Marketers use demographics by zip code to segment the population and develop targeted marketing strategies. Postal zip code segmentation is one of the most popular ways researchers present data because the codes are in use throughout the entire US. Location-based demographic information is particularly relevant in marketing for retail sales because presentation, local conventions, consumer tastes, and buying habits tend to be specific to a geographic region.
Demographics are the specific traits of a target population, such as race, gender, income level, age, and education. Researchers record this data for a group of people and compare it against an applied criteria, such as a behavior, to reach a conclusion about the population's condition or habits. This information is also used to forecast trends by comparing historical demographic data with current data in a particular location or for a defined group.
Location is particularly important to demographic study. Either by design or by accident, zip codes tend to track the parameters of a definable community. Even if a zip code isn't the best way to parse related communities, it is one of the easiest ways to do so at a local level. Some of the most pervasive demographic research that is conducted on a national level uses zip codes as the most local level of analysis, such as the US Census data and the Community Sourcebook of Zip Code Demographics.
Marketers use demographics by zip code to segment the market. This means that out of an entire market, such as a city or a state, the marketer finds pockets of consumers that would be interested and able to buy its products by looking at income and other factors relevant to where they live. The marketer then uses demographic data to develop a profile of the typical person who lives in that community. This profile will drive the type of marketing strategy that is adopted for the area and the development and placement of advertising.
For example, if a billboard goes up in a community with a predominantly Spanish population, the company knows to put the text of the billboard in Spanish and to use Spanish models because marketers used demographics by zip code. They created a profile and found the most appropriate way to relate to the majority of people living in that neighborhood. The availability of this type of information has been instrumental in changing marketing over the years from reactionary to strategic.