Understanding the Importance of Demographics in Marketing

The Upfront Analytics TeamStrategy, Trends5 Comments

A very detailed map of US regions. Each region is grouped and labeled in a separate layer and is very easy to manipulate. Each state can be easily manipulated. The vector formats for Adobe Illustrator AI CS2 and EPS. Also includes a high res JPG file. Map source is in public domain at US Cencus Bureau website.

Getting to Know You: 5 Reasons to Use Demographics in Marketing

Most people willingly assign themselves to categories. In fact, they prefer to be categorized, proudly proclaiming themselves as Cleveland Cavaliers fans; book-lovers; people who are scared of spiders. Categories are way for people to find those most like themselves and assign certain traits and characteristics to their own behavior.

Think of demographics as the ultimate categorization tool. Grouping consumers based upon characteristics allows organizations to better serve the needs of their ideal customers. In terms of marketing, it means selling a product or service to the person most likely to buy it based on their unique needs and preferences. That is why US census data can be great for market research.

Smaller organizations might believe that market research and demographics are something only massive businesses have access to (or need to worry about). But not taking the time to truly understand your customers could be costing you. Here’s why:

  1. Understanding the Ideal Customer

    Every business has an ideal customer profile: A most-likely laundry list of traits and characteristics a customer would exhibit to purchase a product. It’s why laundry soap is usually marketed to moms, and why financial services cater to baby boomers. As you create the profile of the ideal customer, you delve deeper into that ideal customer’s tastes, preferences, and potential issues with a product or service. Doing so allows you to improve and create marketing opportunities that target the customer you want.

  2. Lowering Marketing Costs

    Marketing can be extremely expensive, and medium is one of the factors that essentially decides your marketing budget. If you know your target demographics, you can stretch that budget by going where you can find your ideal customer. If you’re looking to target millennials, it wouldn’t make sense to spend money on a direct mail marketing campaign–they’re all on social media. Instead of large, blanket marketing strategies that cast wide nets for a few fish, you’re able to cast your fishing rod and catch your limit in a smaller (more effective) pond.

  3. Identifying New Opportunities

    Not only do demographics help you define and find your ideal customer, they can help you identify gaps in your marketing strategy. Any chief marketing officer will need it to understand different consumer bases. You might be marketing to Gen Xers and realize that you’re leaving 20-somethings out of the equation. Similarly, your key demographic might be asking for products and features based on their lifestyles, which would mean a no-brainer addition to a product or service line.

  4. Creating Unique Selling Points

    Demographics help you create a marketing story. Instead of just throwing a product or service out there and hoping it sticks, you can create and define scenarios to which your customers can relate. If you think about some of the products and services you use regularly, chances are you can identify times when you were specifically marketed to based on your age, gender, geographical location, economic status, and overall lifestyle.

  5. Increasing Sales

    The most important function of demographics in marketing is obviously to increase sales. By understanding consumers, any business can increase marketing efforts to target those most likely to buy. Whether it means changing up marketing strategy or offering current customers more products and services, it pays to really know what consumers want.

Don’t worry: Demographics won’t pigeonhole your efforts to just one subset of the population. Instead, it lets organizations both big and small get to know past, present, and future customers better. And, the better you know your customers, the more likely you can give them exactly what they want.

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