Segmentation is a powerful tool that can help you hone messaging and create better experiences for your target market.
Demographic segmentation is usually the first method brands to divide their market into groups that may respond differently to certain types of messaging. Way before Google or Facebook analytics we had demographic surveys.
And they worked.
In this guide, we’ll go back to the basics and unearth what demographic segmentation is, how best to use it, and give you a few examples/use cases.
Definition of demographic segmentation
At its core, demographic segmentation is when you divide a market into groups based on hard or tangible factors such as age, gender, income, education, ethnicity, family makeup, etc.
This allows businesses and other types of organizations to tweak their messages or target certain groups of people exclusively. For example, a $100,000 car won’t be targeted at university students. The marketing, branding, design, etc. will appeal to a specific type of consumer identified based on their income level and other factors.
It was the type of segmentation that was first popularized and is still the most common. The basic aspects of demographic data can be easily gotten from your analytics tools.
But some of the more nuanced demographic information such as income or ethnicity isn’t as easy to come by.
Gathering demographic data
You don’t need to get demographic data from everyone in your market. You just need a statistically relevant sample size to make decisions. The first-party data you collect will allow you to build segments that make sense for your business.
Everything else flows from there. The platforms you choose to market on, the way your brand communicates, the way products are positioned, and more.
There are two major ways to get access to this information so it’s relevant to you while still being cost-effective.
Use Analytics software
Most websites in the world use Google Analytics or some other analytics tool to track how visitors interact with their website. Those tools collect more than just session information. If configured properly, it can also collect basic demographic data which can be further enriched by third-party tools.
If you’re using Google Analytics, log in to your account, and follow the information below (note: Google does change the interface occasionally, but the general process is the same.
- Click on audience
- Click on demographics
- Click on overview
It only gives basic information about age, gender, and geography but that’s enough to get started. Keep in mind that this setting needs to be enabled in GA so if you’ve not done so already, it’ll take 24 hours to populate after it’s activated.
This is even more effective because you don’t have to stop at collecting demographic information. You can also ask questions related to personality, lifestyle, and preferences then cross-tabulate the data to unlock much deeper insights.
I’m getting ahead of myself.
Let’s focus on the surveys.
Surveys give you the opportunity to ask direct demographic questions and remove a lot of the margin of error inherent in analytics tools. This is first-party data that no one else can give you.
At the same time, there’s a risk that respondents will abandon the form without completing it. Depending on the tool you use, you may get no data or partial data.
As a rule of thumb, if you want more reliable data that covers a wider range of demographic information, use surveys. If you want an easier way to get basic demographic information, rely on analytics.
Note: Census data may seem like a good option but it’s a bit flawed. It averages small population groupings like neighborhoods yet attaches it to a household. That means everyone in the same neighborhood has exactly the same information according to the census even if they’re completely different in all aspects.
Demographic segmentation factors (and examples)
Not all demographic data holds equal weight. For example, if you’re selling electronic signature software, audience gender holds little relevance when compared to age or revenue.
If you’re selling bags, then gender may play a much larger role because certain designs appeal to certain genders more than others.
Let’s take a closer look at the type of demographic information that can be collected and how to prioritize it.
Gender is often the first type of demographic data that businesses take advantage of. There are only two significant groups.
Without generalizing too much, men and women usually have unique preferences in many areas. Men are often more interested in trading, finances, and aggressive sports. Online investment platforms can cater to these interests, offering a variety of options for individuals to manage and grow their wealth, regardless of gender.
Women, on the other hand, are often more interested in fashion, health and beauty, and less aggressive sports like running. Communities and specific types of brands can cater to those interests.
Of course, the examples I used are just broad generalizations. You may even be targeting people that don’t fit the traditional mold.
The above examples could be used by men and women but some companies choose to focus on a single gender.
Frank Body is for women. Everything they do is for their core demographic.
Does that mean that women don’t buy from Jack & Jones? Of course not.
It means that when those brands do marketing, they don’t’ take the opposite gender who may be aware of them into consideration.
You don’t have to focus exclusively on one gender either. The best strategy is to segment the products you promote to each gender.
Another common factor when it comes to demographic segmentation is age. Alone, it has limited usage unless your target demographic can be widely classed into certain groupings.
Where age shines is when it’s used with other demographic segmentation factors such as gender and income. There are commonly accepted age groups for marketing and advertising purposes:
In a broad sense, age groups have different values, priorities, and preferences. A child would not care much about the cars they’re riding in while an adult would save up for a car fitting their status.
Thursday Boots, as the name suggests, produces and markets boots for men and women. It leads with the slogan ‘Highest Quality. Honest Prices.’ This appeals to a specific demographic which is usually younger millennials and older generation Z members.
It understands this and, though not often, when it shows the faces of models in its advertising, they’re almost always young adults.
It took a stance and then figured out the demographic that its stance would appeal to.
As a rule of thumb, younger demographic groups are more open to advertising messages. Content aimed at them tends to be flashier and more abstract.
Older demographic groups are more decided when it comes to what they want or need. Because of this, ads targeted at them are designed to introduce them to products they may already need as opposed to changing their buying habits.
Another thing the age of your target group will help you understand is the platforms and places you can reach them. Each social media app has its own core demographic group. TikTok and Snapchat are for younger users. Facebook and Twitter are for older users.
Income is used to define groups based on monthly or yearly income. It can be done with household income or personal income depending on the nature of the products you sell.
This comes into play most often when the product is expensive and would be out of the price range of most consumers. With that being said, it is still applicable for inexpensive products because you can make a bargain version of a product for lower-income markets.
This is important because if you’re marketing to the wrong market, the feedback may make you think you’re doing something wrong and encourage you to change directions.
For example, if someone cannot afford the product, they’ll give you feedback that it’s too expensive. For someone that can afford it, they may give you feedback related to quality and overall experience with it.
To see this in action, look no further than luxury clothing brands or luxury car brands. The way Louis Vuitton advertises is different from the way H&M advertises because the target demographics are quite different.
The person willing to pay thousands of dollars for a duffle bag will give feedback on the product – not the price.
Education and occupation
Education has nothing to do with intelligence, but it does have a lot to do with shared experiences and perspectives.
On average, those who receive a tertiary education tend to be more liberal or open-minded. Even if you didn’t go to college, the occupation you choose can also have an impact on the products you purchase and the services you find important.
For example, many doctors and nurses will make health-conscious food choices. Lawyers are more likely to purchase high-end business suits as opposed to designers in a marketing agency. Software engineers may spend more on their computers and accessories when compared to a middle school teacher.
When segmenting based on education/occupation, it’s important to understand two things:
- Will most of your customers fall into specific education and job segments?
- Does it matter enough to be meaningful to your marketing and product development?
There are a few products that have specific requirements before they can be used so segmentation based on education is simple. For example, you can’t get an MBA until you have a bachelor’s degree.
With that being said, there may not be an inherent segmentation of the product but, to better serve your market, you could choose to segment based on occupation or education.
Clio segments its CRM for different verticals. In the image below, it’s targeting legal practitioners by highlighting how the software conforms to their needs.
Keep in mind that others can use Clio, it just happens to be targeting lawyers et. al. using the landing page shown above.
Don’t think this will limit you. In the beginning, especially, it’s a powerful tool to rapidly grow a brand. The people the messaging is designed for will flock to it and it’ll repel others. Feedback is more focused and product development is more effective.
Family makeup (and lifecycle)
Family makeup is the last demographic segmentation type we’ll focus on. Generally speaking, the needs of families are different from the needs of individuals.
A dating service would have little meaning for a couple and a trip to Disneyland may not be ideal for an individual. Certain products work well when they’re segmented based on the family makeup.
- Certain types of clothing stores
- Investment products (like a college fund)
If you understand the nuances of family makeup, you can often position a product as family-friendly. This will at least make mom and dad look at it twice and start to evaluate the product/service on its merits.
In addition to family makeup, events can have a major impact on buying behavior. For example, anniversaries, holidays (like Valentine’s Day), the birth of their first child, etc. are all great opportunities to target and capture high intent buyer interest.
These are just a few suggestions, this list is by no means exhaustive and you could come up with a creative angle to take advantage of family makeup.
Problems with demographic segmentation
While demographic segmentation is a powerful tool for growing your brand or collecting relevant data, it’s not perfect. There are challenges and shortcomings of demographic segmentation that you should be aware of.
The worst thing you can do is not use demographic segmentation at all. Many people think they don’t need it or it’s not applicable to their situation. The reality is that you can almost always take advantage of demographic segmentation.
This is the case even if the product can be used by everyone. You’ll still need to create tailored messaging for specific user groups to show them, specifically, why the product is a good fit for them.
Focusing on the wrong demographic segments
Not all demographic segmentation is useful for every type of product and many people try to force it. For example, a software product that does employee scheduling isn’t designed for a single-gender but you can try to force it into a gender category.
This may produce limited results but it may be a better idea to segment based on occupation since different types of businesses may have unique scheduling needs. Just because you can segment based on certain demographic factors doesn’t mean you should.
Your product or services will determine the best type of segmentation for you to use. You may need to go through a bit of trial and error beforehand to get it right.
Sometimes, more than one demographic segmentation (or another type of segmentation) is needed before you can get the results you’re looking for.
For example, two males that are thirty years old and have similar incomes may not want the same thing. One may be living in San Francisco, have no family, and is barely scraping by due to the high cost of living. The other may be living in Atlanta, married with two kids, and living comfortably because of a medium cost of living.
For the one living in San Francisco, a new car may be the last thing on their mind because they just can’t afford it and don’t need it. For the other, the growing family demands another car and it’s at the top of their to-do list.
Demographic segmentation is just one piece of the puzzle. Market segmentation like psychographics is also important to get a holistic view of customer segments. One data point can never tell the complete picture.
Demographic segmentation is a powerful tool to better understand a market and its needs. When you have accurate data, you can make educated assumptions and test them until you hit on products and marketing campaigns that move the needle for you.
As you interact with demographics more, you’ll get a better idea of which levers to pull and which ones don’t have a tangible impact on your bottom line.
Use surveys and forms to gather the data, distill the insights, and start running small tests based on what you find. Once you’re starting to get results, use multiple demographic or other segmentation factors to further refine your processes until you have an unshakeable persona that helps you craft clear messages that resonate.
That’s when your brand will start to truly shine.