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Demographic segmentation, in marketing, is when a firm uses data about the demographic characteristics (age, sex, race, and others) of its customers in an effort to better target its marketing efforts. Demographic segmentation strategies can lead to better targeting by identifying the types of people who are most likely to buy a firms products. Advertisments and other efforts to reach them can be placed in media or places that segment of the population is likely to see.
For example, in the United States, one of the most coveted demographics is relatively young men (two demographic characteristics). Many products (especially ones like beer and pickup trucks) target this audience. Therefore, they place ads in the broadcasts of sporting events since this demographic is likely to watch those events.
By doing this, firms can more efficiently use their marketing budgets. They can be as sure as possible that their ads will reach the demographic that they want.
A market segment refers to a group of customers within the entire market for a product that have similar needs and wants. The kind of products preferred and used by customers within such market segments and the marketing approach appealing to them may differ significantly from those of other segments. Thus a marketer can market its more effectively by designing and implementing marketing program for each segment separately. A company may segment just a few or even just one small segment from among the many segments that exist, in line with its competitive strengths and resources.
It is possible to segment a market using may different criteria such as geographic, demographic, psychographic and behavioral characteristics of the customers. The demographic segmentation is based on variables such as age, sex, education, occupation, religion family size, and other similar characteristics that are generally obtained as a part of national demographic surveys. This type of customer segments are easier to define and identify. Also often information on size and location of demographic market segments is easily available form secondary data sources. This makes it easy for marketers to design and implement effective marketing activities for each demographic segment separately.
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