11.5: Market Segmentation - Business LibreTexts

Demographic Segmentation

Demographic segmentation uses categories such as age, education, gender, income, and household size to differentiate among markets. This form of market segmentation is the most common because demographic information is easy to obtain. The U.S. Census Bureau provides a great deal of demographic data, especially about metropolitan areas. For example, marketing researchers can use census data to find areas within cities that contain high concentrations of high-income consumers, singles, blue-collar workers, and so forth. However, even though demographic information is easier to obtain than other types of information, it may not always be the best approach to segmentation because it is limited on what it can reveal about consumers.

Forms of Consumer Market Segmentation

Form General	Characteristics
Demographic segmentation	Age, education, gender, income, race, social class, household size
Geographic segmentation	Regional location (e.g., New England, Mid-Atlantic, Southeast, Great Lakes, Plains States, Northwest, Central, Southwest, Rocky Mountains, Far West), population density (urban, suburban, rural), city or county size, climate
Psychographic segmentation	Lifestyle, personality, interests, values, attitudes
Benefit segmentation	Benefits provided by the good or service
Volume segmentation	Amount of use (light versus heavy)

Table11.2: Age Segmentation for Fritos, Doritos, and Tostitos

Name Derivation	Year Introduced	Main Ingredients	Demographic	Niche, According to Frito Lay
Fritos	“Little fried bits” (Spanish)	1932	Corn, vegetable oil, salt	33- to 51-year-old males	“Hunger satisfaction”
Doritos	“Little bits of gold”	1964	Corn, vegetable oil, cheddar cheese, salt	Teens, mostly males	“Bold and daring snacking”
Tostitos	“Little toasted bits” (Spanish)	1981	White corn, vegetable oil, salt	Upscale consumers born between 1946 and 1964	“Casual interaction through friends and family . . . a social food that brings people together”

Table11.3 Source: Adapted from Frito Lay website, accessed October 1, 2017.

Many products are targeted to various age groups. Most music CDs, Pepsi, Coke, many movies, the Honda Fit, and thousands of other products are targeted toward teenagers and persons under 25 years old. In contrast, most cruises, medical products, fine jewelry, vacation homes, Teslas, and denture products are targeted toward people 50 years old and up. An example of how Frito Lay targets various age groups for three of its most popular products is shown in Table 11.3.

Income is another popular way to segment markets. Income level influences consumers’ wants and determines their buying power. Housing, clothing, automobiles, and alcoholic beverages are among the many markets segmented by income. Budget Gourmet frozen dinners are targeted to lower-income groups, whereas the Stouffer’s line and California Pizza Kitchen frozen pizzas are aimed at higher-income consumers.