We formulate and analyse a model describing the combined effect of mechanical deformation, dynamics of the nematic order parameter, and concentration inhomogeneities in an elastomeric mixture of a mesogenic and an isotropic component. The uniform nematic state may exhibit a long-wave instability corresponding to nematic-isotropic demixing. Numerical simulations starting from either a perfectly ordered nematic state or a quenched isotropic state show that coupling between the mesogen concentration and the nematic order parameter influences the shape and orientation of the domains formed during the demixing process.