In the simplest terms, demographics is the statistical characteristics of a population. Basic demographic data includes things such as age and income. The United States Census is an example of demographic data that we all recognize. For marketing purposes, these population characteristics are matched to consumer behavior to better classify target markets. PRIZM reports are a good example of this classification. We will look at them more in the "Finding Demographic Data" section of this LibGuide.
Demographic Data is initially broken down geographically. The delineations vary depending on the source. The Census, for example, uses its own system of "tracts" which are areas of neighborhoods marked off by the bordering streets. Census Data looks at the population at the household level and due to its status as a primary source of demographic data this is how a lot of the marketing specific demographics you find will be presented. Many of the online data tools will allow you to search data by state, county, metro area, city, zip code, and on occasion, map-based searches.
Demographic data can include but is not limited to:
Basic demographic data such as that found in the Census can be used at face value and is good for locating target markets based on core data such as age, education level, or income. There are however other forms of demographic data that can offer deeper insight or even be used to calculate numbers for the financials section of your business plan. Resources like the Census Business Builder and PRIZM Market Segmentation Reports can be extremely useful for consumer side demographic data. The following examples are just a select group of examples for using demographic data for market analysis.
EXAMPLE Using Household Spending to Estimate Sales
The Census business Builder is a good place to find household spending data. It will show you the estimated household expenditure for selected consumer goods. You can see these numbers for areas as large as a city down to individual zip codes. The list of goods is far from exhaustive but is a good jumping off point. More detailed consumer household spending data can be found in industry reports or federal sites such as the Bureau of Labor Statistics.
So, what can we do with this data? The first thing to realize is that there is a finite pool of money available to your industry within your operating area. This number can change, sometimes rapidly, so these can only be averages and estimates but when you are starting fresh with no data of your own to build on, any insight helps. When you are trying to gauge the profitability of your business, knowing this number can help you determine if you can pull enough money from the pool to break even.
The table below is a selection from the annual household expenditures data found on the BLS website. This data is broken up by household income. You can also find the data at the city, county, or zip code level.
Now let's say you have identified your operating area and you want to know what this finite pool of money might be. Here is a simple process:
Something else to try:
EXAMPLE Marketing to Your Customers Using PRIZM Reports
The Claritas PRIZM Market Segments are a powerful tool to effectively market to your target audience. There are 68 segments in total. These segments are defined by Lifestage groups and Social groups. A single group can be associated with multiple segments. In the section on marketing lists, we discussed how marketing differs from market research in that marketing research looks at the marketing strategies across multiple industries. The PRIZM segments give us a better understanding of how that could work.
Let's look at a simple example. The following is a PRIZM report for the 15237 zip code of Pittsburgh and was generated using Mergent Intellect.
As you can see, "Middleburg Managers" is the segment with the highest population in this area and consists of people from the "Second City Society" social group and the "Conservative Classics" Lifestage group. Now that we have identified the largest segment in our operating area, we can examine them in detail using the Claritas PRIZM Premier Premier Segment Narratives. The following are the definitions Middleburg Managers and their respective Lifestage and Social groups:
Segment Definition: This is where you can find detailed information on age, education level, and lifestyle/purchasing behavior. You can also link to the Lifestage and Social group definitions from the segment. The following is the definition for market segment #22, Middleburg Managers.
Lifestage Group: This definition describes the Conservative Classics Lifestage group. This information is more general compared to that in the segment definition. It provides their age range, housing status, and a brief description of consumer behavior including hobbies, entertainment, and social life. Finally, it provides links to all the segments included in the Lifestage group.
Social Group: This is also more general than the segment definitions. Social Group definitions include housing type, job type, and general consumer habits. The included segments for the social group are also linked.
By looking at the PRIZM classifications, we now have the perfect capstone to our marketing research. We have identified our ideal customer, pinpointed their location, and now, thanks to the PRIZM report, we know where they work, shop, play, and eat. We also know what media they tend to consume. Here are some examples of how this data can inform and boost our marketing strategies:
The United States Census is the primary source of demographic data but it is not the only source. Online data tools use Census data and build on it using additional data such as consumer spending habits. This allows you to do focused research tailored to marketing. Coincidentally, one of the best demographic tools is provided by the Census Department in the form of the Census Business Builder data tool. At Carnegie Library of Pittsburgh, we provide access to Data Axle and Mergent Intellect, both of which you can use to do demographic research.
Online data tools offer the easiest access to the most data, but you may be able to find demographic information on trade/industry websites as well. While this data is not as common, it is often very focused and can save you some work and time in the long run. Just be sure to check if they cite their data and to confirm that their sources are authoritative.
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U.S. Bureau of Economic Analysis
EXAMPLE Finding Demographic Data Using Data Axle and Mergent Intellect
The following video demonstrates how to find demographic data using Data Axle and Mergent Intellect. Both of these resources are available for free from the Carnegie Library of Pittsburgh's Business Resources page. If you are not familiar with searching the databases, we advise you to check out our videos on generating marketing lists. There is a lot of ground to cover so we are skipping the basics.