Not everyone wants the same thing. A 25-year-old urban professional and a 60-year-old retiree have different needs, incomes, and media habits. Demographic segmentation divides the market by characteristics like age, gender, income, education, occupation, and family status. It is one of the oldest and simplest ways to group customers.

The advantages are obvious. Demographic data is easy to collect and widely available. It is often correlated with buying behavior. A company selling luxury watches knows to target higher-income consumers. A company selling baby products knows to target new parents. The targeting is straightforward.

The limitation is that demographics are a proxy. Two people of the same age, income, and gender can have completely different preferences. That is why marketers also use psychographic, behavioral, and geographic segmentation. Demographics tell you who someone is on paper. They do not tell you what they care about. The best segmentation combines multiple dimensions, using demographics as a starting point rather than an answer.