To refresh your memory, let’s define demographics again. Demographic segmentation is among the many categories in market segmentation. Unlike geographic, which sorts people according to location, demographic segmentation classifies people according to age, sex, marital status, etc. Now that you have found a location, it’s time to look for the specific people for your target market.
One of the biggest mistakes a business can ever commit is to think that everyone wants to buy their product. The truth is not so nice. All people have different preferences. If you think everyone likes an apple, think again. Just as you have a list of things you need and want, and those you can do without, other people also have the same list, but the contents of that list will be markedly different from yours.
This is where demographic segmentation comes in. Demographics helps you identify that group of people who will mostly need or want your product. By identifying them and their locations, you can streamline your advertising campaign to target the areas where those people are frequently found. This converts to financial savings because you are not blitzing all of the country with your advertisements, when you only needed to advertise in certain regions.
So how to conduct demographic segmentation which narrows down the target market?
- Identify the demographics of people who will most likely buy your product. If you were selling dresses, you would automatically remove the demographic male from your target market, because males don’t wear dresses. Well, some do, but that’s beside the point. So that’s the first step, identify the basic demographic of people who will most likely buy from you. If you sell an XYZ product, who will buy? Sex, age, income, marital status are some of the common factors.
- Identify the second demographic. Within each main demographic, there are sub-demogrpahics. Age, for instance, can be divided into infancy, early childhood, childhood, preteens, teens, late teens, you adults, adults and so on and so forth.
- Now you get to do it again and filter even further. Are these young adults classified as students? What kind of student? College? If they are working adults, what are their professions?
- Two people live in the same house, are they just living together or actually married? Are both working? Only one working? Any children? If only one works, who is the homemaker? What are their combined incomes and individual incomes? Is their child going to private school?
- Is he/she gay? Do they have partners? Have they adopted any children?
- Where do these people live? Suburbia? Gated community? Apartments? Condos?
- Do they live in their own homes? Renting? Company sponsored housing? Halfway house?
Depending on what your product is, you can figure out who will buy it just by looking at all these different factors. It does kind of look confusing; just use some kind of profiling software to make all the calculations for you.
A good example of a business that recognizes its demographic market is the friendly restaurant nearby. At lunch, the restaurant will mostly play host to the business crowd, including executives, young adults to the elderly, male as well as female. At dinner hours, the restaurant will mostly be a dating place or a family eatery including retirees, children, friends, relatives etc.
So here there are two basic demographic segmentation types. Professionals and leisure class. So during work hours, your restaurant should be geared to work faster than normal for service. The business crowd only has an hour to eat, after all. What can be done to manage the rush of work during lunch hour and give optimum service to the working class? Perhaps you can allow people to reserve seats and pre-order their food, along with the added information of the time they should be expected to come in. Being a restaurant for working people, you are probably serving employees who work nearby.
On the other hand, to manage the leisure type of customers, you need more variety that they can experiment with, which might take time to cook as well. They have leisure time in hand to wait for the dishes. Changing the order of how things are done will be a hard thing to swallow mainly because they are used to their own routines and your own set routine.
You can see how useful profiling can be for your business. Compiling all the data, sub-data and then sub sub sub data can be a bit confusing though. Unless you yourself are a statistician, it would ultimately be better for your company, to hire professional researchers to mix and match all that demographic data for you to form a demographic segmentation. A cheaper, and more proactive approach, would be to buy profiling software and let the computer do the compiling. Once you have the data, all you’ll have to do is update the demographics from time to time. This will also save quite a bit of money for you, because you do not have to rely on paid consultants every time you need your demographic data updated.