customers that can be used for segmentation.

This might be from the information they’ve shared directly (such as their name, date of birth, and address), or via a third-party demographic marketing data service that uses sources like browser cookies and information from digital apps and online platforms to give you a clearer picture of your audience.

If you need more, however, there are two main ways to collect market demographics: Public records and private surveys.

Public Records

Demographic segmentation data is usually the easiest type of segmentation data to collect because it is so easily accessible through public resources. Most developed countries and many international organisations have authoritative demographic resources, such as:

• gov
• United Nations Population Division
• Australian Bureau of Statistics
• Statistics Canada
• US Center for Economic Studies
• US Census Data
• UK Census Data
• UK Office for National Statistics

Private surveys

Many marketers find it easiest to collect demographic data about their consumers and prospects through surveys. Often this is done by piggybacking demographic questions onto a survey sent out for another purpose, such as post-purchase feedback or contact centre follow-up.

If you decide to ascertain your target market demographics with surveys, it’s a good practice to save your demographic questions for the end of your survey because sometimes respondents will not want to answer them (especially questions asking about income, ethnicity, religion, etc.), and you don’t want them to abandon the survey before they arrive at your core questions.

Qualtrics provides libraries of demographic survey questions you can quickly import into your survey. It’s important to ask demographic questions in such a way that they don’t offend, don’t bias the respondent, and don’t confuse.

Some data points are more sensitive than others – people may be reluctant to share information about age, sexual orientation, ethnicity, or religion, for example. When formatting your survey questions, it’s a good idea to include a “prefer not to say” option so respondents can skip questions they’d rather not answer.

Here are some examples of how to ask demographic questions:

What’s the highest level of education you have completed?

• No formal qualification
• Secondary school
• Vocational / trade / technical school
• Some college
• Bachelor’s degree
• Advanced degree
• Prefer not to say

Which of the following best describes your current relationship status?

• Single
• Married or engaged
• Divorced or separated
• Widowed
• Prefer not to say

Income information is very important for us to understand. Could you please give your best guess? Please select the answer that includes your entire household income in (the previous year) before taxes.

• Less than $10,000
• $10,000 to $19,999
• $20,000 to $29,999
• $30,000 to $39,999
• $40,000 to $49,000
• $50,000 to $59,999
• $60,000 to $69,999
• $70,000 to $79,999
• $80,000 to $89,999
• $90,000 to $99,999
• $100,000 to $149,000
• $150,000 or more
• Prefer not to say

How to use demographics for your segmentation study

Demographics can be a helpful way to gather extra information when you attach them to a survey about interest in your brand or product.

By attaching demographic questions to the end of your survey and generating a banner or crosstab report, you can see which groups are most and least receptive.

For example, you may discover that:

• College-educated single women are most likely to try your product
• Interest in your product drops generally at the age of retirement
• Presence of children in the home makes a customer 3x more likely to buy
• Men younger than 21 years old prefer to contact sales through an app versus over the phone
• High-income consumers in the Pacific Northwest have the highest unaided awareness of your brand

The next step after demographic segmentation

Demographic segmentation is a foundation of solid marketing strategy, but don’t fall into the trap of relying on demographics alone to identify unique groups. To really dig deep enough, you also need to factor in behaviours and psychographics.

Behaviours can include sales data, clicks, social media engagement, and store traffic. Psychographics can include values, brand preferences, political views, attitudes, and perceptions.

When you combine demographics, behaviours, and psychographics, you create a powerful marketing triad that will drive your product design, channel strategy, pricing philosophy, and brand messaging.

Segmentation vs targeting

Segmentation is the first step in a two-step process. Once you understand which different groups exist (segmentation), you can then proceed with selecting which groups you wish to address (targeting).

After all, just because you understand how groups are separated, that doesn’t mean you must dedicate resources to each one. Doing so, however, can become part of a winning marketing strategy.

Demographic segmentation marketing strategies

Ok, so once you’ve completed your demographic segmentation, you can then look to target those demographics independent of one another. Or, maybe your research shows that your target market is overwhelmingly made up of one kind of demographic? Either way, marketing strategies that tailor to specific demographics are incredibly common and effective.

Here are some examples:

Segmenting and marketing based on age

Let’s imagine you make and sell cars, and one of your target demographics is young people who may have just passed their test and are looking for their first car. Your age segmentation data probably goes hand in hand with data showing a lower income level than the norm. With that knowledge, you’ll naturally want to focus your marketing campaigns around ideas that match up to that demographic segment and their needs.

In this case that might be promoting more affordable, hatchback cars, and doing so on platforms you know that audience frequents, such as TikTok. That way, you’re not wasting marketing spend advertising the wrong cars to the wrong audience.

Segmenting and marketing based on family circumstances

If you’re a jewellery company, your marketing strategies will vary greatly based on whether the people in your demographic segments are married or unmarried. For example, you’d probably run marketing campaigns and ad-spend around engagement rings at unmarried people, and also those in the 25-35 age range, rather than wasting time and money attempting to market those items to people who’re either married or too young to be.

Segmenting and marketing based on income

Vacation companies that offer a wide range of trips will be keenly aware that demographic segmentation variables make all the difference in terms of converting sales through bespoke marketing. Budget backpacking vacations naturally attract a much different audience to luxury Caribbean all-inclusive packages – but the first step towards targeting each of those target audience types with the right material is running demographic segmentation based on income.

How demographic segmentation can impact your brand

As we alluded to earlier in this article, demographic segments are your secret weapon in driving down customer churn.

Moreover, demographic segmentation can directly help with boosting brand attraction and retention. At its heart, brand attraction and retention derives from feeling a part of something – from being listened to, understood, and valued. As such, it’s pretty much impossible to foster without treating customers as personally as possible, which is exactly what segmentation allows.

Personalisation at scale demands demographic segmentation, because – in lieu of being able to treat every single customer as a unique individual – segmenting them into smaller groups is the next best thing.

How to create a truly personalised experience

Age segmentation, geographic segmentation, income, education, marital status, and any other kind of data you can use to build out demographic segmentations will help you deliver products, services, and marketing campaigns that make customers feel like you know who they are and what makes them tick. That’s what builds brand loyalty.

What’s more, being able to reward customers for sticking around is only possible through the act of segmentation between repeat customers and new ones.

Demographic segmentation: Using the right tools

Companies that master demographic segmentation enjoy better performing products, better market positioning, and stronger growth. But if you want to understand, segment, and talk to your various target market types better than ever before, you’ll need a modern experience management suite that can handle the heavy lifting for you.

With tools like Qualtrics BrandXM™, you can measure and improve how each of your segments resonates with your brand.