Segmentation is the process of categorizing customers into distinct groups for the purpose of marketing. Marketing includes several things from research and development to advertising and promotions. However, for any kind of marketing communication to be effective, it needs to be targeted at the right group. Segmentation helps concentrate at the right set of customers. Suppose you have to market a newly launched product that you need to promote in the Chinese market. However, you cannot target entire China for this purpose. Therefore you need to segment the customers into right groups so you can target the group most likely to purchase your product. Demographic segmentation is a commonly used strategy in marketing and also an effective one. Marketers using this strategy segment their customers into distinct categories based on one or the other of socio-economic variables like age, gender, marital status, income, education etc.
Age is one of the most important traits used in segmentation. It proves quite helpful when you are trying to target your audience through your promotional messages and do not know which one is the right group. You can ask yourself for which age group your product is made. Usually, people across the same age group have matching tastes and can easily be targeted based on age. If you are marketing a lifestyle magazine, you will like targeting young people. Fashion products are generally marketed using this segmentation strategy. In this way, age is one of the most prominent factors used in market segmentation. For example, Villa sellers target retired people with enough disposable incomes who want to lead a peaceful life.
Gender and marital status:
Like age, gender and marital status can also be effective for marketing. You have a product exclusively for men, you would naturally like to target the male audience in your promotional messages. If you are marketing a beauty product, you would like to target the female audience. In this way, gender is an important category for segmenting customers that is also effective and makes targeting the right set of customers easier. Similarly, marital status also helps at targeting the right customers. Honeymoon packages or several cruises target married or newly married couple that are looking for an ideal, romantic vacation spot.
Not every product is for every income group. There are products that are meant for low income consumers whereas others can be afforded by the high income customers only. High end product ads therefore target the high end consumers. Luxury products like luxury watches, high end fashion and luxury cars target the high end customer. Marketers lay the ads for such products where they are most likely to be viewed by the high income buyers. For example, lifestyle magazines. On the other hand the discount retailers or the products that are made for the low income or average income consumer group will target these groups and lay ads where they are most visible to them. IKEA and Walmart target these customer groups. Discount offers and ads can be easily found in daily newspapers. The ads targeting these customers highlight the affordability of these products and emphasize value for money.
Education and Occupation:
These two factors are related to income level. However, there are certain products or services that are most likely to be consumed by educated people or people in a certain occupation. For example, there are certain magazines that are most likely to be ready by people having received higher education and the others that are in a specific profession like nursing. Similarly, an ad for executive MBA will target people with jobs and experience and requiring further education. Many times occupation also decides salary and income. Income is also related with education since people with higher education are more likely to have a higher income level. Marketers trying to sell luxury products are more likely to target such customers.
Other factors like Race, Ethnicity and Religion:
These are not most commonly used categories for segmentation. Still, they become important in case of certain products and services. Segmenting customers on their basis also helps the marketers understand the preferences of their target audience and its buying habits. It also helps understand their core values and better predict their buying patterns. Religious products and services will be marketed to the customers segmented on basis of religion.