Skip links

Is Demographic Segmentation Enough for Target Market Segment Identification

Demographic segmentation is an easy and the most common way to segment your audience. You can sort the market by using demographic elements such as age, gender, income, race, etc.

But is demographic segmentation all you need for identifying your target market segment? Or do you need other segmentation types as well? If you have these questions on your mind, we got you covered.

This blog briefly explains how demographic segmentation helps with the market segmentation process and whether it’s the only thing you need. You’ll also find how B2B businesses can use other B2B market segmentation types. So, read in full.

Is Demographic Segmentation potent for all businesses

Demographic segmentation is a pretty straightforward way of segmenting the market. You can obtain data from public records without much investment. Then, analyze it, measure it, and craft sales and marketing strategies accordingly.

For instance, if you’re selling skincare products for the elderly, you can segment your audience using demographic segmentation (age). But will this approach be effective in a B2B setup?

Not so effective after all

Unfortunately, demographic data only tells you how much a person earns, their job, age, and gender. It can’t tell you how your consumer feels or behaves. And this can make demographic segmentation ineffective.

Take companies that sell b2b software for example. How would a consumer’s education or income decide be decisive enough to understand if they are ideal personas or not?

The Answer

Whether demographic segmentation is suitable for target market identification depends on your business type. If you have something static, demographic segmentation works.

However, demographic segmentation fails if things are more dynamic, like in the entertainment or gaming industry, where age or income doesn’t decide anything. Something more dynamic like behavioral segmentation can help in this case.

Furthermore, for B2B businesses, demographic segmentation doesn’t seem to help as there are multiple decision makers within an organization and information regarding which can be obtained only using firmographic data.

Different types of segmentations B2B companies can use

1. Firmographic Segmentation

Firmographic segmentation for B2B is like demographic segmentation for B2C. However, in firmographic segmentation, instead of gender, race, and ethnicity, data such as industry, company size, revenue, and location are considered.

B2B companies can use this data to target the right decision-making individuals from companies that generate a specific revenue.

Pro Tip: Firmographic information on its own could be useless as it lacks details. However, you can use that data and create buyer personas and customer profiles. This way, you can determine exactly who you want to target.

2. Segmentation Based on Customer Needs

This segmentation type is more subjective than the previous one, based on the customers’ attitudes and needs.

So, instead of targeting a group of small businesses altogether, you can be more specific and find individuals with similar pain points. For instance, you can find and target individuals with similar revenue requirements, budget constraints, or productivity.

3. Behavioral Segmentation

The above two segmentation types help you understand who your customer is and what their needs are. However, behavioral segmentation tells you how they’ll act or respond.

To get behavioral data, you need to analyze:

  • The prospects’ channels to visit you, i.e., social media, website, forums, etc.
  • The type of content your options interact with, like blogs, ads, and whitepapers.
  • Technology or software applications they already use.
  • The way they interact with your product/service.

Using this data, you get explicit information on what your customers want.

Pro Tip: Combining firmographic data and customer needs with behavioral data can help you understand who your prospects are, what they need, and how they behave. So, try using them in combination.

4. Psychographic Segmentation

This segmentation is probably the most helpful for B2B organizations. It helps you divide the market based on:

  • Consumer Personality: A consumer’s personality hugely impacts their buying decisions.
  • Attitude: Cultural backgrounds influence a buyer’s perspective, which affects buying decisions.
  • Social status: A high social status means a person can afford luxury products and vice versa.
  • Lifestyle: People from different lifestyles have different problems, thus unique buying patterns.
  • Interests: What interests your audience in their free time or generally helps you position your product in a way they might like?

The above data can usually help you understand:

  • How do your consumers perceive your services and products?
  • What consumers want and the “why” behind it.
  • Gaps in your product, if any.
  • How to communicate better with your target audience

With the information above, you can identify and understand your customers better than ever and thus convert more.

Pro Tip: Combining psychographic data with demographic, geographic, and behavioural data could provide you with more powerful points.

Look beyond demographic segmentation

Demographic segmentation can help identify the target market for some businesses. However, its scope is limited.

Therefore, relying on demographic segmentation alone for identifying the target market won’t be a good idea, especially if you’re from the B2B domain.

Instead, you should combine different segmentation types and try to identify your target market. This will help offer you more vital points to target your ideal market accurately.