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Marketing Demographics Definition

Updated on November 15, 2014
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Heidi Thorne is an author and business speaker with over 25 years of experience in sales, marketing, advertising and public relations.

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What is Marketing Demographics?

Marketing demographics is the classification of populations of potential customers based on various attributes. Common attributes tracked include:

  • Geographic location by country, state, city, neighborhood or ZIP code.
  • Gender.
  • Age.
  • Income level.
  • Size of household or size of business.
  • Education level.
  • Marital status.
  • Job title.
  • Type of residence (apartment, single-family home, etc.)
  • Business category (often segmented by SIC codes)

Marketers identify populations that are likely to become buyers of the product or service offered. Prospective buyer populations are typically identified by historical sales data of an organization or through market research activities.Only those populations with the highest potential for sales receive solicitations. This reduces marketing and sales costs dramatically since money is not wasted connecting with those least likely to buy.

One of the primary ways that marketers use demographics is in the selection of mailing lists for direct mail and email campaigns. Marketers also look at the audience demographics for trade shows, magazines, newspapers, television, radio and websites to determine if advertising opportunities offered by these venues have high potential to reach desired target populations.

The Demographic Dilemma

Are two households whose income level is identical both good sales prospects? Hardly. For example, there will certainly be a difference between the spending habits of a $100,000 household income earned by a young single attorney and that of a couple with two small children earning a combined household income of $100,000. Because of this, multiple attributes, or filters, are selected when choosing target populations.

But then there's the dilemma of how many filters to apply. Filter a list too much and you may not have a sufficient volume of potential buyers to achieve a reasonable return on your marketing investment. Filter it too little and you could be wasting valuable budget dollars on mediocre sales prospects.

Luckily, demographic choices have become more accurate with the evolution of psychographics.

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Demographics Evolved: Psychographics

"Census" type data (age, race, geographic location, marital status, etc.) only tells a tiny fraction of a population's story. Using the $100,000 household income scenario from earlier, the heads of those two households could also be on opposite ends of spectrum when it comes to hobbies and interests... or they could be nearly identical. Welcome to the brave new world of psychographics!

Unlike demographics, psychographics looks at the similarities of people in terms of attitudes, interests and other personality attributes.

At its basest level, psychographic techniques would involve the selection of target populations based on demonstrated interest in the product or service category. Popular interest-based sources of target populations include:

  • Magazine and email subscriber lists.
  • Association members.
  • Event and trade show attendees.
  • Buyers of similar or related products or services.

For example, a motorcycle dealership could send promotional materials to local subscribers of a popular motorcycle magazine or lists of motorcycle owners. But that could even be ineffective. Why?

If you know anything about the motorcycle community, you know that motorcycle owners are more finely segmented by brand of vehicle owned and style of riding. Though not applicable to all, typically there is a difference between a Harley-Davidson owner and a Ducati owner in terms of activities and attitudes. The former are often more interested in the community aspects of motorcycling such as group rides and events. It's a brotherhood or family. Whereas Ducati owners might be more interested in competitions and bike performance issues. Do you think there might be a different personality profile between bike owners interested in community and those interested in competition... and, more importantly, a difference is what they buy? Guaranteed!

How are these psychological profiles determined? Many marketers already have a good idea of the personality profiles of their customers, particularly in smaller organizations that have a good deal of direct contact with customers. However, if there are questions as to what an existing or ideal psychographic customer profile is for a business, it is worth investing in market research and surveys to determine.

A popular way that many businesses collect psychographic data is by having customers fill out product warranty information cards. (Yes, that's why they do it!) So if you've ever wondered why they asked you all those questions about whether you like stamp collecting or cooking, now you know.

Fine Tuning

Segmenting marketing efforts by demographic and psychographic data can be very finely tuned with the wide array of selection filters for mailing and distribution lists available. But it still requires a good understanding of customers' life situations, interests and needs to know which filters to apply.

Additionally, what populations may be viable prospects today, may be totally irrelevant next year. Monitoring shifts in demographic or psychographic profiles is a key marketing function.

Disclaimer: The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.

© 2013 Heidi Thorne

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    • heidithorne profile image
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      Heidi Thorne 4 years ago from Chicago Area

      Thank you, FSlovenec, for stopping by and your kind comments! Glad you enjoyed!

    • FSlovenec profile image

      Frank Slovenec 4 years ago from San Francisco, CA

      Well done the thinking that goes into the process certainly repeats. The consumer marketing segments are different in many ways from the complex sale, however the basic tenets of consumer marketing apply in all cases. You have done a great write to remind of some of those basics.

    • heidithorne profile image
      Author

      Heidi Thorne 4 years ago from Chicago Area

      Will do! Shared on Twitter and G+.

    • Ric Dragon profile image

      Ric Dragon 4 years ago from Kingston, New York

      You're quite welcome Heidi. You might enjoy the post I wrote on the topic for Marketing Profs: just google Microsegment 'Social Media Marketing'

    • heidithorne profile image
      Author

      Heidi Thorne 4 years ago from Chicago Area

      Thank you so muck, Ric, for the info on micro-segmentation! I serve some micro-segments both online and off. Even though many of them may look the same in a lot of respects, they can be completely different animals when it comes to marketing.

    • Ric Dragon profile image

      Ric Dragon 4 years ago from Kingston, New York

      Michael; you might be interested in the micro-segmentation approach we take at DragonSearch. Building off of our demographic, psychographic, and behavioral segmentation, we do brainstormings to create a library of the smallest possible lists.

      For example, in one exercise, we were building off of the concept of "who cares about musicians" - which led to people in music education, which led to the various schools for music, which led to Berkeley. At Berkeley, they have a group interested in World Music, and in that group, a smaller group that meets every Thursday to do Zydeco dancing. THAT'S a micro-segment.

      You can then research these micro-segments to identify where they are already existing in communities online .

      regards,

      Ric

    • heidithorne profile image
      Author

      Heidi Thorne 4 years ago from Chicago Area

      No matter how sophisticated the marketing demographic or psychographic segmentation, one-to-one marketing (whether face-to-face or screen-to-screen) will never die! This is particularly the case for complex sales with a long sales cycle such as those you find in the B2B arena. Thanks for commenting, Michael!

    • charmike4 profile image

      Michael Kromwyk 4 years ago from Adelaide, South Australia

      I am really supportive of segmenting databases into 'like groups' so that you can market to the customer base. But there is nothing like one-to-one marketing which I try to employ at a direct contact such as in a shop or a contact centre. The demographics can then point you in the right direction of what to offer to that individual once you have done a needs analysis. Great hub on a truly fascinating concept. Cheers Michael