Chapter 3: Demographic environment

Introduction

Demographic environment is a term used by marketers to describe the characteristics of a population

that can be used to influence the success of a business or commercial venture. The most important
demographic factors for businesses include age, sex, income, education level, and occupation. We will
discuss how each of these factors impacts business and commerce.

Q-1 What is a demographic environment?

Demographic environment is a term that marketers use to describe the characteristics of a population. It
can be used as an indicator of how successful or unsuccessful your business may be. The three main
factors that make up the demographic environment are:

– size

– age

– location

Each of these factors can have a significant impact on the success of your business. For example, if
you’re a pizza parlour in a busy city centre with lots of foot traffic, you’ll likely do better than if you were
located in a remote rural area.

It is also used as an indicator of how well a product will sell. A company that wants to launch a new line
of baby clothes, for example, would want to research the size and age of the population to determine if
there is a market for their product.

Finally, it can be used to understand how people are spending their money. If you’re launching a new
product, but the demographic environment shows that people aren’t buying as many clothes or shoes as
they used to, then it might be time to change your pricing strategy.

Q-2 Factors affecting demographic environment:

Impact of size in marketing

As businesses grow, they often focus on their target markets to ensure that their products and services
are reaching the right consumers. The demographic environment can impact how a business markets its
products and how successful it is in reaching its target market. The size of the population can affect what
types of marketing strategies a business uses.

Impact of age in marketing

Age is one of many factors that can affect the success of a business. The demographic environment can
impact businesses in several ways, including how much money consumers have to spend and what they
choose to buy. In this article, we will look at how age affects businesses and what age groups have the
most purchasing power.

Impact of location in marketing

The location has an impact on marketing as it determines a lot of things like the population density,
language spoken, literacy rate etc. It helps us to determine the needs and wants of people in the area.

Demographic environment in marketing

The demographic environment in marketing is the study of human populations in terms of size, density,
location, age, sex, race and occupation.

The demographic environment consists of the basic characteristics of a population, such as age and
gender. These factors can be used to segment large populations into specific groups, which can then be
targeted with specific marketing messages.

Demographic environment example

The demographic environment examples include age, race, gender, income and education. The
demographic environment is the make-up of a population in terms of these factors. Each of these
characteristics is used to define a market segment, which will generally have fairly similar buying
characteristics. A demographic environment example could be the high school crowd, who share the
same age and education level.

Another example would be a group of people who are planning to retire within five years, who might
have different spending habits than, say, a group of 20-somethings. Income is another important factor;
wealthy people buy things differently than those who are on a tight budget, and many companies
market to each group specifically.

Q-3 Advantages of the demographic environment on business and commerce

The demographic environment has many advantages for business and commerce. It is important to
know these advantages to understand how it works and how it affects the market.

The first advantage is that the demographic environment helps businesses understand their customers.
This information can be used to improve their product or service. By knowing what demographics are
most interested in their product, businesses can focus on these groups and create a marketing strategy
that appeals to them.

Another advantage is that it can help companies make decisions about where they should place their
advertisements. For example, if a company wants to target young women with high-income levels, then
it would be wise to place ads in magazines that these women read.

Finally, the demographic environment can help businesses understand the competition. This
information can be used to create a plan that beats the competition. For example, if a company knows
that their main competitor is targeting young men with low-income levels, then it would make sense for
them to create an advertising campaign that targets young men with high-income levels.

Q-4 Disadvantages of the demographic environment on business and commerce

The disadvantages include:

Population ageing: An increased number of retirees will reduce the workforce and consumer demand, as
well as strain social security and health care systems.

Declining birth rates: A shrinking population will reduce the number of consumers and producers in the
economy.

Shifting ethnic demographics: Changes in the ethnic makeup of a population can create tension and
conflict, as well as new opportunities and challenges for businesses.

Urbanisation: An ever-increasing proportion of the population living in urban areas will create significant
economic, political and environmental challenges.

Q-5 Using Demographics to Guide Global Marketing Strategy

Whether marketing to domestic or international markets, demographic information can provide

important insights about a target market and how to address consumer needs. As discussed during this
our discussion of consumer behavior, demographics refer to statistical information about the
characteristics of a population.

Marketers typically combine several variables to create a demographic profile of a target market. A
demographic profile (often shortened to a “demographic”) is a term used in marketing and broadcasting
to describe a demographic grouping or a market segment. Common demographic variables to consider
for global and domestic marketing purposes include the following:

Age: Age bands, such as 18–24, 25–34, etc., are great predictors of interest in some types of products.
For example, few teenagers wish to purchase denture cream.

Social class: Social-class bands such as wealthy, middle, and lower classes. The rich, for instance, may
want different products than middle and lower classes, and may be willing to pay more.

Gender: Males and females have different physical attributes that require different hygiene and clothing
products. They also tend to have distinctive male/female mindsets and roles in the family and household
decision making.

Religious affiliations: Religion is linked to individual values as well as holiday celebrations, often tied to
consumer preferences and spending patterns.

Income brackets: Indicating level of wealth, disposable income, and quality of life.

Education: Level of education is often tied to consumer preferences, as well as income.

Geography: Area of residence, urban vs. rural, and population density can all be important inputs into
marketing strategy and decisions about where and how to target advertising and other elements of the
promotion mix.

Demographic research may include a variety of other characteristics used to separate a country’s
population into groups that fit a company’s target customer profile. A demographic profile also provides
enough information about the typical member of this group to create a mental picture of this
hypothetical aggregate. For example, a marketer might speak of the single, female, middle-class, aged
18–24, college-educated demographic.

Conclusion

The demographic environment is a factor that influences business and commerce. It can be difficult to
keep up with the constant changes in population, technology, consumerism, etc., but businesses need to
know how demographics affect their consumers so they can stay ahead of trends and provide the best
customer service possible. If you are interested in learning more about this topic or want help creating
your marketing plan based on demographic shifts, contact us today! We specialise in helping students
learn about digital marketing strategies from different perspectives. Contact our team at Student
Marketing Solutions for all your student-focused needs!