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What Is Demographic Segmentation in Marketing? - Definition, Advantages & Disadvantages

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Lesson Transcript
Instructor: Molly Gigli
There are ways to target a specific market for your product or service. Demographic segmentation is one of the ways to target a specific group of consumers. Read on to learn more about demographic segmentation and its advantages and disadvantages.

What is Demographic Segmentation in Marketing?

Demographic segmentation is market segmentation according to age, race, religion, gender, family size, ethnicity, income, and education. Demographics can be segmented into several markets to help an organization target its consumers more accurately. With this type of segmentation, an organization can categorize the needs of consumers.

Advantages of Demographic Segmentation

One of the main advantages of demographic segmentation is that the information you need is readily available for you. You can pull census data to determine who, where, and how you want to market your product. For example, automobile industries can market their cars to different age groups, income levels, and genders.

Another way that businesses, such as automobile industries, don't miss out on the growing market is by providing employees who are bilingual to work with their customers. It is now very common to see business, TV, and newspapers in Spanish as well as English.

Another advantage of demographic segmentation is customer retention and loyalty. When an organization spends time focusing on its customers and their wants and needs, customers will typically come back for repeat business. In our automobile industry example, customers will come back or recommend their friends and family if they were satisfied with their purchase.

Disadvantages of Demographic Segmentation

One of the main disadvantages of demographic segmentation is it can make an organization vulnerable to competitors. Competitors may try to use the same marketing techniques and potentially take away customers. Another disadvantage is that an organization may spend all of its time and efforts on a specific demographic only to find out its efforts were wasted on the wrong section of the market.

As you can see, it is important for an organization to do research on its potential consumers to ensure it's targeting the correct market. In demographic segmentation, an organization has an advantage because it can drill its target market down to a specific demographic targeting factors such as age, gender, or ethnicity.

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