Demographics explain who makes up your audience and help you to segment your customers by individual characteristics and needs…

Have you ever seen an ad aimed at an audience that clearly didn’t include you? If so, you’ve witnessed the power of demographics in marketing. Demographic data can help brands to narrow the scope of their marketing efforts so that their time and money aren’t spent pursuing people who are unlikely to become customers. After all, not everybody will be interested in that website ad for a dating website.

business owner or marketing expert can harness the power of demographic segmentation in marketing. Below, learn all about demographics and how to use them in marketing segmentation.

What is an example of a demographic?

Here are some examples of demographic data and variables for consumers:

• Age group
• Gender
• Race
• Ethnicity
• Location
• Marital status
• Education level
• Occupation
• Employment status
• Income level

For businesses, demographic data and variables (also known as firmographic data when collected for businesses) may include the following:

• Company size
• Industry
• Products or services provided

All of these demographics reflect basic qualities that can be used to determine the market segment to which your target audience, whether businesses or people, best belongs. In other words, demographic segmentation allows you to divide a larger target market into smaller subgroups that may be more receptive to certain products or marketing strategies.

What is demographic segmentation?

Demographic segmentation is the division of a target market into smaller groups of people who share demographic characteristics. For instance, a luxury jewelry company looking to target customers in the Northeast may divide this massive target audience by location (state or city) or income level (a lower-income consumer may not be able to afford the company’s products). Demographic marketing, which is one of the four market segmentation types, can streamline your business’s promotional efforts and help direct your work toward a narrower, but likely more receptive, customer base.

The five main segments for demographics

Although there are many examples of demographics, there are five main segments for demographic targeting: age group, gender, income level, education and occupation. While all of the major demographics have merits when it comes to your marketing strategy, a demographic segmentation strategy that prioritizes the five main segments may prove more fruitful, since these demographics tend to most strongly inform consumer behavior, interests and needs.

Additional types of market segmentation

In addition to demographic marketing, there are four other types of market segmentation:

• Psychographic segmentation. Whereas demographic marketing is based on objective qualities, a psychographic segmentation strategy relies on subjective traits. These traits may include personality, values, interests, lifestyle, beliefs, priorities, motivations and attitudes. For example, a payroll software company using psychographic market segmentation may promote its products to business owners who prioritize staying tax compliant as efficiently as possible.

• Geographic segmentation. Location can be part of a demographic marketing strategy, but in geographic segmentation, location is the entire focus. Use a geographic segmentation strategy to divide your customer base by country, city, ZIP code, climate, urban or rural setting, or proximity to a certain location. An example of geographic market segmentation would be an electric scooter company aiming its products at people who live in crowded cities.
• Behavioral segmentation. A behavioral segmentation strategy focuses on consumer behavior. It requires marketing research into consumer purchasing habits, spending behavior and brand interactions. Any company that targets customers who have bought similar products from either that company or competitors is using behavioral segmentation as its marketing segmentation approach.
• Firmographic segmentation. Whereas demographic segmentation applies to people, firmographic segmentation applies to businesses. Firmographic segmentation involves dividing target companies by factors such as industry, location, size and revenue. For example, a water delivery service with limited supply may use firmographic segmentation to market itself to smaller businesses that may not demand as much water.
• Market segmentation. Marketing strategies often involve market segmentation, since this approach details the makeup of the target audience. Market segmentation can be especially useful for social media marketing, because narrowing the audience of a social media campaign can boost engagement rates while lowering marketing costs. Market segmentation also overlaps with market research. As you narrow your target audience, you will naturally come to learn these customers’ behaviors, interests and needs.

Why are demographics important in marketing?

Demographic targeting is important for determining the group of people who best fit your vision of the ideal customer. Demographics can – and should – inform your marketing strategy from the bottom up, as pushing a product to an unreceptive audience can be a wasteful use of time and money.

Demographics are crucial for the following aspects of your company:

• Business plan. When determining how your business will earn revenue, you need to be sure that your most likely customers are aware of your products and services. Therefore, the very foundation of your business plan should be to figure out the target market for your products and services, and demographics can help you determine that.
• Market research. When you are gathering data about your customers’ wants and needs, demographics can be of paramount importance. Dividing market research tasks by demographic can allow you to identify the consumer subgroups that are the likeliest to buy your products or use your services. You may even discover that the groups you had initially expected to be most responsive to your company are uninterested, while the groups expected to be uninterested are highly responsive.

• Image building. Messaging, branding and image are vital for brand success, and demographics can help you finalize each of these marketing tools. By knowing the age, social class, gender and other crucial demographics of your current consumers and target audience, you can develop your company’s logo, imagery and general presence to best appeal to your customer base.

• Media use. If your demographic research determines that your customer base skews older, using social media to reach them may backfire, as social media audiences tend to be younger. Likewise, placing ads on a men’s magazine website may backfire if you learn that your audience is mostly women, and pitching coverage in a local newspaper may be ineffective if your demographic research does not identify that particular region as a hotspot for your company.

How do companies use demographics in marketing?

Here are some of the ways companies use demographics in marketing:

• Social media marketing. Most social media platforms’ key demographics are readily available. Your company can use these demographics to inform your social media strategy. Look at where your customers’ demographics overlap with those of social media. For instance, if your customers are primarily women and you see that Pinterest’s user base is overwhelmingly female, you may find Pinterest campaigns especially useful.

• Ad spends. Knowing your customers’ demographics can inform your ad spend strategy. Age group is a particularly powerful demographic for ad spending, especially for products that target young adults who spend often or older adults with greater spending power. According to one survey, during an eight-month period in 2018, digital advertising efforts geared at people 65 or older increased by 25% and ad spending for data on consumers ages 25 to 34 increased by 23%.

• Marketing campaign images. Visuals and images, whether digital ads on websites or large ads seen at public transit stops, can be crucial to your marketing plan. However, if these visuals are not relevant to the groups you are targeting, the images will be far less effective. Use demographics to help you decide whether your images should appeal to women or men, older or younger customers, people in urban or rural areas, and more.

• Ad and marketing image placement. Speaking of public transit ads, why would you place ads for a product with a mostly rural consumer base in subway stations or on the sides of buses? That’s why so many public transit ads are for movies or apps: People living in urban areas tend to use these products and services more than rural residents do.

Where to find demographics

When you’re learning about the ways demographics are used for marketing, you may be wondering, where are businesses that successfully market to demographic segments getting their demographic data, and how can your business do the same?

These are the primary methods of demographic collection in the digital era:

• Customer accounts or orders. If a customer has created an account with your business or placed an order for shipping to their home, then you already know one of their major demographic variables: their location. These accounts can often give you even more demographic info. For example, if you own a clothing company for which customers register accounts online and save favorites to their accounts, you may be able to at least guess your customer’s gender.

• Browser cookies. In recent years, browser cookies have become controversial among the online security community; you’ve likely had to agree to the terms in a notification on a website informing you that cookies were being collected. That’s because cookies collect and store your personal data, which makes them great sources of demographic data. If you install cookies on your website, you may be able to easily access demographic information.

• Digital apps and online platforms. You can use third-party demographic marketing services to collect demographic information on your target audience from digital apps and online platforms. Data collected via these services can paint a detailed picture of the demographics your marketing efforts should target.

Conclusion

The ease of obtaining demographic data is a huge factor in the popularity of demographic marketing and segmentation. Just make sure you have a plan in place before turning your data into marketing campaigns and, hopefully, results.