Demographics examples and use for businesses

In this post, we will discuss examples of demographics and how useful demographic data is for businesses and how they can use this data for brining improved products and services to the market.

Demographics are statistical data related to a population’s socioeconomic condition. They represent the various characteristics of a population like age, sex, race, and other characteristics.


There are several demographic factors that are related to a person’s buying behavior or have a limited or critical influence on his buying behavior. For example, age, educational status, employment, and other factors including gender are important in this regard. Marketers and businesses find this demographic data useful for targeting the right market segments and knowing which segments are most likely to buy their products. Businesses also use demographics to tailor their services to their customers’ needs and preferences. Many companies also use demographic data to develop customer profiles that can be helpful while making critical decisions related to marketing and sales.

 Here are some examples of most important demographics:

Examples of demographics:

Age:

Age is an important demographic factor and a critical indicator of tastes and preferences. Consumer behavior can be similar among people of the same age group. Businesses ask customers to indicate their age as a part of surveys carried out to collect demographic data. Consumer behavior varies from one group to another. For example, the millennials were born and grew up in an environment marked by rapid technological advancement. They are very different from the previous generation or the Gen X. However, there are also differences between Gen Z and the millennials. Gen Z are the ones born between 1997 and 2012 whereas the millennials are the ones born between 1981 and 1996.

Gender identity:

Gender identity is also a critical factor that affects buying behavior and choices. It is also a acritical indicator of a person’s tastes and preferences. There are several products that are especially designed for women. Companies that are targeting only female consumers or only male consumers would especially find this data important. Businesses collect data related to gender identity by asking close ended questions. They give their participants multiple choices to choose their gender identity from. However, in many cases if the participant is not interested in disclosing his/her gender identity, there is also a choice – ‘prefer not to answer’.

Race or ethnicity:

Demographic surveys also classify people on the basis of their race or ethnicity which basically means classifying them on the basis of special physical or social attributes. The racial or ethnic background of a person can prove useful for marketers and businesses for determining the tastes and preferences of a person. People can be from various ethnic backgrounds like Asia, African American, Hispanic, White, Native American etc.

Education:

How educated a person is also affects his buying behavior and personal choices and preferences. It also determines what type of products he is more likely to buy and which ones less. Companies and marketers also classify their customers based on education attained. When collecting demographic data they use close ended questions to know the highest education a person has received. It can be high school diploma, associate, bachelor’s, or graduate degree. In the online education industry, while this data is very useful, there are several more sectors as well, where marketers and companies can find this data useful.

Employment status and annual income:

The employment status of a person and his annual income also have a critical influence on his buying behavior, tastes and preferences of products and services. It helps know a person’s disposable income and his spending. An employed person is more likely to buy compared to an unemployed. A person with higher annual income is more likely to spend on luxury products and services compared to a person with lower annual income. Since both employment status and annual income are important in terms of buying behavior and purchasing decisions, companies classify their customers into groups based on these demographics. For example, companies carrying out a survey to collect demographic data may ask for people’s employment status through closed ended questions and offering them multiple choices to select from. The same practice is used to collect data related to annual income.

Industry employed in:

Many businesses that serve professionals or bus8inesses like to use demographic data related to their employment in particular industry sectors to classify their competitors. While it may help them to tailor their services specifically based on the industry sector, it may also be helpful in terms of marketing and sales. The company can select only relevant products and services based on the industry sector. It can be beneficial for a large number of companies to know what industry sectors their clients are from. To collect demographic data related to industry, companies carrying out surveys ask close ended questions and offer choices for customers to select from. For example, accounting, finance, education, healthcare, research, marketing, IT, retail, construction and so on.

Marital status and family size:

Many businesses may also find it relevant to collect demographic data related to a person’s marital status and family size. It applies in case of several industries including finance where businesses offer a large range of services. It is important to classify customers on the basis of their marital status, and family size to offer them the right plans and policies. Not just banking and finance sector, there are a large number of other businesses to, which might find this data useful including retail and entertainment sectors. Businesses collecting demographic data related to the marital status of a person ask closed ended questions in surveys and offer multiple choices to indicate their marital status.  For example, you can ask participants to indicate their relationship status by selecting one of the multiple choices which can include single, married, divorced, separated, widowed and so on. Knowing the number of children a person has can also be helpful in terms of marketing and sales.

While these are the main demographics companies use for market segmentation and targeting the right buyer segment, there are other types of demographics too which may prove useful for businesses in specific conditions. For example, a person’s religion and his political affiliation may also affect his choices. Or this data can at least be useful for developing a customer profile that can be used to improve marketing strategy and for offering a superior customer experience which will drive higher loyalty.

How can companies use demographics?

Demographic information can be useful for businesses in several areas from improving customer experience to creating better marketing strategies and making better decisions related to various business areas. Having access to demographic data can help companies in the following areas:

Improved marketing efforts:

Businesses can use demographic data to improve their marketing efforts along various channels including physical channels, digital channels and social media. They can also use this data to improve their marketing strategy and design better marketing campaigns. It will help improve the appeal of their marketing efforts to their target audience. Companies can use demographic data to know what kind of content will appeal the most to their users and is most likely to drive user engagement higher. For example, if a company knows that most of their customers are from Gen Z, they can accordingly create marketing campaigns and decide the right promotional channels to drive higher engagement and better ROI.

Selecting business location:

Knowing the demographics of your target audience can help you drive sales by opening retail locations at the right place. It is helpful for businesses across several sectors including retail, fashion, entertainment, and fast food. Take the example of Costco. It opens retail locations in suburbs where its affluent customers are most likely to drive for shopping. Fashion brands generally open their retail shops in locations where footfall of their target audience is higher.

Designing sales offers:

Companies can also use demographic data to design special offers for various customer groups. They can use this data to create the kind of offers that will drive sales higher. It can especially be useful during the festival seasons. While it will help them attract more customers, the data can also be used to design offers that encourage customers to spend more.

Pricing strategy:

Companies can also use demographic data to create the right pricing strategy based on the needs and buying ability of its target audience. When you have access to the right demographic data including the income level of your customers, you can accordingly price your products and services to drive higher sales and loyalty. For example, if you are targeting middle class and price sensitive customers, you would like to keep prices of your products and services low to be competitive and achieve higher sales.

Developing new products:

Demographic data can also be useful in terms of developing new products and creating innovation that benefits your customers. Businesses that have access to the demographic data of their target audience can understand their needs and problems better. Based on this information, they can develop products that solve those problems or address their needs better. For example, if you know which generation your buyers are from, it will help you develop products that are more likely to appeal to them. You would like to develop products that have a strong appeal among your target audience and are more likely to sell.

A few last words:


Demographics have a critical impact on consumers’ buying behavior and therefore it is important for businesses to understand customer demographics to know the needs and preferences of their targeted customer segment better. Demographic data is critical to understanding the customers and how you can serve them better or improve your products and services to better suit their needs. For example knowing the applicable demographics with respect to your target market like age, sex, income level, education, family size etc. can help you understand your customers better and also target the right customers. Marketers and business managers must have access to the required demographic information to classify their customers and make critical decisions that will drive superior conversion and higher sales. Other important demographics that businesses may find useful in terms of business and marketing strategies include ethnic background, marital status, family size, religion, political affiliation and the industry sector in which a person is employed. The good news is that most of this data can be easily collected using surveys and through simple close ended questions. While on the one hand, demographic data can help to improve your products, services and customer experience, it can also help you introduce new products and services that may have a higher appeal for your customers.