Managing External Forces

Demographics

Demography involves the study of characteristics of a population and how these change over time.  The characteristics that are of most interest to marketers fall into two categories:

• Total Population – These characteristics take a very broad view of the population as a whole in terms of size (e.g., number of people, number of businesses) and location (e.g., geographic region).
• Personal Variables – These characteristics look at how the population is changing based on individual factors such as gender, age, income, level of education, family situation (e.g., single, married, co-habitation), sexual preference, ethnicity, occupation, and social class.

We saw in Part 6: Targeting Markets demographics is a key variable used to segment both consumer and business markets.  In particular, demographic variables are an important component in creating customer profiles.  These profiles are based on both demographic and non-demographic (e.g., customer behavior, attitudes, lifestyles) factors and are used for grouping customers into definable market segments from which a marketer then selects its target markets.  Since demographics is tied directly to identifying target markets, monitoring how demographics change is critical for making marketing decisions.

Most demographic shifts do not occur rapidly so marketers will not see dramatic changes in a short period of time in the manner that other external forces can impact an organization (e.g., impact of a new law).  However, over the long term, demographics can reshape a target market requiring marketing organizations to rework their marketing strategy in an effort to appeal to a changing market.