Demographic segmentation: how-to guide

Marketers need a way to better understand their audiences. Demographic segmentation divides heterogeneous groups of people into smaller groups based on characteristics that can be defined and measured, such as age, income level, or family size. Specific categories of people become a target demographic for marketers, helping them sell to these groups more easily. It assumes that smaller groups have similar preferences that make it easier to sell to them.

Demographic segmentation helps marketers be very specific about their target market. Demographics include age, income, occupation, and other similar variables that describe a group of people. Companies use surveys at one point in time or at several points in time to understand changes in customer preferences and behaviors. Using demographic analysis with survey data can be used to create user personas that summarize the tastes of each group. Personas personalize demographic data, helping marketers to envision a person, not just a group of statistics.

For instance, a marketing team may create B2B personas to understand their customers better. By combining their age, occupation, and other variables, they can make a persona that reflects their target market’s decision-making process and buying habits.

Surveys are an easy way to collect demographic data. They are available in our survey templates to ensure the results meet your project’s needs. Demographic segmentation questions include:

In addition to demographics, you may also use psychographics, behavioral, and geographic questions to categorize people. Marketers combine the answers to these questions and create groups of people with shared attributes and preferences. Based on these groups, they will clarify who their target market is and define their buying preferences. 

By using a survey, marketers collect data that is specific to their business goals. Marketers can design a custom survey or use an existing template.

In addition to surveys, government agencies like the Bureau of Labor Standards provide household, income, education, and health data used for marketing strategy and business goals.

Because of the widespread use of smart devices, granular data is available from apps that collect a wide variety of data, including photos, travel patterns, hospital wait times, and virus contact tracing. Now in use for complex clinical trials or academic studies, these apps capture vast amounts of demographic data at a specific point in time or over several time periods.

Marketers speak to their target audience using messages that appeal to their specific demographic segments. Having a strong understanding of their demographic segments will allow marketers to create key messaging content that speaks to their target audiences and forms the basis of their marketing strategy.

Marketers use these concepts to develop a consistent flow of marketing campaigns, ads, social media posts, packaging, and other messaging that raises customer awareness. Messaging must be consistent across all channels to demonstrate the value their brand provides to their target market.

A consistent brand position will build value for a company. For instance, Amazon, Microsoft, and Spotify are three of the biggest growing brands that provide the value their target markets desire: empathy, agility, and affinity. Microsoft empathizes with customers’ needs, providing them with leading software products. Amazon customers like agility, the ability to quickly adapt to changing times and new products. Spotify customers are incredibly loyal, creating an affinity relationship with Spotify's music service.

Over 95% of new product launches fail. Companies who use demographics to define their target market and create consistent messaging have a greater chance of survival.

US advertisers spend over $250 billion to get our attention. Companies like Amazon, Proctor and Gamble, and Walt Disney (three of the biggest advertisers) want to make sure they advertise to the right people.

For instance, the Walt Disney Company might appear to target children, but they target the entire family, including children, tweens, teens, and adults. “You’re dead if you aim only for kids. Adults are only kids grown up, anyway," said Walt Disney.

Surveys can be used to identify  specific demographic groups and understand how much they will pay and how frequently they would buy your product.

Companies with existing products frequently use surveys to see how their customer buying behaviors change or identify new market trends. Looking at this survey data across different demographic segments helps companies invest their resources in the right products and target the right audience segments.

Age is usually an indicator of customer preferences. However, to avoid asking for personal data, surveys ask people to identify with an age range. Sample answers include:

Surveys can be structured to collect data about one person or an entire household. Marketers like to know how many people live in a household and what their ages are. Family size and age ranges help marketers understand household habits and buying preferences for every age range.

Survey respondents are frequently categorized by generation. Gen X, millennials, Gen Z, and baby boomers all have different preferences and attitudes. Companies use generational demographic variables to create marketing messages, packaging, and campaigns that appeal to specific age groups. For instance, young age groups are typically more familiar with technology, but baby boomers may need less tech, and are less interested in it.

Sexual Orientation and Gender Identity (SOGI) questions ask for personal information and should be carefully considered. Understanding and communicating your survey’s purpose is critical to help people feel comfortable answering these questions.

Depending on the nature of your survey, gender questions may include:

Gender can make a difference in both B2C and B2B marketing. For instance, one study showed that when women attend a business event, they want to be inspired, educated, and network with peers. However, men like business events to find out about the latest and greatest products. Understanding the gender of your audience will impact how successful your product, service, or event will be. Marketers are also using these questions to become more inclusive and develop products designed for SOGI differences. More guidance on how to ask these questions in a survey can be found here.

Income plays an important role in determining if people can afford a company’s products, especially for luxury goods retailers to target upper-income demographics. Income questions can include:

Marketers use income demographics to target their advertising, especially for high-end products. For instance, the Tesla Model X targets male customers who earn over $143,000 per year, over twice the average US household income. Companies target their product design and marketing campaigns to people who can afford a luxury car with a high price tag.

Occupation demographics indicate if a person is employed, to what extent, and what occupation they pursue. Employment refers to how frequently a person works and occupation describes their field of work. Companies can design custom surveys or gather public data from the Bureau of Labor Services website.

A person’s occupation and role indicate their specialized skills and how they make money. Employment shows how consistently they are working in their occupation. Based on these two factors, marketers use this information to define their target market’s income level and professional interests.

B2B marketers rely heavily on occupation demographics to target customers with specific professional skills or interests. In B2B marketing, occupation and role define what industry they work in and their decision-making ability. B2B marketers target people who make buying decisions, making their role or title an essential demographic.

Understanding a group’s ethnicity helps to create products that appeal to their common beliefs and interests. Potential questions include:

Marketers can position new products and services to these ethnic groups including food, cosmetics, and personal items. According to new research, Black, Asian, Latinx, Native American, and multicultural groups are all expected to have increased buying power.

Geographic demographics segment buyers based on where they live. These regions can be as large as a country or as small as zip code or neighborhood. Typical questions include:

Preferences vary by region, giving marketers a better opportunity to tailor their products and services. Country and regional differences influence how marketers develop and sell their products.

Direct mail advertising uses zip codes to target potential customers for local retailers. These businesses can focus their ad budgets on residents and income levels who will buy their products. Geography can indicate a person’s income level and preferences, allowing marketers to target their audience better.

Education demographics can include the education level, languages, and occupations of the respondent and their family members. A typical survey question and answer options include:

What is the highest level of school you have completed or the highest degree you have received?

Education demographics are critical for media and book publishing companies. In general, the more educated people are, the more often they read. In 2019, over 90% of people who had a college degree or more read books. However, only 75 percent of those who had some college and 61% of those who attended high school read books.

Marital status influences people’s preferences and buying habits. Typical survey questions include:

Marital status may influence income and decision making. For instance, twice as many single women are buying homes than single men, according to one report. For B2B marketers, this demographic data is critical to realtors, construction companies, and appliance manufacturers who need to tailor their products to this demographic.

Marketers create more specific demographic groups by combining marital status, age, income and other variables. Life Stages are a type of demographic segmentation example that includes:

You can easily analyze your survey results and sort responses by demographic variables using SurveyMonkey’s tools to understand your data and create insightful results.

Create filter rules.  When designing your survey, think about how you want to filter your results. If you wish to group on specific demographic variables, you can include a question in the survey that will allow you to filter by that group.

For example, if you want to understand the income levels associated with a zip code, you can filter for those demographics.

You can use single or multiple filters. Filter types include:

Compare rules.  The Compare rules feature lets you choose two or more answer options from a single question and view them side-by-side.  This feature is valuable for demographic variable analysis, easily comparing data that clarify your target audience.

For example, if you include a question in your survey asking people their age, you can create a compare rule to view each age range’s results. This will show how different age groups responded to questions in your survey.

Crosstabs. As part of our paid feature, Crosstab reports let you choose questions and answer choices to display in a table for easy comparison across multiple questions and share them with other people. A table shows how many times an answer choice was selected, the percentage of responses, and the total number of responses per answer choice.

If you want to compare two or more answers from a single question, you can use a compare rule. Crosstab reports are best for when you want to compare multiple questions and answer choices all at once.

Once collected, responses are grouped according to common traits. The practice of breaking down a larger group of people into smaller segments with similar needs, requirements, and interests is called market segmentation.

Companies may use different methods to group their segments apart from demographics, including psychographics, lifestyle traits, and customer behaviors. The goal is to find common characteristics that represent your potential customers.

Some market segments will be ideal customers and other groups will not buy the company’s products. The next step is for a company to identify and select a target market. Based on all the market segments under review, a company must choose which markets they will invest in, or focus on. A target market allows companies to focus their resources, perform in-depth market research, and create the ideal messaging and packaging that will appeal to them.