Demographic analysis is the study of a population-based on factors such as age, race, and sex. Demographic data refers to socioeconomic information expressed statistically, including employment, education, income, marriage rates, birth and death rates, and more.
Governments, corporations, and non-government organizations use demographics to learn more about a population's characteristics for many purposes, including policy development and economic market research.
For example, a company that sells high-end RVs may want to reach people nearing or at retirement age and the percentage of those who can afford their products.
- Demographic analysis is the collection and analysis of broad characteristics about groups of people and populations.
- Demographic data is very useful for businesses to understand how to market to consumers and plan strategically for future trends in consumer demand.
- The combination of the internet, big data, and artificial intelligence is greatly amplifying the usefulness and application of demographics as a tool for marketing and business strategy.
- Market segments are often grouped by age or generation.
- Demographic information can be used in many ways to learn more about the generalities of a particular population.
Demographic analysis is the collection and study of data regarding the general characteristics of specific populations. It is frequently used as a business marketing tool to determine the best way to reach customers and assess their behavior. Segmenting a population by using demographics allows companies to determine the size of a potential market.
The use of demographics helps determine whether its products and services are being targeted to that company's most influential consumers. For example, market segments may identify a particular age group, such as baby boomers (born 1946–1964) or millennials (born 1981–1996), with specific buying patterns and characteristics.
The advent of the internet, social media, predictive algorithms, and big data has dramatic implications for collecting and using demographic information. Modern consumers give out a flood of data, sometimes unwittingly, collected and tracked through their online and offline lives by myriad apps, social media platforms, third-party data collectors, retailers, and financial transaction processors.
Combined with the growing field of artificial intelligence, this mountain of collected data can be used to predict and target consumer choices and buying preferences with uncanny accuracy based on their demographic characteristics and past behavior.
For corporate marketing goals, demographic data is collected to build a customer base profile. The common variables gathered in demographic research include age, sex, income level, race, employment, location, homeownership, and level of education. Demographical information makes certain generalizations about groups to identify customers.
Additional demographic factors include gathering data on preferences, hobbies, lifestyle, and more. Governmental agencies collect data when conducting a national census and may use that demographic data to forecast economic patterns and population growth to better manage resources.
You can gather demographic information on a large group and then break it down into smaller subsets for deeper dive into your research.
Most large companies conduct demographic research to determine how to market their product or service and best market to the target audience. It is valuable to know the current customer and where the potential customer may come from in the future. Demographic trends are also significant since the size of different demographic groups changes over time due to economic, cultural, and political circumstances.
This information helps the company decide how much capital to allocate to production and advertising. For example, the aging U.S. population has specific needs that companies want to anticipate. Each market segment can be analyzed for its consumer spending patterns. Older demographic groups spend more on healthcare products and pharmaceuticals, and communicating with these customers differs from that of their younger counterparts.
Demographics refers to the description or distribution of characteristics of some target audience, customer base, or population. Governments use socioeconomic information to understand the age, racial makeup, and income distribution (among several other variables) in neighborhoods, cities, states, and nations in order to make better public policy decisions.
Companies look to demographics to craft more effective marketing and advertising campaigns and to understand patterns among different audiences.
The U.S. Census Bureau collects demographic data on the American population every year through the American Community Survey (ACS) and every 10-years via an in-depth count of every American household. Companies use marketing departments or outsource to specialized marketing firms to collect demographics on users, customers, or prospective client groups. Academic researchers also collect demographic data for research purposes using various survey instruments. Political parties and campaigns also collect demographics in order to target messaging for political candidates.
Demographics are key to businesses today. They help identify the individual members of an audience by selecting key characteristics, wants, and needs. This allows companies to tailor their efforts based on particular segments of their customer base. Online advertising and marketing have made enormous headway over the past decade in using algorithms and big data analysis to micro-target ads on social media to very specific demographics.
Economists recognize that one of the major drivers of economic growth is population growth. There is a straightforward relationship when identifying this: Growth Rate of gross domestic product (GDP)=Growth Rate of Population+Growth Rate of GDP per capita, where GDP per capita is simply GDP divided by population. The more people around, the more available workers there are in the labor force, and also more people to consume items like food, energy, cars, and clothes. There are also demographic problems that lie on the horizon, such as an increasing number of retirees who, while no longer in the workforce, are nonetheless expected to live longer lives. Unfortunately, the number of new births seems to be too low to replace those retirees in the workforce.
Breaking information up into measurable characteristics can make it easier to understand. This is especially true of demographics. Find out what demographics are using simple terms and explore some examples of common demographics you might encounter in your community or the world at large.
When you look at demographics of a population, you’re looking at statistics. These statistics can help you to break down the common characteristics of the population into digestible segments. This can include age, race, family size and much more. You might look at demographics for your area, the world as a whole, or even just a random sampling.
For example, demographics can give you specifics like how many 20-year-olds live in Chicago or the number of married couples in Manhattan. You might be able to find out the racial diversity of Louisiana by exploring racial demographics or learn how many children are in your area through family size demographics.
Demographics have vast uses in society.
Demographic factors and data are oftentimes used in the context of politics and government. For example, a Democratic politician might look at the political affiliation of an area to assess if their campaign will be successful. Similarly, a local government might use the income level of an area to justify building more low income housing.
One of the largest uses of demographics is for customer segmentation in business. Understanding demographic data can make or break a business. This is because businesses need to understand their customer base when creating new products or marketing, expanding their stores, and even when starting a new business in the first place.
If a business fails to understand their customer base, this is a surefire recipe for disaster.
For example, an online education company might use site demographics and traffic of a famous blogger with a reader demographic of 80% women to justify paying her to promote an online campaign. A hot arcade might look at the student demographics of a particular area when deciding to open a new store in an area or where to market their hottest game.
Just like people, demographics come in all shapes and sizes. Some corporations, governments or nonprofits might look for unique or specific demographic data like income level, while others might explore several demographics at once.
Common demographics that you might encounter, including examples of each, include:
- Age: Under 12, 12 to 17, 18 to 24, 25 to 34... (these typically go on at 10-year increments)
- Sex (gender): Male, female, other nonbinary identities
- Income level: Under $15,000, $15,000 to $24,999, $25,000 to $34,999... (distribution brackets will vary based on who is being sampled)
- Race: Caucasian, African American, American Indian, Latino, Asian, Pacific islander
- Ethnicity: Jewish, Arab, Irish, Dutch, Russian, Swedish
- Employment status: Employed, unemployed, self-employed, retired, disabled
- Education level: High school, some college, undergraduate degree, graduate degree
- Number of children: None, 1 to 2, 3 to 5, 5 or more...
- Living status: Own, rent, lease, other
- Location (geographical data): Zip code, city, county, state, country
- Political affiliation: Republican, Democrat, independent
- Marital status: Single, married, separated, widowed
- Religious affiliation: Muslim, Buddhist, Hindi, Catholic, Jewish
- Social class: Lower class, middle class, upper class
- Nationality: American, Mexican, German, Swiss, Finnish, French
While these are some of the most common, you will find other demographics that might cover birth and death rates, marriage rates and more. If a population can be grouped, it likely will be.
The importance of demographics lies in the fact that these factors can turn a population into something that you can measure. You can measure and compare the age of your customers. You can measure the proportion of families in need in your neighborhood. When a population becomes measurable, you can make changes to improve your company, government or community.
- For a business, this means you know who your customers are. Therefore, you can better meet their needs. This will allow you to spend your marketing budget more effectively or discover new markets.
- For a government, you know how to tailor your programs, budgets, and resources to best meet the needs of your town, city or state. Demographics can help a government understand the need for a community center or to get a grant for a new park.
- Educational professionals can use demographics to better meet the needs of students in school.
- Scientists can look to demographic factors as a meaningful way to organize data and to better understand the dynamics of a given population.
Demographics allow a company, government and even scientific institute to group people based on specific characteristics like race, gender and location. Since you’ve got demographics down to a science, give a look into stereotypes and the impact they have.
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