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 to show the right advertising to the right people – for example, only customers in Omaha need to receive ads about the Omaha state fair. 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 markets 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.

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 and their employment status and spending power. If you’re doing market research for a luxury convertible, you’ll be looking at your audience through a different lens altogether.

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Types of demographic data by which you can segment

Demographic data is descriptive data about people and their lives. It uses markers that describe how different populations live and define themselves. Some examples of demographics are:

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

Find out more about types of demographic categories, and the applications they can have for your business, in our article Demographic survey questions that yield valuable insights.

Where to find demographic data about your consumers

The chances are you already hold some information about your existing and potential customers that can be used for segmentation. This might be from information they’ve shared directly, such as 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 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:

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

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 center follow-up.

If you decide to collect market demographics 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.

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, include a “prefer not to say” option so respondents can skip questions as they choose.

Here are some examples of how to ask demographic questions:

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 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.

Related segmentation resources:

What is market segmentation?

A beginner’s guide to psychographic segmentation

What is geographic segmentation and how to put it to work?

Customer segmentation to increase revenue: Examples from Best Buy, Mercedes Benz, and AMEX