A level Business Studies and AVCE Business exam revision resource




 

Demographic segmentation divides the market into groups based on demographic variables including age, gender, family size and life cycle.

The following four variables are examples of demographic factors used in market segmentation:

  1. Age : Consumer needs and wants change with age. The marketing mix may therefore need to be adapted depending on which age segment or segments are being targeted.


    With a plethora of anti-ageing products flooding the market, catering for society's baby boomers would appear to be at the fore of new trends within the cosmetics and toiletries industry. However, manufacturers have also set their sights firmly at the other end of the spectrum, on the tweens and teens market, as they increasingly segment products across all age groups.

    The underlying factor making Generation Y an ever attractive demographic is its growing purchasing power. The trend is being fuelled by higher disposable incomes resulting from more generous allowances and teens opting to work part-time during schooling, less reliance on parents to make purchases, and heightened media awareness....

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  2. Gender : Dividing a market into different groups based on sex, has long been common for many products including cosmetics, clothing and magazines. In the 1960's car companies such as Toyota began to realise the purchasing power of women, creating marketing campaigns, and then cars, specifically targeted at the female market. Many suggest that the range of interior and exterior colours schemes, and emphasis placed on safety factors by car manufacturers today, is due to in no little part to their desire to market cars to women, as well as men.

  3. Life-cycle stage : Dividing a market into different groups based on which stage in the life-cycle, presented in the table below, reflects the fact that people change the goods and services they want and need over their lifetime.


    young, single people not living at home
    young, no children
    youngest child under six
    youngest child six or over
    older married couples with dependent children
    older married couples, no children living with them
    older married couples, retired, no children living at home
    in labour force
    retired

  4. Neighbourhood and dwelling classification : Divides the market into groups, based on the assumption that the type of dwelling and area a person lives in is a good predictor of their purchasing behaviour including the types of products and brands they might purchase. The ACORN system as it is known (A Classification of Residential Neighbourhoods) classifies homes, rather than individuals, as a basis for segmentation. It analyses the 10-yearly population census that is undertaken during every year ending with one - the most recent census data being generated in 2001. The system was developed by Richard Webber for Consolidated Analysis Centres Incorporated (CACI). It breaks down the census of population into various categories of homes as shown in the table below.


    3% of UK population
    18% of UK population
    17% of UK population
    4% of UK population
    13% of UK population
    9% of UK population
    7% of UK population
    4% of UK population
    4% of UK population
    16% of UK population
    4% of UK population
    1% of UK population

    Each of the above classifications is sub-divided into smaller groupings. For example, Group C Older housing of intermediate status, is broken down into:

    C8 Mixed owner-occupied and council estates,
    C9 Small town centres and flats above shops,
    C10 Villages with non-farm employment,
    C11 Older private housing skilled workers

    Businesses which use this system include the large supermarkets who use ACORN to determine suitable store locations.

 
 

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