In demographic segmentation, the market is divided into groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social class.
There are several reasons for the popularity of demographic variables to distinguish customer groups. One reason is that of consumer needs, wants, and usage rates and product & brand preference are often associated with demographic variables.
Another is that demographic variables are easier to measure. Even when the target market is described in non-demographic terms (say, a personality type), the link back to demographic characteristics may be needed in order to estimate the size of the market and the media that should be used to reach in efficiently. Here is how certain demographic variables have been used to segment markets.
Age and Life-cycle Stage
Consumer wants and abilities change with age. Toothpaste brands such as Pepsodent, Crest and Colgate offer three main lines of products to target kids, adults, and older consumers. Age segmentation can be even more refined. Pampers divides its market into prenatal, newborn (0-1 month), infant (2-5 months), cruiser (6-12 months), toddler (13-18 months), explorer (19-23 months), and preschooler (24 months +).
Nevertheless, age and life cycle can be tricky variables. In some cases, the target market for products may be the psychologically young. For example, Honda tried to target 21-year olds with its boxy Element, which company officials described as a â€œdorm room on wheelsâ€?. So many baby boomers were attracted to the carâ€™s ads depicting sexy college kids partying near the car at a beach, however, that the average age of buyers turned out to be 42!
Nostalgia can also play a role. Chrysler had a young target market in mind for the PT Cruiser, but found that lots of older consumers were reminded of hot rods from their youth. Toyota has been more successful with its younger pitch for Scion.
Named for wealthy offspring, Scion is an attempt by Toyota to attract the Gen Y audience, which might see Toyota as their parentsâ€™ brands. The Scion has a hip look and feel and an industrial strength stereo and is sold in chrome and black showrooms tucked inside Toyota dealerships. Priced at under $15,000 and sold on a fixed price basis (no haggling), the marketing strategy is to go underground and link the brand to up and coming entertainment and events, allowing the youthful target to â€˜discoverâ€™ the brand.
Persons in the same part of the life cycle may differ in their stage. Life stage defines a personâ€™s major concern, such as going through a divorce, going into a second marriage, taking care of an older parent, deciding to cohabit with another person, deciding to buy a new home, and so on. These life stages present opportunities for marketers who can help cope up with their major concerns.
It has been estimated that newlyweds in the United States spend a total of $70 billion on their households in the first year after marriage and they buy more in the first six months of marriage than an established household does in five years!
Marketers know that marriage often means that two sets of shopping habits and brand preferences have to be blended into one. Companies such as Procter & Gamble, Clorox, and Colgate-Palmolive include their products in â€œNewlywed Kitsâ€? that are distributed when couples apply for their marriage license. JC Penney has identified â€œStarting Outsâ€? as one of its two major customer groups. Marketers pay companies a premium for name lists to assist their direct marketing because, as one marketer noted, newlywed names â€œare like goldâ€?.
Men and women tend to have different attitudinal and behavioral orientation, based partly on genetic makeup and partly on socialization. For example, women tend to be more communal minded than men and men tend into be more self-expressive and goal-directed; women tend to take in more of the data in their immediate environment; men tend to focus on the part of the environment that helps them achieve a goal.
A research study examining how men and women shop found that men often need to be invited to touch a product, while women are likely to pick it up without prompting. Men often like to read product information; women may relate to a product on a more personal level.
Gender differentiation has long been applied in clothing, hairstyling, cosmetics, and magazines. Avon built a $6 billion-plus business selling beauty products to women. Some products have been positioned as more masculine or feminine. Gilletteâ€™s Venus is the most successful female shaving line ever, with over 70 percent of the market, and has appropriate product design, packaging, and advertising cues to reinforce a female image; Camel Cigarettes emphasizes men and surrounds the brand with more masculine, rugged cues.
Some traditionally more male-oriented markets, such as the automobile industry, are beginning to recognize gender segmentation, and are changing how they design and sell cars. For example, armed with research suggesting that 80 percent of home improvement projects are now initiated by women, Loweâ€™s designed its stores with wider aislesâ€”to make it easier for shopping carts to get aroundâ€”and to include more big-ticket appliances and high-margin home furnishings. Half of its clientele is now female, forcing its more traditional competitor, Home Depot, to introduce â€œLadies Night at the Depotâ€? to appeal to women. Many others are recognizing the opportunities to target women.