To develop a successful marketing plan, you must know your target customers. With this knowledge, you can increase sales and improve profits. One way to understand your customers better is to analyze their demographic profiles.
Demographic segmentation segregates the market into groups based on demographic variables. These include age, gender, family size, income, occupation, education, religion, race and nationality. Here’s a summary of key demographic variables:
- Age: Consumer needs change with age. If you are targeting customers of different age groups, you must design and promote a product or service differently for each age group. For example, toothpaste manufacturers market toothpaste to kids (Crest Kid’s Spider-man) and adults (Crest Pro-Health Gum Protection).
- Life-cycle stage: This variable is closely related to age, but it is not the same. For example, a 40-year-old married man with kids may not have the same needs as a 40-year-old bachelor. Each is in a different stage of life. Marketers use this variable to segment the market. In sectors like tourism and leisure, packages are specifically designed to meet the needs of children, honeymooners or “empty nesters.”
- Gender: Gender is a major demographic variable for marketers. For example, Procter & Gamble’s Gillette Mach 3 is a personal grooming brand for men, whereas its Gillette Venus brand caters women. Industries like clothing, hairdressing, magazines, toiletries and cosmetics widely use gender segmentation.
- Income: This variable defines the capacity of a customer to purchase a product. For example, luxury good marketers usually target affluent customers, because they know low-income customers cannot afford their products or services.
- Education: Education levels influence customers’ choice of products and brands. Highly educated customers may appreciate verbal advertisements, while less educated customers may prefer visual ads.
Other demographic variables include religion, marital status and average size of family. Marketers use these demographic variables to segment markets. Marketers can then focus on the most relevant and profitable segments of the market. Customer demographic profiles help marketers make decisions about pricing, product, advertising and promotion.