Marketers 'must move beyond seductive demographics'

Further evidence has emerged for marketers to move beyond broad-based demographic data – no matter how simple and seductive it may be – and embrace more sophisticated targeting models to improve their campaigns with the cost of living crisis rewriting the targeting rulebook.

Last week, the GWI 2023 Commerce Report claimed that the financial squeeze which is forcing huge swathes of Generation Z and Millennial consumers out of the housing market is also giving them more disposable income.

Now, new research from Kantar Media shows that living circumstances are more likely to indicate alignment between consumer groups than age, highlighting the challenges of using demographic shorthand alone.

The business looked at how rising costs are influencing people’s behaviour and attitudes as interest rates hit a 15-year high in August and found that 27% of 21 to 26-year-olds living at home with parents say they prefer to buy premium goods and services, the same proportion as over 55 year olds who own their home outright.

This, Kantar, suggests, indicates exposure or not to the housing market can be a better indicator of buying preferences.

Kantar Media isolated those who expect to renew their mortgage in the next 12 months, around 1.5 million people, to emphasise the distinct groups of consumers that the current crisis has created.

It found that they have a dramatically different outlook, despite largely reflecting the population of the UK as a whole. Only 47% of this group say that they are ‘perfectly happy’ with their standard of living – a fall of almost 20% in just the last 12 months. In contrast, 64% of people who own their home outright are happy with their living standards.

Kantar Media’s TGI data found stark gaps in mortgage renewers’ cost consciousness and spending intentions compared to the average consumer. The number of people who agree that price is an important factor when buying toiletries and cosmetics, for example, has risen by 18% among this group, and there has been a 8% jump when it comes to food.

This compares to increases of 7% and 6% respectively for all adults. Mortgage renewers are also far more likely to delay spending on big ticket items than the average adult, reporting much sharper declines in their intention to buy goods.

For instance, among all adults there was a +8% intention to buy a new fridge, whereas for mortgage renewers this was -64%; for other items, including for a tablet computer (-16% vs -39%); a car (-7% vs -22%); and a TV (-4% vs -18%) the intention to buy was much lower among home loan renewers.

Kantar Media managing director of TGI Sarah Sanderson explains that the cost of living crisis is hitting people in very different ways and that marketers must understand these trends to make sure their messaging lands in the right way with the right people.

Sanderson added: “The trouble is many campaigns are still planned largely using demographics, but this misses the nuance of how people’s lives are being impacted. Our TGI data shows that even labels like homeowner are too broad brush now given the mix of financial pressures consumers are facing.”

She maintains that demographics still do have a role to play but they are just one piece of the jigsaw – mortgage renewers are in this predicament largely by chance rather than anything to do with their age or gender.

While campaign planning teams probably know the limitations of demographic models, their apparent simplicity can be seductive, Sanderson reckons. However, now more than ever, marketers have to take into account the full scope of consumers’ attitudes, behaviours and circumstances. If not, they risk misrepresenting the true picture and wasting budgets at a time when they can ill afford to.

She concluded: “It would be far riskier to ignore this opportunity than to stick with the status quo.”

However, there is also evidence that marketers are already turning away from targeting their customers through demographic data, placing greater importance on real-time personalisation and first-party data to tap into changes in consumer behaviour.

According to a UK study from Twilio, published in July, consumers have gone through a major shift, with nearly three-fifths (58%) of adults admitting their behaviours and buying choices are more complicated than three years ago.

Consequently, age-old techniques of customer segmentation and targeting are no longer meeting marketers’ needs with 48% believing demographic data is losing its value.

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