Targeted marketing has replaced blind, mass marketing that in the past, has meant a lot of waste of time and money for companies hoping to hook come customers by saturating the market. Targeted marketing is smart marketing and it ensures a higher ROI by only targeting consumers that are interested in your product or service. But in order to target a market, you have to know who you are trying to reach, in other words, you have to know who your customer is, and this is accomplished by demographics that help you create a customer profile.

Knowing as much as possible about your current and potential customers and reaching them through very specialized advertising is what demographic date is designed to do. A company can use demographics to compile a customer profile of their target audience.

Factors that should be considered in the profile include:

discretionary income is the amount of money left over to spend after all other obligations are paid for. It is often this last type of income that marketers are most interested in.

Education level. Generally, the more education a person has, the greater the income they earn, thus the more money they have to purchase products. Education is most often measured by level of schooling completed. As a rule of thumb, college-educated people are among the most desirable consumer groups, but studies show that they also tend to be the least brand loyal. This means a business may have to work harder to reach and keep those customers.

Other important demographic factors often include age, sex, geographic location, occupation, size of family, and ages of children in the family unit, and lifestyle factors.

Targeted demographics can include:

  • Cultural background
  • Religious background and beliefs
  • Values
  • Political convictions
  • Hobbies/Recreational activities
  • Musical preferences
  • Reading preferences
  • Entertainment preferences (television, movies, etc)
  • Eating habits

Demographics also use what is called a cluster system, which is also known as a geo-demographic segmentation system. Cluster systems take large numbers of demographic variables such as age, income, ethnicity, and occupation and combine them to create profiles of individuals as well as households. When this data is used in conjunction with business mapping systems that link demographic data to geographic areas such as ZIP codes, cluster systems are a powerful marketing tool.

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