Customer segmentation is a powerful marketing tool that allows you to target your marketing efforts to various groups of customers who share similar traits.
There are many types of customer segmentation, but here we’ll delve into three of the most important—demographic, psychographic and technographic—and how they can be used to guide your marketing strategy.
What is Demographic Segmentation?
Demographic segmentation is the process of dividing your market into groups of customers based on certain traits such as age, gender, income, occupation, family status, ethnicity, level of income, and more.
This is one of the most common segmentation methods used by businesses as it requires fewer data points compared to psychographic or behavioral segmentation, but still allows for more selective distinction than geographic segmentation.
Age is one of the most common variables used in demographic segmentation. Consumer preferences and needs differ significantly based on the age group they fall under. Companies can use age to tailor their marketing efforts to the right age group.
Income levels also play an important role in determining consumer purchasing ability. Consumers with higher income levels may prefer luxury products, while consumers with lower income levels may value affordability. Income levels also influence pricing strategies for companies, helping them determine the best pricing for their products.
Race, religion and ethnicity can also inform marketing campaigns. Religion has a significant impact on consumer preferences, so it’s important to be aware of the different religious implications of your target segmentation.
Additionally, gender identity should be considered when creating marketing campaigns for products that are gender-specific or gender-neutral. Buying preferences will differ for products required by individuals who identify themselves on the gender spectrum.
There are multiple advantages to using demographic segmentation:
- The data required for demographic segmentation is easily available through census data that’s collected by governments.
- Companies can target the right demographic with the right marketing campaigns, helping to establish customer loyalty and improve retention rates.
- Companies can define their target market and develop effective marketing strategies that appeal to this demographic.
What Is Psychographic Segmentation?
Psychographic segmentation is another type of customer segmentation which focuses on psychological factors that influence purchasing and consumption habits of customers. It includes characteristics such as lifestyle, attitude, interests, values, personality, social class, and more.
The main difference between demographic and psychographic segmentation is that the former emphasizes traits that are objective, easily measurable, and tend to put people into large categories; while the latter focuses on subjective characteristics that help define a personality. Combining these segmentation techniques allows marketers to add further details to their buyer personas, which in turn will allow for better brand positioning, messaging, and product development.
What Is Technographic Segmentation?
Technographic segmentation involves analyzing the technology a customer uses to understand their needs and wants. Research can help uncover the technology stack that a customer uses, such as the software, hardware, and tools that they use. This data can be used to make informed decisions about product development, marketing campaigns, and customer service.
Generally, technographic data is uncovered in three ways: through surveys, website crawling, and third-party data purchase.
