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Demographics: Understanding Your Target Market

UFirst Now - Demographics: Understanding Your Target Market

Let’s say you’re a shop owner and a random customer comes into your store and purchases an item with cash and then leaves. Ask yourself these questions:

If you don’t know the answers to these questions, you’ve probably eliminated any chance to make that person a repeat customer. To solve this problem, you need to understand your demographics and how to incorporate them into your marketing strategy.

The demographics that are of interest to your business are the average/typical characteristics of the customers who buy your products and/or services. These characteristics include, but are not restricted to, the following indentifying factors:

Age/Gender/Race

Gross Annual Income

Education Level

Occupation Category (e.g., industry type)

Size of Household

Residence (Rent/Own)

Marital Status

Taking demographics one step further, psychographics includes IAO variables (interest, activities, and opinions). These variables and human behavior attributes include personality, interests, lifestyles, values, attitudes, etc.

The most effective way to fine-tune your marketing efforts is to combine the marketing research datum derived from both the demographics and psychographics applicable to your region. In fact, to define a demographic, most marketers combine several variables to create a profile.

A demographic profile provides enough information about the typical member of this group to develop a mental picture of this hypothetical aggregate. For example, a motorcycle manufacturer might tailor advertising based of the following demographic profile:

single, male, middle-class, ages 16–24, with some college

Marketing researchers typically have two objectives. First: Determine what segments or subgroups exist in the overall population. Second: Create a clear and concise picture of the characteristics of an average/typical member of each of these segments or subgroups.

Once these profiles are constructed and contrasted, they can be used to develop a marketing strategy. Marketing research can be conducted using in-house resources or by hiring an outside agency.

Performing Due Diligence in Daily Life

The more formal definition of due diligence is “research and analysis of a company or organization done in preparation for a business transaction.” In simpler terms, due diligence is nothing more than “doing your homework” and diligence itself means “persevering done with careful, steady work.”

Due diligence in the business world refers to steps taken by venture capitalist before investing capital in a startup business. It also involves continuing investigations as to how the funds are being distributed or the precautionary steps taken by a larger company in deciding whether or not to acquire a smaller company.

So, can a consumer perform due diligence? You bet! In fact, performing due diligence should be a part of your daily life. For example:

Your home theater room is missing a satellite dish or cable TV provider. Instead of selecting the first one you find in the phone book, you should be researching and comparing several aspects of both options before committing to your entertainment choice. Don’t rush the process — take whatever time is necessary to cover all your bases.

First, compare availability. If certain favorite channels aren’t available in your area or that particular provider doesn’t service your neighborhood, move on to the next choice. From there, compare equipment issues (e.g., dish mounted to your roof, multiple remote controls) and bundled services (e.g., Internet + cable or telephone + cable).

And last, but not least: price. Now that you’ve narrowed down your choice to either satellite or cable, does your entertainment dollar still make sense?

Notice that “price” was listed last in the due diligence process. That’s because if you have $100 a month to spend, chances you’ll end up spending $100. If you perform due diligence and study what’s being offered, you might find you’re just as happy with the $50 package. Getting the best bang for your buck doesn’t means spending all your bucks.

Just like in the business world, consumer due diligence is an excellent way to identify and subsequently manage the risks involved. The amount of time and money that can be saved is virtually immeasurable.