How Demographic Segmentation Works and How To Use It (2024)

Would you try to sell snowshoes in Puerto Rico or baby strollers to people in their 90s? While you might appeal to the occasional Puerto Rican ready for a winter vacation or great grandparents buying gear for their newest family members, this is unlikely to be a winning strategy with a large target market.

Smart marketers understand that different demographic segments want different goods and services, and they design their marketing strategies based on demographic factors. Known as demographic segmentation, this sales and marketing approach is a driving force behind some of the most successful marketing campaigns.

Here’s an overview of demographic segmentation in marketing, plus some examples of prominent brands that target specific audiences in their marketing messages.

What is demographic segmentation?

Demographic segmentation is a marketing strategy that divides a target audience into specific segments based on measurable characteristics. A business can then conduct targeted marketing and pricing strategies to appeal to each demographic segment.

To implement this strategy, marketers consider demographic segmentation factors like location, age, gender, income, education, occupation, family size, religion, ethnicity, nationality, and returning customer status. You can collect demographic data using surveys, ecommerce analytics tools, focus groups, social media insights, and third-party data sources such as census data.

If marketers accurately collect demographic data, identify the varied segments that make up their target audience, and create messages directed at those groups, they can reel in potential customers who may have otherwise gone uncaptured with a generic marketing campaign. Companies that segment based on demographic variables may find it easier to meet customer needs, learn client preferences, and ultimately close more sales.

Why demographic segmentation matters for ecommerce

Demographic segmentation lets marketers work more efficiently as they strive to connect with new and existing customer bases. Here are five reasons to embrace demographic segmentation in your marketing efforts:

• Increased precision. By analyzing key data points related to demographics, ecommerce businesses can tailor marketing messages, promotions, and product offerings to specific groups, leading to higher engagement and conversions. 
• Improved customer experience. Demographic segmentation enables businesses to provide personalized services and recommendations, creating a more engaging and relevant shopping experience that makes customers feel understood and valued.
• Provides insights for product development. Learning more about your customer demographics helps your product team address the needs, preferences, and pain points of your shoppers. This market-based approach helps you make products people want to buy, leading to higher sales volumes and increased customer satisfaction.
• Efficient use of a marketing budget. By focusing marketing efforts on well-defined demographic segments, ecommerce companies can maximize their return on investment (ROI) through strategic targeting.

Types of demographic segmentation 

In today’s stratified media atmosphere, it’s hard to craft a marketing campaign that appeals to every single person who encounters it. People may respond differently to the same marketing material depending on factors like their age, marital status, and geographic location. Knowing this, businesses sometimes break customer groups into demographic segments and then create personalized messages that resonate with specific audiences. This marketing strategy can lead to more effective ad spends, with more audience members converted into paying customers.

Here are some demographic segmentation examples that illustrate how companies aim their messages at specific target markets:

Geographic location

Marketers care about geographic segmentation because a person’s home environment can significantly influence their lifestyle, climate needs, and cultural values. This demographic variable helps explain why you might sell more surfboards in Tahiti than in Kansas, or why a person living in Austria would rather see German ad copy than Japanese ad copy.

Age

Dividing up the public based on age groups is one of the more common types of customer segmentation. Age segmentation is valuable because different generations have different standards and customer preferences. For instance, baby boomers who came of age in the 1950s and 1960s may consume more media via television, while younger audiences get more of their information from the internet.

We often see age segmentation in the clothing industry. For instance, the brand Goodfair targets a younger age group by emphasizing its eco-friendly roots, while shoemaker Rothy’s sets its sights on a broader age range, targeting those who care about sustainability and comfort.

Gender

Advertisers frequently embrace gender-specific marketing, though it is important to avoid gender stereotypes when doing so. Use customer behavior to guide demographic segmentation based on gender. For instance, market research shows that more women purchase makeup than men, so it makes sense that Cheekbone Beauty would run advertising campaigns featuring lots of women’s faces.

Income range

Income-based market segmentation happens naturally. Certain products and brands are only within reach of people who can afford their price tags. The income segment you’re marketing to can impact not just the kind of messaging you create (a focus on luxury versus value for money, for example), but the channels where you allocate your ad spend. For example, you may target high-income individuals by advertising in financial newspapers or high fashion magazines, and target lower-income segments via channels like broadcast TV or social media.

Family structure

This is a type of segmenting based on marital status, family size, and family roles. This type of demographic segmentation benefits advertisers because it lets them tap into purchasing priorities, such as single people buying household essentials, parents buying children’s products, or couples buying travel packages. For Lunchskins, a company founded by a mom looking to eliminate plastic waste when packing school lunches for her kids, it makes sense to target parents and families in its marketing campaigns.

Education

Educational background can impact consumer preferences, needs, and their approach to purchasing decisions. It can also influence how brands can effectively communicate with target audiences. Market researchers collect data about education levels among their existing and potential customers. They then may write ad copy using language that’s more likely to resonate with their perceived customer base. Someone selling to professionals with doctorates is likely to phrase their message in a different way than someone marketing to high school students.

Occupation

Marketers can target customer groups based on the kind of work they do. What makes this demographic segmentation important is that it unlocks the ability to market niche products that only apply to certain industries. For instance, if you sell medical scrubs or piano tuning equipment, you’ll be marketing your products to a very specific group of people, which makes segmentation a powerful tool for optimizing an ad budget.

Ethnicity and national origin

Businesses can learn about a prospective audience’s nationality and ethnicity by conducting market research or simply by reviewing US census data. By focusing on these demographic segmentation variables, businesses can better address the needs of specific communities, providing products that align with their values and traditions. This type of segmentation also helps marketers decide what language to use for their ads.

Religious and cultural background

Religious and cultural background demographic segmentation is important because it doubles as a type of behavioral segmentation. It also serves as a form of psychographic segmentation because religion and culture often align with beliefs, values, and lifestyles. For instance, if some demographic segments of your target market follow a halal or kosher diet, you may decide to highlight that your products are halal or kosher certified, or even develop a new product that caters to this group’s needs.

Relationship to the brand

Businesses may combine demographics like gender and age with another key form of segmentation: whether or not a person is a repeat customer. Brand loyalty plays a big role in purchasing decisions, as do other factors related to branding, like whether the prospective customer has seen the company’s ads or even knows its name (brand awareness).

Businesses solicit customer feedback and put a premium on customer satisfaction as a way to encourage repeat purchases. They can also offer referral programs where existing customers get rewarded for bringing in new clients. This expands the business’s reach and promotes increased customer loyalty from those who already know the brand. Companies like Bombas, Brooklinen, and Saie have all used referral marketing to drive new business to their online platforms.