Demographic segmentation divides the market into groups based on demographic variables including age, gender, family size and life cycle.
The following four variables are examples of demographic factors used in market segmentation:
Age : Consumer needs and wants change with age. The marketing mix may therefore need to be adapted depending on which age segment or segments are being targeted.
Case Study : The lure of generation Y
With a plethora of anti-ageing products flooding the market, catering for society's baby boomers would appear to be at the fore of new trends within the cosmetics and toiletries industry. However, manufacturers have also set their sights firmly at the other end of the spectrum, on the tweens and teens market, as they increasingly segment products across all age groups.
The underlying factor making Generation Y an ever attractive demographic is its growing purchasing power. The trend is being fuelled by higher disposable incomes resulting from more generous allowances and teens opting to work part-time during schooling, less reliance on parents to make purchases, and heightened media awareness....
click to read more
Gender : Dividing a market into different groups based on sex, has long been common for many products including cosmetics, clothing and magazines. In the 1960's car companies such as Toyota began to realise the purchasing power of women, creating marketing campaigns, and then cars, specifically targeted at the female market. Many suggest that the range of interior and exterior colours schemes, and emphasis placed on safety factors by car manufacturers today, is due to in no little part to their desire to market cars to women, as well as men.
Life-cycle stage : Dividing a market into different groups based on which stage in the life-cycle, presented in the table below, reflects the fact that people change the goods and services they want and need over their lifetime.
Life-cycle stages
Bachelor Stage young, single people not living at home
Newly Married Couples young, no children
Full Nest I youngest child under six
Full Nest II youngest child six or over
Full Nest III older married couples with dependent children
Empty Nest I older married couples, no children living with them
Empty Nest II older married couples, retired, no children living at home
Solitary Survivor I in labour force
Solitary Survivor II retired
Neighbourhood and dwelling classification : Divides the market into groups, based on the assumption that the type of dwelling and area a person lives in is a good predictor of their purchasing behaviour including the types of products and brands they might purchase. The ACORN system as it is known (A Classification of Residential Neighbourhoods) classifies homes, rather than individuals, as a basis for segmentation. It analyses the 10-yearly population census that is undertaken during every year ending with one - the most recent census data being generated in 2001. The system was developed by Richard Webber for Consolidated Analysis Centres Incorporated (CACI). It breaks down the census of population into various categories of homes as shown in the table below.