Demographic Segmentation: How to create and use it
A great way to waste marketing dollars is to ignore demographic segmentation. But since you probably don’t want to waste marketing dollars, it’s worth a few minutes to understand the basics of demographic segmentation as it relates to better positioning your products for success.
What is Demographic Segmentation?
Demographic segmentation is understanding how different demographic groups perceive your brand. Segmentation is different than targeting, as segmentation involves identifying how groups of people are different, while targeting involves actively selecting which groups you want to address.
The goal of a good segmentation study is to divide large, heterogeneous groups into smaller markets that may be more responsive to a targeted product or message. Breaking markets down into smaller groups is more efficient for both the brand and the consumer because brands can know whom to ignore and consumers are more likely to receive only messaging about products they are likely to be interested in.
Types of Demographic Data
Demographic data is descriptive data about people. It uses markers that describe how different populations live and define themselves. Some examples of demographics are:
- Education Level
- Presence of Children
- Residence Environment (Urban, Rural, Suburban)
- Sexual Orientation
- Family Composition
- Marital Status
- Years of Work Experience
Where to Find Demographics about your Consumers
There are two main ways to collect demographic data about consumers: Public records and private surveys.
Demographic 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 organizations have authoritative demographic resources, such as:
- United Nations Population Division
- Australian Bureau of Statistics
- Statistics Canada
- UK Census Data
- US Center for Economic Studies
- US Census Data
Many marketers find it easiest to collect demographic data about their consumers and prospects through surveys. If you decide to collect demographic data with surveys, it’s 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 cause confusion.
Here are some examples of how to ask demographic questions:
How to Use Demographics for your Segmentation Study
Demographics can be helpful 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 prefer to contact sales through an app versus on 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 behaviors and psychographics. Behaviors 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, behaviors, and psychographics, you create a powerful marketing triad that will drive your product design, channel strategy, pricing philosophy, and brand messaging.
Segmentation versus 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 against each one.