What are demographics? An explanation of the basics of attribute data and how to use it in marketing.

The word "demographic" is one of the terms frequently used in the field of marketing. However, its definition and specific application are often used with surprising ambiguity.

In this article, we will explain in an easy-to-understand strategic perspective, from the basics of "What are demographics?" to specific ways to use them in marketing, as well as limitations to be aware of and recent trends.

What is Demographic? Basic Definition

Demographics is translated into Japanese as "demographic attributes" or "population attributes" and refers to the basic characteristics of people, such as the following:

• age
• Sex
• Place of residence (region, city/country, etc.)
• Household composition (single/family, etc.)
• Educational History
• Occupation
• annual income
• marital status

Because these pieces of information are relatively stable and easy to grasp from the outside, they have been widely used in marketing for targeting and market segmentation.

Why are demographics important in marketing?

The essence of marketing is "delivering the right message to the right person at the right time." To do this, it is necessary to clearly define who you are delivering to, i.e. your target audience.

Demographics are a way of capturing this information about "who" in a structured way.

How to use:

• Services for new graduates looking for workIn that case, attributes such as "around 22 years old," "fourth-year university student," and "living in an urban area" are important.
• Luxury car advertisementIn this case, the target demographics would be "over 40 years old," "annual income of over 1000 million yen," and "managers/those in senior positions."

In this way, the strength of demographics is that they allow you to define your target image in a way that anyone can understand.

Examples of using demographics

Demographics are used in various aspects of marketing, such as determining customer targets, product prices and promotions, and deciding whether or not to open new stores. For example, they can be used in the following ways:

Existing customers are segmented by demographics (age, gender, income range, etc.), and targets are determined after determining the customer base (target) that frequently purchases the company's products.

Since the target demographic is women in their 20s, we need to think about promotional methods that will appeal to women in their 20s.
When opening a new store, the company uses statistical data to investigate the proportion of the population of its user base of gender and age within the trade area, and then decides whether or not to open a store there.

However, in today's world where values ​​and lifestyles are diversifying, it is difficult to determine targets by analyzing demographics alone.

Targeting aspects other than demographics

Besides traditional demographic segmentation, there are three other methods: geographic, psychographic, and behavioral. Geographic segmentation focuses on geographic attributes such as regional population, climate, and culture.

Psychographics is a segmentation method that focuses on an individual's psychological attributes, such as their lifestyle and values. Behavioral is a segmentation method that focuses on purchasing-related behavior, such as the number of visits to a store, the products purchased, and the average purchase price.

When actually carrying out marketing, we combine multiple segmentations from these to clarify the image of our target customers.

Demographic Characteristics

One feature of demographics is that the data is easier to obtain compared to other segmentation methods. Demographics are relatively easy to ask about in surveys and interviews, and governments and research institutions often regularly survey statistical information, making it easy to obtain information.

Compared to demographics, psychographics are more closely related to an individual's inner thoughts, so it can be difficult to ask questions and find existing survey data.

In addition, since Geographic is a statistic about regional attributes, it is difficult to use it for analysis focusing on people. Since Behavioral is an analysis of targets that have already been in contact, it is difficult to use it for targeting new product development or public relations activities to increase awareness.

How demographics differ from other targeting methods

Demographics are just one axis of targeting, and combining them with other approaches like the following will allow for more precise marketing:

In recent years, purchasing behavior has become increasingly diverse and cannot be explained by demographics alone, and the simple correlation of "I do this because this" is no longer valid.

For example, even if two people are both "women in their 30s living in urban areas," a housewife raising children and a single managerial employee have completely different lifestyle patterns and consumption behavior.

Main uses of demographics

1. Marketing strategy design

It is used as a starting point to understand and target the needs of each market segment.

2. Media Planning

When selecting media such as television, newspapers, and digital advertising, this can be used as a basis for deciding which media has the highest viewership among men in their 40s.

3. Creative Development

When designing the appeal and visuals, this can provide hints for questions such as, "What is the tone that will resonate with women in their 30s?"

4. Input variables for MMM

MMM (Marketing Mix Modeling)In some cases, demographic variables linked to the product or target can play an important role when evaluating advertising results.

About Geodemographics

Area marketing is necessary when publicizing a small store or conducting trade area surveys for new stores. A method called geodemographics is often used when conducting area marketing.

Geodemographics is a term that combines geography, which represents a map, and demographics, and refers to data that breaks down demographic data into finer details and reflects it on a map.

Geodemographics can be used to smoothly carry out marketing research. For example, when opening a new store, you can plot the planned location, look up the trade area within a 20-minute walk from there on a map, and use geodemographics to find out the population and age group within the trade area to decide whether or not to open a store there.

By the way, please note that geographics and geo-demographics explained in the segmentation section are unrelated.

About demographic targeting ads

Demographics are also used in web advertising. Advertisements that are only shown to specific demographics are called demographic targeting ads. A typical example is demographic targeting ads used on social media.

Based on the demographics registered on the SNS, ads are displayed only to targets who fit the demographics set by the ad distributor.

You can also target by demographics with paid ads, but search engine demographics are not based on demographic data you enter like social media demographics are.

Since demographics are simply inferred from search keywords, etc., ads are not necessarily delivered only to the targeted demographic.

Demographic Limitations

While demographics are simple and easy to use, they also have limitations:

• We can’t know the “inner self” of individuals
  　The true cause of a purchase is often determined by other factors, such as values ​​and motivation.
• Difficult to respond to diversification of lifestyles
  　In today's world, where behaviors and preferences vary widely even for people with the same attributes, attribute information alone is not enough.
• Obtaining information is becoming more difficult due to privacy concerns
  　Cookie regulations and strengthened personal information protection are putting restrictions on the use of traditional attribute data.

As a result, multi-layered segmentation such as "demographics x behavioral" and "demographics x psychographics" is becoming mainstream.

Also, MMM and other things promoted by XICACMM (Consumer Mix Modeling)Modeling techniques such as these handle multiple variables in an integrated manner, enabling policy evaluations and predictions that are more in line with reality.

A new approach to "strategically utilizing" attribute data

As mentioned in the previous chapter, demographics are one of the starting points in marketing. However, in today's marketing environment, "similar attributes = similar behavior" does not necessarily mean.

That is why an approach called CMM has been gaining attention. CMM is a method of analyzing and modeling the effect of marketing on consumer behavior for each customer segment, and determining "what worked for which customer group?" Specifically, it statistically analyzes the mechanisms behind consumers' brand choices based on consumer awareness data (survey data).

Differences and cooperation between MMM and CMM

MMM excels at understanding the quantitative aspects of "where and how much" of marketing investment, while CMM is an approach that reveals the more qualitative aspects of "what and to whom."

CMM and MMM each use different perspectives and data for analysis, so by appropriately combining these methods, companies can carry out more precise marketing.

At XICA, we use an integrated analytical framework that combines MMM and CMM to help evolve marketing decision-making from "intuition" to "science." If you are having trouble designing a strategy based on demographics, we recommend that you give it a try.of the Directions & Parking.

Summary

I have explained the demographics above.

Targeting is very important when doing marketing, and demographics is one of the most conventional methods of customer segmentation that focuses on individuals' social attributes.

However, as consumer needs are becoming more diverse, it would be better to determine your target image not only by demographics but also by using other segmentation methods such as consumer lifestyle and purchasing behavior.

Other Marketing Terms Explained

• What are in-feed ads: advantages and disadvantages
• What is campaign management? The difference between CCCM system and MA system
• What is programmatic buying of ads?
• What is a pop-up store? The benefits of opening one
• What is Ambassador Marketing? How is it different from Influencers?
• What is webrooming? Why do we do it? How is it different from showrooming?
• What is Endless Aisle? Benefits & Case Studies
• What is Mobile Deep Linking and How Do I Implement It?

Author information

XICA Co., Ltd. Marketing Team