How Do Demographics Affect Business?
Demographics play a crucial role in the success of businesses, as learning consumer characteristics helps a business owner determine what products and services to create and how to market them. Future shifts in demographics also determine what necessary adjustments a business must make to its strategies.
Demographics indicate the general characteristics of the population in a specific region. These characteristics include purchasing power, type of residence, means of transportation, family status and educational level. Analyzing these traits allows entrepreneurs to, for example, verify if business is viable in the region and determine the prices for products and services that encourage consumer spending. This analysis also helps businesspeople develop advertising messages and marketing plans that appeal to their target markets, thus leading to effective campaigns for lead generation.
Demographics work in tandem with psychographics. Psychographics focus on the attitudes and lifestyles of potential customers, such as personal preferences, hobbies and interests. Psychographics also explain why consumers buy a product or service. Whereas demographics consist of statistical and external data, psychographics encompass behavioral and internal information. Both consumer studies provide a clear perception of a target market.
Business owners can gather both demographic and psychographic information from government agencies concerned with economics and statistics. Neighborhood profiles and customer surveys are also great sources of information.