Demographics and Brand Decisions

I recently found the following interesting quote in a post titled ‘the danger of targeting a demographic‘:

On average (across product categories), less than 2% of brand choice is explained by demographics.

The statistic is attributed to research from Mediamark Research & Intelligence, but I’ve not been able to find the original source on their site.  Anyway, whether the number is accurate or the underlying research methodology sound is neither here nor there for the purposes of this post.  The fact is that it would be really surprising if they had found otherwise.

It is well established that in the vast majority of markets there is very little demographic distinction between the buyers of different brands in a category.  This is despite the effort and resources dedicated by armies of marketers to ‘differentiate’ their brands and appeal to narrow audiences like ’15-35yo males’.  See 7 Brand Buying Facts (PDF) from the Ehrenberg-Bass Institute for Marketing Science in South Australia for a few more interesting facts about repeat purchase and loyalty.

Further than that, it isn’t even logically necessary that a marketer appealing to a certain demographic segment will maximise profit.  It is quite possible that a mass-market appeal will result in greater overall sales even if it doesn’t generate as high a response as a targeted campaign would have amongst a particular segment.  See this article on the logical limitations of target marketing (PDF) for the full explanation.

Knowing these things is useful for a couple of reasons.  First, it opens the door to considering a different focus for advertising (if the aim isn’t to appeal to segment x, then what is it?  to maintain salience amongst existing buyers? generate awareness in a new market?  support a promotional effort to induce trial?).  This shift in focus also alters downstream decisions such as media purchasing.

Second, this knowledge helps put market research results in context.  For instance, if the bulk of a brand’s buyers are young, this is probably because most of the category buyers are young.  It doesn’t mean the brand has any more ‘mind share’ amongst that group than another brand in the category.

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