Demographic Segmentation

A major tool of marketing today, demographic segmentation is one of the easiest segmentation strategies to tap the potential market without wasting your resources. To know more about demographic segmentation, its variables, advantages and disadvantages, read on....
In marketing, it is very difficult for a single organization to satisfy the needs of all consumers, and therefore it has to resort to the concept of 'market segmentation'. Through market segmentation, it is possible for the organization to fulfill the needs of all consumers belonging to a particular niche, instead of trying to fulfill the needs of entire market - which is virtually impossible. Various strategies of market segmentation are being used by different organizations today, and 'demographic segmentation' seems to be the most sought-after of them all.

Why Segment Your Market?
Market segmentation is basically the division of market into smaller segments in order to make marketing easier and avoid waste of resources. It helps the organization tap the available resources, to satisfy the needs of a particular section of the market which it caters to. Simply put, it helps companies identify potential consumers and target them - which, in turn, results in efficient use of resources. The division of market is carried out by using one of the five segmentation strategies
» Behavior segmentation
» Benefit segmentation
» Psychographic segmentation
» Geographic segmentation
» Demographic segmentation
In case of geographic segmentation, the market is divided into various geographical regions. It helps a company dealing in air cooling systems, identify and target the tropical market wherein the consumer is expected to buy air coolers, instead of targeting the cold regions wherein air coolers are of no use.

Demographic Segmentation: Definition
Demographic segmentation is basically market segmentation executed by taking various demographic factors, such as age, gender, social class, etc., into consideration. (The word 'demographic' is derived from the word 'demography', meaning the study of population.) It helps the organization divide the market into several segments or groups, each having a common variable, and target each of these groups to enhance the performance of the organization. This market segmentation strategy aims at understanding the prospective market, and taking necessary steps to ensure that the needs of a targeted group are fulfilled.

Demographic Segmentation Variables
Segmentation variables are basically factors which help the organization in determining the target group. In demographic segmentation, variables mainly consist of demographic factors such as age, ethnicity, occupation, etc. Below we have given a list of demographic segmentation variables which are commonly used to divide the market into smaller segments.
» Age
» Gender
» Family size
» Family life cycle
» Income
» Occupation
» Education
» Ethnicity
» Nationality
» Religion
» Social standards
Based on these variables, an organization can decide which group they need to cater to. An organization dealing in sports cars, for instance, will have to target people from 20-40 age group. On the other hand, an organization publishing women's magazine has to focus on targeting the female population. Demographic segmentation helps these companies identify their respective consumers, and efficiently cater to their needs.

Demographic Segmentation Advantages and Disadvantages
If demographic segmentation is one of the most popular methods of market segmentation today, it is because of certain benefits which make it the first choice for various organizations. The two prominent advantages of demographic segmentation are:
  • The organization can easily categorize the wants of the consumers on the basis of demographic factors such as age, gender, etc.
  • Demographic segmentation variables are much easier to obtain and measure, compared to the variables of other segmentation strategies.
One of the most prominent disadvantage of this market segmentation strategy, which is often cited by its critics, is the one dimensional approach that it follows. In this segmentation strategy, it is usually believed that all the individuals belonging to a particular 'group' have same needs - which is not necessarily the case. If an organization is resorting to demographic segmentation alone, it is more likely to be vulnerable to its competitors.

Demographic segmentation helps the organization understand the customers, and satisfy their needs. In a market driven by intense competition, market segmentation analysis can be of great help. Basically, market segmentation is based on the simple fact that you can't please all consumers with a single product; and therefore you have to identify the potential market, divide it into various segments and cater to the needs of each segment individually in order to become a successful business entity.
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Last Updated: 3/15/2012
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