What Is Demographic Segmentation? With 6 Examples

Updated April 24, 2023

Infographic with seven types of demographic marketing

Effective marketing campaigns combine many different tactics to identify their target audience, analyze behaviors and determine how to reach them. Demographic segmentation is one of the most popular and successful ways to build a target audience.

In this article, you will learn what demographic segmentation is and the benefits of applying this marketing strategy and see common examples of how it works.

What is demographic segmentation?

Demographic segmentation divides the consumer market into smaller categories based on common demographic factors. These smaller segments help companies understand their prospective markets better, allowing them to utilize their resources and time more efficiently. Studying how different demographics engage with products and services helps companies develop and update their marketing strategies.

Common variables for demographic segmentation in marketing

Companies look at several variables to analyze their target consumer base. They study these variables, then adapt their marketing and production accordingly. The most common variables used for demographic segmentation in marketing include:

Age

Age is the most straightforward demographic and also one of the most important variables. Consumer preferences change with age, and different age groups consume and respond to advertising differently. The age variable has three categories:

Age range: Age range represents a specific age group, such as two- to four-year-olds and 13- to 15-year-olds and is commonly used for retail marketing.
Life-cycle or life-stage: These stages may include infants, children, adolescents, adults, middle-aged adults and senior citizens. The housing market may use cycles and stages, as well as educational institutions and the personal care industry.
Generation-based: This breakdown defines age by generation, such as baby boomers, Generation X, millennials and Gen Z. Consumers within generations will differ slightly in age, but still tend to share characteristics, viewpoints and ideas.

Gender

It's important to not conflate the separate constructs of gender, sex and sexuality when creating a marketing plan for your product. In recent years, there has been a push toward more gender-neutral marketing techniques. Avoid leaning into gender stereotypes and representing your brand as too binary. Consider if your product actually needs to segment the consumer using gender. Often, your marketing techniques could benefit more from using other classifications such as age and income.

Income

Income communicates useful information about the buying power of a company’s target consumer. The average income of a demographic determines how a company will price its products and services.

With income data, it can determine how its audience spends money on the high and low ends of the spectrum. For example, luxury car brands cater only to the high-income segment, while retail stores generally provide options for low- and middle-income segments. Other companies create tiered options for the same product to cater to multiple income segments within their target audience.

Related: Examples of Target Markets

Occupation

Occupation targeting allows companies to focus their resources on specific industries and job titles. This is beneficial for companies with account advertising because they can target at the account level, which holds the highest revenue potential. Occupation segmentation can also help divide groups of people into specific locations such as cities, suburbs and rural areas and is sometimes combined with income segmentation.

Ethnicity and religion

With a wide variety of ethnicities and religions in the United States and an increase in international business, it's important to consider these groups in marketing. Each culture has unique interests and preferences that can impact buying habits and marketing responses. Some companies that sell their products internationally change their advertisements based on ethnicities, religions and cultural differences throughout their consumer base.

Family structure

Family structure plays an important role in family needs and desires. Large families may prefer low-cost, bulk products, while singles may spend more money on vacations and high-end services. Changes in family dynamics then lead to changes in those needs and desires. Newlyweds, newly divorced, newly widowed and couples having their first child will likely show a change in how much they are willing to spend and what types of products they buy.

Examples of demographic segmentation

The following are some examples that represent the different types of demographic segmentation:

Age: Advertisements that feature cuddly stuffed animals are aimed toward young children, while different kinds of video games can be marketed to ages 13-34, depending on the type of game.
Gender: Skin care commercials and ads that feature nonbinary people as well as feminine and masculine-presenting people could signal to your target audience that your product line is inclusive and meant for everyone to use.
Income: Luxury products are one example of a brand that targets its customers based on their income. Think of an ad that features a sleek sports car as opposed to a marketing campaign that focuses on a car that gets great gas mileage.
Occupation: An ad campaign that features an office employee who takes breath mints right before a big presentation is appealing to a demographic based on occupation. In the same regard, ads that include construction workers seeking pain relief products appeal to a specific audience based on their occupations.
Ethnicity and religion: Companies that make kosher products are often appealing to customers based on their religion and ethnicity. In the same respect, bibles and jewelry with religious symbols are also appealing to a specific demographic.
Family structure: Commercials that feature easy-to-prepare meals that kids will love are targeting parents who are juggling work, childcare and meal prep.

What are the benefits of demographic segmentation?

The demographic segmentation of consumers is one of the most commonly used practices because data is easy to collect, inexpensive and effective. Here are the main benefits of demographic segmentation for marketing:

Readily available information

Pulling census data to determine the target demographic is simple. Analytics software and consumer reviews are easily obtained and provide valuable insights into the consumer market. This helps businesses determine who they want to market to, where those people are located, which marketing techniques they respond to and what they are generally willing to pay.

Increased ROI

With demographic segmentation, companies are better able to market directly to their target audience in ways that generate a healthy consumer response. This, in turn, increases revenue, especially from email campaigns and new product launches, without increasing expenses.

Customer retention and loyalty

Because companies focus more on their customers' desires and needs, customer retention and loyalty increase. Through personalized marketing strategies, companies can reach customers on a more human level, which creates a deeper connection. When customers are valued, they are more likely to be repeat customers.

Improved products and services

Knowing consumers on a deeper level means companies can adjust and improve their products and services to better meet consumer needs. With improvement comes greater retention and an increased ROI.

Optimized marketing strategies

Segmenting the market also allows companies to get more creative and specific with marketing. When they know exactly who their audience is and what they want, they can clarify their message and future advertising plans. This saves time, resources and money.