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J.D. Power and Associates Announces the Death of Demographics

J.D. Power and Associates published a white paper in April about “The Death of Demographics: Why Targeting by Purchase Behavior is M... This comes as no surprise to those within the digital marketing field, because the onset of so much new technology has shifted the way marketing power is focused.

Looking at demographics such as gender, age, and income are no longer enough for informing on the best marketing and advertizing practices. We need data on the consumer lifecycle. We need to be able to look at and measure the consumer’s buying behavior to predict how and when they are going to buy in the future.

“Demographics, more so than many other tools, has proven to be a much less effective tool in the automotive space, particularly with regard to new-vehicle buyers. The most popular models overall are typically the most popular regardless of the particular demographic.”

Sophisticated digital marketing technology can see what websites a consumer is visiting or what other products they are buying, not just look at listed specifics that don’t delve into the truth of who the consumer is and how they buy.

A dealer used to be able to market their minivans to the family down the street without much thought. In today’s market, family buyers are just as likely to purchase SUVs or crossovers, and it is only by better understanding a particular family’s buying behavior that a dealer can learn how to best market to them.

Simply put, demographics don’t work because they can’t tell us enough about how the consumer thinks and feels.

The automotive industry demonstrates this to the extreme. Repeated studies on various vehicle models show that the automotive market is flat across demographic groups regardless of which model is being looked at. How people view driving and their vehicle is not informed by demographics. For example, someone in the highest income bracket might care more about dependability than luxury and purchase a vehicle that demographics would never consider for them.

The other huge shift in why demographics are less effective is how the consumer has changed. Consumers are in control, and they want to retain that feeling of control throughout the buying process. With social media, email, online chat, etc., consumers feel they have the right to communicate the way they want to communicate when purchasing a vehicle.

“With all of this media fragmentation and product and lifestyle diversity, targeting by purchase behavior has emerged as a more effective means of marketing to a specific audience. This is much more effective than the use of demographics, and even more precise than psychographics. By understanding the media consumption of recent new-vehicle purchasers, it is possible to target future new-vehicle buyers using that same medium.”

J.D. Power and Associates found that purchase behavior was a much more effective tool for segmenting their marketing tactics than demographics, especially when targeting new customers. However you communicate with your customers, whether traditional media, email marketing, or mobile, make sure the messages you are sending are the right ones for the right consumers.

While the many industries are changing as we shift toward digital marketing and away from demographic profiling, one thing remains the same: You have to know your customers to market to them effectively.

Read the full pdf of the J.D. Power and Associates white paper here.

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Tags: behavior, buyer, buying, demographic, jd, marketing, paper, power, purchase, white

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Comment by Joe Tareen on June 22, 2011 at 3:37pm
Revenue Management is not new. Automotive is just now waking up to it. Hotel and the Airline Industry have been doing it for a while. Of course looking at transaction points to market or price items is really price discrimination. It is legal but must be done a certain way. I have done extensive research on Revenue Management focused on the Fixed Ops side. I would love to share with anyone interested. Good Blog....!

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