What is Demographic Segmentation and How Can it Help?

May 28, 2010 by  Filed under: Marketing 

Demographic segmentation is a vital first step in targeting both customers and potential customers.

If an organization does not know who its customers are (or its potential customers), it is literally shooting in the dark from a marketing perspective. Absurd as it may sound, organizations can and do attempt to market without this critical information. Instead, they use a shotgun approach: mailing out flyers in bulk, dabbling in radio advertising (or television or the Internet), tossing a message into the market and hoping (and praying) the right people will listen, hear and act.

The end result of such efforts is often disappointing. Money is expended with little or nothing to show for it. Even if there is, the organization has no idea whether or not it could have had much better results with even rudimentary targeting. To do so requires demographic segmentation and a test-and-measure marketing environment.

Demographic segmentation is accomplished in two ways: internal data analysis and market research.

The most accurate demographic information just might reside in your customer/potential customer databases. You are collecting information about your customers, right? This information is gold, so find creative ways to ask customers to tell you a little bit about themselves. A freebie, a coupon, something in exchange for basic demographic information such as age, education, income and the like.

If you already have data like this for your customers and/or markets, you need to turn the data into information. To start, create simple distributions as basic as what percent of your customers fall into which age brackets. Typically, you would do this for all of the demographic data you have.

Once you have done so, the next step is to look at the information in matrices, comparing, say, education and income, age and education, and age and income. What you are looking for a sweet spots. Are your customers primarily well-educated (college degrees or higher) and mature (45 years of age and older) or are they well-educated and young?

In a demographic segmentation, you examine patterns and look for anomalies that you can exploit from a marketing perspective.

Similarly, if your organization does not have, or cannot readily obtain demographic information in your internal databases, you would look to market research to understand your customers and markets. Market research uses random sampling to ensure that you get a representative approximation of your total customer or market base. At its most basic, you would commission a market research study to collect demographic data about your customers or markets. Using a survey, market research asks your selected population a series of questions. Demographics are a standard form of questions and you can ask additional questions that might reveal other critical information that would be of use to your organization for marketing purposes.

Once you have completed the survey, you analyze the results in much the same manner that you would with internal data.

What is critical in a market research-based demographic segmentation is that the research is conducted using random sampling techniques.

At first glance, doing market research in-house looks like an attractive and very inexpensive way to go. But great caution must be exercised. Generally speaking, your demographic segmentation results will only be a valid as the sampling procedures you use. A convenience sample of, say, an opt-in email list gathered from your organization’s website will likely yield interesting information, but it is highly unlikely to be representative of your entire customer base.

Once you have valid, reliable demographic segmentation of your customers or markets, you have a valuable and highly useful resource.

You can craft and customize your marketing communications to the demographics of the audience you are working to reach. On the old premise of birds of a feather flock together, if you know the demographic composition of your current customer base, you can target potential customers who look like your current customers. You can develop or re-align business processes that more closely fit exactly who your customers are.

A rudimentary example: support an important process in your business in a call center to service customer questions and issues. If your customer base is primarily senior citizens, do you want to train your customer service reps to be officious and crisp or friendly and inviting?

Demographic segmentation, correctly executed, can bring your organization to the next level of its evolution in the market. Quite frankly, companies that use demographic segmentation find greater success, while companies that do not often find themselves stagnant at best.

Up your marketing game by using demographic segmentation to move to the next level of marketing success.

Demographic segmentation can be a valuable marketing tool, but only if it is well-planned and well-managed. To discover even more, click here to visit the premier site for demographic and market segmentation information or for a quick overview, watch Dr. Bob’s video on the Fundamentals of Demographic Segmentation on YouTube.

Article Source:

http://EzineArticles.com/?expert=Robert_S_Sherman

Robert S Sherman - EzineArticles Expert Author

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