China A-Shares Definition

What is demography?

Demography is the study of a population based on factors such as age, race and gender. Demographic data refer to socio-economic information expressed statistically, including employment, education, income, marriage rates, birth and death rates and other factors. Governments, corporations and non-governmental organizations use demographics to learn more about the characteristics of a population for many purposes, including policy development and economic market research.

For example, a company that sells high-end recreational vehicles wants to know roughly how many people have reached or are nearing retirement age and what percentage is able to buy the product.

Key points to remember

  • Demography is the collection and analysis of general characteristics on groups of people and populations.
  • Demographics are very useful for businesses to understand how to market to consumers and to strategically plan for future trends in consumer demand.
  • The combination of the Internet, Big Data and artificial intelligence greatly amplifies the usefulness and application of demography as a marketing and business strategy tool.



Understanding demography

Demography is the collection and study of data concerning the general characteristics of specific populations. It is frequently used as a business marketing tool to determine the best way to reach customers and assess their behavior. Segmentation of a population using demographic data allows companies to determine the size of a potential market. The use of demographic data helps determine whether its products and services are aimed at the most important consumers of this business. For example, market segments can identify a particular age group, such as baby boomers (born in 1946-1964) or millennials (born in 1981-1996), who have certain buying habits and characteristics.

The advent of the Internet, social media, predictive algorithms and big data has dramatic implications for the collection and use of demographic information. Modern consumers release a flood of data, sometimes unintentionally, which is collected and tracked throughout their lives online and offline by a myriad of apps, social media platforms, third-party data collectors, retailers and financial transaction processors. Combined with the growing field of artificial intelligence, this mountain of collected data can be used to predict and target consumers’ purchasing choices and preferences with astounding accuracy based on their demographic characteristics and past behavior.

Types of demographic information

For the company’s marketing objectives, demographic data is collected in order to create a profile for the organization’s customers. Common variables that are collected in demographic research include age, sex, income level, race, employment, location, home ownership and education. Demographic information makes certain generalizations about groups to identify customers. Other demographic factors include collecting data on preferences, hobbies, lifestyle and more. Government agencies collect data during a national census and can use this demographic data to forecast economic trends and population growth to better manage resources.

How demographic information is used

Most large companies conduct demographic research to determine how to market their product or service and the best market to the target audience. It is important to know the current client and the possible provenance of the potential client. Demographic trends are also important, as the size of different demographic groups changes over time due to economic, cultural and political circumstances.

This information helps the business decide which capital to allocate to production and advertising. For example, the aging of the American population has certain needs that businesses want to anticipate. Each market segment can be analyzed for its consumer spending patterns. Older demographic groups spend more on health and pharmaceuticals, and the method of communicating with these clients differs from that of their younger counterparts.

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