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Segmenting customers into distinct groups depending on their shared characteristics is central to developing personalized marketing campaigns. Businesses across industries and geographies are increasingly adopting demographic segmentation to tailor their marketing campaigns and deliver a more relevant user experience.
This blog provides a detailed overview of demographic segmentation, including its factors, examples, benefits, how to use it for developing marketing strategies, and more.
Demographic segmentation refers to the process of grouping existing and potential customers into distinct categories based on their common traits, such as age, gender, education, income, and occupation.
These shared traits influence how users react and respond to your marketing campaigns and can thus help you target the right people with the right message. When done right, demographic segmentation enables you to ensure optimum utilization of their resources.
It is important to note here that demographic segmentation is not a one-time activity. You may find yourself segmenting the customer pool based on different criteria at different times as required by your marketing strategy. For example, a travel and tours company would want to know the marital status, number of children, household income, and other such details ahead of launching a new holiday package.
Demographic segmentation enables you to understand the composition of your customer pool and create groups that you can then target with more relevant messaging. Adopting this as part of your marketing strategy can engender a number of benefits.
Creating customer segments based on demographic factors enables you to use more relevant and personalized messaging that resonates better with the targeted group. For example, a streaming app could do an email campaign for a new anime movie for couples with kids, or a food delivery app could send a push notification to people with jobs to order something delicious to get rid of Monday blues.
Understanding who your target customers are and their preferences can significantly help align product development to meet the customers’ evolving needs. For example, with the growing environmental, social and governance (ESG) awareness of people belonging to the Gen Z and Millennial age groups, a lot of cosmetics companies today develop and market their products using messaging such as cruelty-free and environment-friendly packaging.
Marketing and advertising campaigns and initiatives that are developed to cater to a specific customer demographic segment will always be more impactful and effective than a more generic, one-size-fits-all approach. With demographic segmentation, you can target customers that are more relevant to you and more likely to make a purchase, thereby ensuring optimum utilization of the marketing budget with higher return on ad spend (ROAS) and lower customer acquisition cost (CAC).
Demographic segmentation allows you to bring the element of personalization into your marketing efforts. For the end user, this makes them feel valued and, in turn, helps you improve customer loyalty, satisfaction, and retention.
Grouping customers based on their income provides you with insights into their buying behavior. This information can help you determine the right price for your products and the right channels that ensure maximum outreach.
A business can use a demographic factor or a combination of factors to create customer groups. Some of the most widely used demographic segmentation factors include:
Let’s look at some examples.
A business-to-consumer (B2C) company can segment customers using demographic factors like ‘age, gender, and income.’ For example, a car company can design a marketing campaign for their luxury cars for people above 40 years and an annual income of $250,000 or above while promoting affordable cars with lower price points to youngsters between 21-25 years of age and low or no income.
Business-to-business (B2B) companies, however, would adopt a demographic segmentation that includes the “occupation” factor to ensure they are targeting the right person with their campaign. For example, a risk management solution provider could target risk management professionals across industries with designations of director level or up.
Once you’ve collected demographic segmentation data and created customer groups, then you can design marketing strategies for specific groups. Let’s understand this with the help of some examples.
People belonging to similar age groups often share similar tastes, preferences, and lifestyles. This information can help you to create specific customer segments defined by their buying persona for driving personalized marketing campaigns.
The list below shows the standard years of age-based classifications:
For example, companies in the food industry would target Gen Alpha with fast food, snacks, chocolates, and candies, while Gen Z and previous generations with healthier options. Given the growing health awareness globally, food companies today are highlighting their products’ nutritional ingredients in marketing messages to make them more relevant to their customers.
In another example, consider that you are a skincare company. Your target customers would comprise people from, say, 16 years to 60 years of age. So, you could target customers in the 16-25 age group through social media and influencer marketing via TikTok and Instagram, with messaging centered on the latest trends, such as glass skin, blemish-free skin, and others. For people in the 25-40 age group, you could use a mix of social media and television advertising with messaging focused on using sunscreen, reducing fine lines and wrinkles, and so on.
Understanding demographic segmentation is critical to ensure the right product is offered to the right audience with the right messaging. Imagine you’re a vacation company offering travel and tour packages.
Demographic segmentation based on ethnicity, religion, and nationality enables companies to better align their products and marketing efforts accordingly. For example, the global fast food chain company McDonald’s offers certain food items in certain countries to cater to the tastes and preferences of people in those countries. This includes offering soup in Portugal, McPinto Deluxe (a traditional dish) in Costa Rica, McPatongko (street food) in Thailand, Nasi Lemak in Malaysia, vegetarian and vegan burgers, and so on.
To create the right demographic segments and drive tailored marketing campaigns, you need a robust technology-based analytics platform. CleverTap enables you to understand your target audience, create demographic segments, and engage with them efficiently and effectively with the ability to scale as needed. It leverages real-time behavioral data to identify specific customer groups, thereby enabling you to deploy personalized marketing campaigns that are relevant to each segment.
CleverTap helps you enhance customer segmentation with a range of advanced tools and technologies, including
Want to see it in action? Contact us for a personalized demo today!
While demographic segmentation is important to developing a more targeted and personalized marketing strategy, it is not enough by itself. It needs to be coupled with other customer segmentation information, such as psychographics, behavioral, geographic, and others, to create unique groups that are more aligned with your business.
Geographic segmentation is the grouping of customers based on their location. Depending on your market presence, you can segment the audience by region, country, or even neighborhood.
Psychographic segmentation involves segregating customers based on their interests, lifestyles, personality traits, and values.
Behavioral segmentation refers to the process of grouping customers based on how they interact with your products or services. It involves analyzing their purchase history, brand loyalty, and other behaviors.
Knowing your customers is the first step in developing a targeted, personalized, and effective marketing strategy. While demographic segmentation is often regarded as rudimentary, it forms the foundation for marketers to build their more granular segmentation strategy. It is all the more important in today’s hyper-competitive business environment where every brand is trying to grab the attention of their prospective customers and meet their needs and expectations. Demographic segmentation enables you to “speak” directly to the customers, make them feel valued, and foster their long-lasting loyalty.
A: To segment customers based on demographics, you need to:
A: Segmentation is the process of grouping customers into different categories based on their common characteristics such as age, gender, income, and family structure while targeting refers to the process of selecting the groups that you want to focus on with your marketing campaigns.
