DECA Retail Merchandising Practice Exam

Which method groups customers by factors such as age, gender, income, and education?

1. Composite

2. Lifestyle

3. Demographic

4. Buying situation

The correct answer is: Demographic

The method that groups customers by factors such as age, gender, income, and education is known as demographic segmentation. This approach allows businesses to categorize their customer base into distinct groups based on observable characteristics, making it easier to tailor marketing strategies and product offerings to meet the specific needs and preferences of those groups. Demographic factors are typically quantifiable, which means that businesses can gather statistical data to make informed decisions. By understanding the demographic profile of their target market, companies can identify potential customers and develop promotions that resonate with particular segments, which can enhance customer engagement and drive sales. In contrast, lifestyle segmentation focuses on the activities, interests, and opinions of individuals rather than strictly their demographic factors. The composite method combines various segmentation approaches, which may include demographics but is not limited to them alone. Finally, buying situation segmentation considers the context in which purchases occur, such as time or place, rather than underlying demographic characteristics. Thus, demographic segmentation remains key in targeted marketing and customer analysis.