Demographics comprises selected characteristics of a population (age and income distribution and trends, mobility, educational attainment, home ownership and employment status, for instance) for purposes of social studies. It is also used in marketing, marketing research, opinion research and the study of consumer behaviour. This article primarily discusses demographics as used in marketing.
Marketers often group consumers into segments based on demographic variables. The most frequently used demographic variables are:
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- family size
- family life cycle
- home ownership
- socioeconomic status
In addition to demographic variables, marketers can segment a population based on psychographic, geographic, and behavioural variables. See market segment for a list.
Demographics is an applied art
The term demographics is often used erroneously for demography, the study of human population and its structure and change. Whereas demography is a descriptive and predictive science, demographics is an applied art and science. In both cases however, the objects of study are the characteristics of human populations. In the case of demography the characteristics being studied tend to emphasize biological processes such as population dynamics, whereas demographics is also concerned with a wide range of economic, social, and cultural characteristics. Demographics is interested in any population characteristic that might be useful in understanding what people think, what they are willing to buy, and how many fit this profile.
Marketers typically combine several variables to define a demographic profile. A demographic profile (often shortened to "a demographic") provides enough information about the typical member of this group to create a mental picture of this hypothetical aggregate. For example, a marketer might speak of the single, female, middle-class, age 18 to 24 demographic.
Marketing researchers typically have two objectives in this regard: first to determine what segments or subgroups exist in the overall population; and secondly to create a clear and complete picture of the characteristics of a typical member of each of these segments. Once these profiles are constructed, they can be used to develop a marketing strategy and marketing plan.
Many demographic trends are quite easy to determine. This is due to the predictability of many demographic relationships. If, for example, the birth rate increases during certain years (as indeed happened during the baby boom years), we can determine that there will be an increase in the demand for baby food and diapers. In several years there will be an increase in the demand for toys and children's clothes; after a decade an increased demand for public education, video games and music CDs; after two decades an increased demand for university services, compact automobiles, rental apartments, wedding photographers, and furniture; after four decades an increase in the demand for houses, sedan cars, insurance, weight-loss centres, and investment services; after six decades an increased demand for health-care services and undertakers.
Demographic trends have been used to explain everything from the demand for vacation properties, to the tennis craze of the 1970s, to election and stock market results. Of course no social phenomena is so simple as to be explicable with demographics alone, but it is a good start. This is the meaning of professor D. Foot's (1996) often quoted claim that "demographics explains about two-thirds of everything".
Dr. Dychtwald (1989) describes the "aging of America" and convincingly argues that the changing age distribution of the American population is "the most important trend in our time". He considers the consequences of demographic facts like: the over 50 age group owns 77% of all financial assets in America, accounts for more than 50% of all new car sales (by value), spends more on travel and recreation than any other age group, etc. He asks what will happen to health care systems and social security entitlements (pension benefits) when the greying of America places additional demands on the system while simultaneously reducing the number of contributors into the system.
Sterling and Waite (1998) describe this aging trend in terms of "generational warfare". They ask what will happen to the value of the real estate and financial assets when the aging baby boomers all try to sell them. How will the younger age cohort react to this?
Other recent demographic trends include the rise of the two income family, the single parent family, and the nuclear family.
A generational cohort has been defined as "the aggregation of individuals (within some population definition) who experience the same event within the same time interval" (Ryder, N., The cohort as a concept in the study of social change, presented at the 1959 annual meeting of the American Sociological Association). The notion of a group of people bound together by the sharing of the experience of common historical events was first introduced by Karl Mannheim in the early 1920s. Today the concept has found its way into popular culture through well known epitomes like "baby boomer" and "gen-Xer".
An interesting study by Strauss and Howe (The fourth turning) looked at generational similarities and differences going back to the 15th century and concluded that over 80 year spans, generations proceed through 4 stages of about 20 years each. The first phase consists of times of relative crisis and the people born during this period were called "artists". The next phase was a "high" period and those born in this period were called "prophets". The next phase was an "awakening period" and people born in this period were called "nomads". The final stage was the "unraveling period" and people born in this period were called "heros". The most recent "high period" occurred in the 50s and 60s (hence baby boomers are the most recent crop of "prophets").
The most definitive recent study was done by Schuman and Scott (1989) in 1985 in which a broad sample of adults of all ages were asked, "What world events over the past 50 years were especially important to them?". They found that 33 events were mentioned with great frequency. When the ages of the respondents were correlated with the expressed importance rankings, seven distinct cohorts became evident. Today we use the following descriptors for these cohorts:
Depression cohort (born from 1912 to 1921)
- Memorable events : The Great Depression, high levels of unemployment, poverty, lack of creature comforts, financial uncertainty
- Key characteristics: strive for financial security, risk averse, waste not want not attitude, strive for comfort
WWII cohort (born from 1922 to 1927)
- Memorable events: men leaving to go to war and many not returning, the personal experience of the war, women working in factories, focus on defeating a common enemy
- Key characteristics: the nobility of sacrifice for the common good, patriotism, team player
Post-war cohort (born from 1928 to 1945)
- Memorable events: sustained economic growth, social tranquility, The Cold War, McCarthyism
- Key characteristics: conformity, conservatism, traditional family values
Baby Boomer cohort #1 (born from 1946 to 1954)
- Memorable events: assassination of JFK, Robert Kennedy, and Martin Luther King, political unrest, walk on the moon, Vietnam War, anti-war protests, social experimentation, sexual freedom, civil rights movement, environmental movement, womens movement, protests and riots, experimentation with various intoxicating recreational substances
- Key characteristics: experimental, individualism, free spirited, social cause oriented
- Baby Boomer cohort #2 (born from 1955 to 1965)
Generation X cohort (born from 1965 to 1976)
- Memorable events: Challenger explosion, Iran-Contra, social malaise, reagonomics, AIDS, safe sex, fall of Berlin Wall, single parent families
- Key characteristics: quest for emotional security, independent, informality, entrepreneurial
- N Generation cohort also called Generation Y (born from 1977 to date)
Criticisms and qualifications
Demographc profiling is essentially an exercise in making generalizations about groups of people. As with all such generalizations we must be aware that many individuals within these groups will not conform to the profile. Demographic techniques are simplifications of reality and should not blind us to the richness of individual complexity. Most importantly, we must not prejudice our view of specific situations by setting up expectations about individuals based on generalizations about groups that they belong to. Demographic information is aggregate and probabilistic information about groups, not about specific individuals.
Most demographic information is culturally specific. The generational cohort information above, for example, applies primarily to North America (and to a lesser extent to Western Europe). Serious errors result when demographic information is applied to groups other than ones similar to those in the original study.
- Coping with Changing Demographics http://www.ericdigests.org/pre-9214/coping.htm
- Foot, D. (1996), Boom, Bust and Echo: How to profit from the coming demographic shift, MacFarlane Walter & Rose, Toronto, 1996, ISBN 0-921912-97-8
- Dychtwald, K. (1989), Age Wave: The challenges and opportunities of an aging North America, St. Martins Press, New York, 1989, ISBN 0-87477-441-1
- Sterling, W. & White, S. (1998), Boomernomics: The future of your money in the upcoming generational warfare, The Library of Contemporary Thought (Ballantine Publishing), New York, 1998, ISBN 0-345-42583-9
- Schuman, H. and Scott, J. (1989), Generations and collective memories, American Psychological Review, vol. 54, 1989, pp. 359-81
- Meredith, G., Schewe, C., and Haim, A. (2002), Managing by defining moments: Innovative strategies for motivating 5 very different generational cohorts, Hungry Minds Inc., New York, 2002, ISBN 0-7645-5412-3