Demographic segmentation divides a market on the basis of its physical and social characteristics, including gender, origin or heritage, religion, socioeconomic status, and life stage. On its own, demographic segmentation does not necessarily provide enough information for marketers to make informed decisions about how to market products to each segment. But, as a starting point, this method helps marketers discover some valuable information.

Gender or sexual orientation. Though marketers know that groups are never completely identical, they know that one quick way to classify their customers is by gender—because gender can indicate purchase preferences. For products created specifically for men or women, such as clothing and cosmetics, dividing customers by gender is especially helpful.

However, sexual orientation, alternative lifestyles, and perceptions of gender identity complicate the use of gender to segment markets. Some businesses are following the trend toward gender-neutral marketing, appealing to people’s desire to choose products based on their individuality instead of their gender. Toy manufacturers, in particular, are responding to parents’ and children’s desire for toys that don’t reinforce traditional gender roles and stereotypes. Hasbro’s gender-neutral redesign of its toy oven is explained in the ABC News video “Girl, 13, Helps Transform Easy-Bake Oven.”

Origin or heritage. Marketers also group customers by background. Race, ethnicity, nationality and other elements of a customer’s heritage might indicate purchase preferences. Social issues, cultural issues, and even immigration can also affect customers’ purchase preferences. When people migrate to another area, they may adopt some new tastes or perhaps influence their new society. In recognition of its growing Chinese and Chinese-American market, for instance, the NBA created a commercial celebrating Chinese New Year.

Religion. Whether or not you’re part of an organized religious group, your personal beliefs affect your actions—and what you choose to buy. Preferences affected by personal beliefs include entertainment options, fashion alternatives, and food selections. For example, a Muslim woman is much more likely to purchase a hijab head scarf than a bikini bathing suit. So, marketers take note of the preferences which correspond to personal beliefs—and provide products in keeping with what their targeted customers want.

Socioeconomic status. Socioeconomic status is an economic and sociological measure of a person’s income, education, and occupation. By dividing customers into different groups based on their earnings, level of education, and jobs, marketers can determine what different customers are likely to buy. Better educated individuals, for instance, are more likely to demand higher quality products. Likewise, high-income customers have more money to spend on such products as expensive jewelry, vacation packages, and cars. Knowing a customer’s socioeconomic status gives marketers insight into that customer’s purchase preferences and financial capability.

Life stage. Another important way to group customers is by their current stage in life. Age, generation, marital status, family life cycle, family size—whatever the determining factor, marketers want to know where customers fit in the day-to-day buying routine. Are customers buying toys, smartphones, or hearing aids? Do they need retirement-planning assistance, car-pooling opportunities, or childcare services? When marketers categorize customers by where they are in life, they can quickly discover their needs and what to do to meet them. Theme parks like Disney, for example, use life stage to create special trips for both young families and older adults with grandchildren.