Loading the player...

What are 'Demographics'

Demographics is the study of a population based on factors such as age, race and sex, among others. 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 wants to know roughly how many people are at or nearing retirement age and what percentage are able to afford the product.

BREAKING DOWN 'Demographics'

Demographics is the collection of data regarding a specific population. 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 to determine whether its products and services are being targeted to that company's most important consumers. Market segments may identify a particular age group, such as Baby Boomers (born from 1946-1964) or Millennials (born 1980-2000), that have certain buying patterns and characteristics.

Types of Demographic Information

For corporate marketing goals, demographic data is collected in order to build a profile for the organization's customer base. The common variables that are gathered in demographic research include age, sex, income level, race, employment, location, home ownership and level of education. Demographics make certain generalizations about groups in order 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 in order to better manage resources.

How Demographics Information Is Used

Most large companies conduct demographic research in order to determine how to market their product or service and best capture 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 important, since the size of different demographic groups changes over time as a result of 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 certain needs that companies want to anticipate. Each market segment can be analyzed for its consumer spending patterns. Older demographic groups spend more on health care products and pharmaceuticals, and the method of communicating with this customer differs from that of their younger counterpart.

RELATED TERMS
  1. Customer

    An individual or business that purchases the goods or services ...
  2. Demographic Dividend

    The freeing up of resources for a country's economic development ...
  3. Market Segment

    A group of people that share one or more characteristics. Each ...
  4. Current Population Survey

    A statistical survey that is performed by the U.S. Census Bureau ...
  5. Target Market

    The consumers a company wants to sell its products and services ...
  6. Working-Age Population

    The total population in a region, within a set range of ages, ...
Related Articles
  1. Investing

    Explaining Demographics

    Demographics is the study and categorization of people based on factors such as income level, education, gender, race, age, and employment.
  2. Insights

    How Changing Demographics Affects U.S Elections

    With the 2016 election upcoming, the change in two of the country's largest demographics will go a long way in determining who controls the White House.
  3. Investing

    Demographic Trends And The Implications For Investment

    See how people's movements, ages, deaths and buying patterns affect portfolios worldwide.
  4. Investing

    Investing in India: The Next Frontier?

    Watch as India becomes one of the next top frontier markets in which to invest as it grows to be a major player in the global economy.
  5. Financial Advisor

    Ignore This Demographic At Your Own Peril

    Hispanics have unique financial planning needs and attitudes, and financial advisers would be well-served by studying this fast-growing demographic's differences.
  6. Insights

    These Companies Are Poised for Growth as Global Population Growth Comes Online

    While there are many concerns about population growth putting pressure on natural resources such as water and energy, these increased demands can spell profits for certain companies that can ...
  7. Investing

    4 Key Factors That Drive The Real Estate Market

    The size of the real estate market make it an attractive sector for many investors, but understanding the factors that drive it is essential.
  8. Small Business

    Generational Marketing: Harvest The Whole Family Tree

    Attract new clients by tailoring your message to specific age groups.
  9. Insights

    Boom or Bust? The End of China's One-Child Policy

    China's easing of its one-child policy has demographers speculating whether it'll lead to a baby boom. Here's why it might not.
  10. Insights

    4 Global Economic Issues of an Aging Population

    Discover why dramatic increases in life expectancy is creating significant socioeconomic challenges for many advanced industrialized nations.
RELATED FAQS
  1. What are key factors that are generally considered in demographic studies conducted ...

    Understand the importance of demographic research and learn key demographic factors that a company seeks to discover through ... Read Answer >>
  2. How might a company use demographics to assess the size of a potential market?

    Discover how a company can utilize the examination of different demographic characteristics to identify and assess the size ... Read Answer >>
  3. What can demographics tell us about present and future consumption trends and economic ...

    Learn what demographics reveals about present and future consumption trends and economic cycles. Demographics is the study ... Read Answer >>
  4. What demographic trends are creating potential profits for insurance companies?

    Discover the ways in which insurance companies can profit from demographic trends. Two major ones are aging populations and ... Read Answer >>
  5. Why do growth investors buy insurance stocks?

    Discover why growth investors buy insurance stocks; these stocks are tied to major secular trends such as rising costs and ... Read Answer >>
  6. Is Japan an emerging market economy?

    Discover whether Japan is an emerging market economy. Emerging markets have high levels of risk and reward due to their growth ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center