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Is Demographic Segmentation Important?

by Oren Greenberg on

Should You Target Based on Demographic Segmentation?

Demographics are defined as parameters such as gender, age, location, languages, annual income, marital status, family size, education, and more. These are the socioeconomic details. Many marketers use this information, and segment a target audience based on demographics. Whilst demographic segmentation is a good starting point, you shouldn’t rely solely on these parameters . They should indeed be taken into account to define the needs, desires, and habits of your potential customers. But they are not the holy grail. This practice would be seen to be a “one size fits all” approach for broad groups; something which is ineffective and unnecessary in today’s world. The times of segmenting solely according to demographics are gone. We now have more information at our fingertips about personalities, behaviours, pain points, and more. To rely on demographics is lazy, and it will waste money.

What are the consequences of demographic segmentation?

In marketing, once the customers have been divided into different groups, the campaign planning starts with the assumption that all members in the same group have the same trait. So, only those with this defined trait are targeted. In this way, marketers identify prospects for their products or service through the prism of demographics.

Targeting beyond demographics

One marketer recently asked his colleagues if they could identify their target audience. He was surprised that their answers were almost always a description of a demographic profile, such as “my customers are male millennials”. He gave an example of his two friends in that demographic group, to highlight the difference in tastes and preferences. See the table below:

  What is your favourite drink? What are your hobbies ? What is your preferred social media platform? Do you smoke?  
Matt Cider Hiking Instagram No
Arnold Beer Video games LinkedIn Yes

 This is one tiny example that highlights a broader problem. This is telling marketers that the focus should be on needs, desires, interests, fears, pain points, and motivations. To stop at demographics is a big mistake. Demographic groups are complex, inconsistent, and mixed.

Until now, it has been hard to get deeper information. But with the development of technology to help with audience research, plus new psychological insights, it’s now possible to create deeper personality profiles far beyond the basics of demographic segmentation.

This is demonstrated by the use of AI in building rich personas. As outlined in this article on VentureBeat, social media activity and insights from “social speech” provide deep clues about emotions and characteristics. This is where technology has revolutionised targeting.  

Using demographics

The advantage of demographic segmentation is that it’s quick and easy. It can be done using census data and other easily-obtainable surveys and/or reports. The disadvantages are that it is broad information, not suitable for basing digital marketing campaigns on alone. That said, don’t discount demographics completely. There are plenty of examples in everyday life whereby demographics inform targeting. We see it most candidly in media placements. For example, TV ads for retirement homes are slotted between midweek afternoon reality shows. Hair transplants are promoted in football magazines. Unethical though it is, betting shops and pawnbrokers are placed in the areas with lowest average income and highest unemployment. Demographics aren’t dead, but the use of demographics as the sole informer of strategy is outdated and unnecessary. Go deeper, and reap the rewards of more effective campaigns.