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2.2: Demographic Analysis

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    In this section we look at Demographics as a category of consumer analysis. For marketers, an understanding of the demographics of their buyers provides a generalized view into the experiences of the consumer based on their age, gender, stage of family life cycle, and culture. As you learn more about what influences decisions for your particular target segment, product category, brand, and competitive set, you can use these influencing factors to your advantage. What you say to customers, the words you use, the people who say them, the images they evoke—all of these things can link back to that web of influencing factors at work in a purchaser’s mind. Great marketing uses those connections powerfully and effectively to win the minds and hearts of customers.

    Demographics

    Demographics are an important set of factors that marketers should not overlook when trying to understand and respond to consumers. Demographics include variables such as age, gender, income level, educational attainment, and marital status. Each of these can have a strong influence on consumer behavior.

    Historically, marketers have made much of generational differences—focusing on the best ways of reaching different cohorts such as Baby Boomers, Generation Xers, Millennials, and Generation Z. Many of the distinctions between these groups are related to the groups’ ages and related needs at any given point. For example, as Baby Boomers head into their retirement years, marketers target them with messages about prescription drugs and other health care products, insurance, home and financial security—all issues of growing concern for people as they age. Generational differences can also be factors in they ways people use media and where they go for information to inform their consumer choices. A 2013 study found that Millennial moms (birth years 1981–1997) were online “followers” of 22.5 brands, on average, while Generation X moms (birth years 1965–1980) followed just 13.7 brands online.[1] Understanding differences like these can be essential to developing the right marketing mix whenever age is an identifying factor in market segmentation.

    Gender is also a defining characteristic for many consumers, as is the marketing that targets them. You have only to watch TV ads during an NFL game and the TV ads during the women-oriented talk show The View to see how the different needs and wants of men and women are translated into marketing messages and imagery.

    Photo of diamond ring

    DeBeers Limited, which has commanded an 80 percent share of the market for diamonds used in engagement rings, employs a consumer demographic profile in the development of its promotional programs. Their primary target market for engagement rings is single women and single men between the ages of 18 and 24. The company combined this profile with some additional lifestyle-related factors to develop a successful promotional program.

    The demographic marker of economic status is another strong influencer in consumer decisions. Not surprisingly, people in different income brackets tend to buy different types of products, shop in very different ways, and look for different qualities. Many designer clothing shops, for example, aim their marketing at higher-income shoppers. Meanwhile, a retail chain like Wal-Mart sticks closely to its “lowest prices” positioning in order to maintain its appeal for middle- and lower-income shoppers.

    Life Stage

    Linked to demographics is the concept of life stage: consumer behavior is tied to the significant life events and circumstances people are experiencing at any given moment. Moving out of your parents’ home, going to college, getting married, buying a house, starting a family, sending children to college, retiring: all of these are life events that shape consumer attitudes, behaviors, and decisions.

    A photo of a young boy literally up to his neck in LEGOs.

    Life stage has a big enough impact on consumer decisions that many marketing organizations develop proprietary segmentation schema to help them better understand this dimension of the consumer experience and better target products and services to individual needs. A representative example is the set of lifestyle segments developed by the consumer data company Experian. Experian’s life stage segments include Independent Youth, Young Families, Maturing Couples & Families, Elderly Singles, and six other segments it uses to encompass the entire U.S. adult population.

    American consumers experience life-stage marketing when offers relevant to their life events appear in their in-boxes, mailboxes, and even in the checkout line. Producers and sellers of baby products like Procter & Gamble, Johnson & Johnson, and Target send a barrage of product samples, coupons, and other promotions to expecting and new parents. Families of young children are invited to sign their kids up for LEGO’s free quarterly magazine and become part of the Toys-R-Us Rewards program for frequent shoppers. Financial services companies target new college students and their parents with credit card offers and banking plans. Home Depot, Lowe’s, and even the U.S. Postal Service send promotional welcome packets to new homeowners, hoping to win their business as they settle into a new residence.

    Learning and Socialization

    In the context of consumer behavior, learning is defined as changes in behavior that result from previous experiences. Learning is an ongoing process that is dynamic, adaptive, and subject to change. Learning does not include behavior associated with instinctive responses or temporary states of an individual, such as hunger, fatigue, or sleep.

    Learning is an experience and practice that actually brings about changes in behavior. For example, in order to learn to play tennis, you might learn about the rules of the game and the skills tennis players need. You would practice the skills and participate in tennis games to gain experience. Learning can also take place without actually participating in the physical experience. You can learn about something conceptually, too. In other words, you could learn to play tennis by observing experts and reading about it without actually doing it. This is called nonexperiential learning.

    Picture of an elderly man sniffing a glass of red wine before tasting.

    Consumer decisions can be influenced by both experiential and nonexperiential learning. Take an example of buying wine. Suppose you are at a winery and you are considering buying a bottle of zinfandel, which you have never tried before. If you taste the wine and discover you don’t care for the strong, spicy flavor, you have learned experientially that you don’t like zinfandel. On the other hand, you could ask the tasting-room host about the flavor of zinfandel, and she might say that it resembles strong ginger ale, in which case you might decide not to buy the wine because you don’t like ginger ale. In this second case, you have learned about the product nonexperientially.

    Marketing relies heavily on nonexperiential learning, using tactics like customer testimonials, case studies, and blogger reviews to teach new customers through the experiences and opinions of others. Consumers themselves seek out resources for nonexperiential learning when they read book and product reviews on Amazon, film reviews on Rotten Tomatoes, and restaurant reviews on Yelp.

    Another characteristic of learning is that the changes may be immediate or anticipated. In other words, learning may be taking place even if there is no evidence of it. We can store our learning until it’s needed, and we do this often with purchasing decisions. For example, a person might read up on product reviews for the latest set of tablet computers even though she doesn’t expect to buy one soon. Eventually she may be in the market, and at that point she can put her learning to use.

    Reinforcement is the process of having your learning validated through rewards or punishments, which confirm that what you learned was correct. Over time, reinforcement can shape strong patterns of behavior. Suppose a consumer’s first car purchase is a Subaru. He loves the car and finds it to be safe, reliable, energy efficient, and a great value for the money. Each positive experience with his car rewards him and reinforces what he has learned about Subarus: they are great cars. When he decides to replace the car, positive reinforcement will almost certainly lead him to consider a Subaru again. Reinforcement can work in positive or negative ways, with consumers experiencing rewards or punishments that influence their decisions.

    Socialization is the process by which people develop knowledge and skills that make them more or less able members of their society. Socialized behaviors are learned and modified throughout a person’s lifetime. This social learning approach stresses “socialization agents” (i.e., other people), who transmit cognitive and behavioral patterns to the learner. These people can be anyone: a parent, friend, celebrity spokesperson, teacher, role model, etc. In the case of socialization in consumer behavior, this takes place in the course of the person’s interaction with other people in various social settings. Socialization agents may include any person, organization, or information source that comes into contact with the consumer.

    Consumers acquire this information from other individuals through the processes of modeling, reinforcement, and social interaction. Modeling involves imitation of the agent’s behavior. For example, a teenager may acquire a brand-name preference for Adidas from friends and teammates. Marketers can take advantage of this idea by employing product spokespeople who have strong credibility with their target consumers, as in the case of NBA star LeBron James for Nike. As noted above, reinforcement involves either a reward or a punishment mechanism used by the agent. When a colleague compliments a coworker on her outfit, it conveys a rewarding message about the type of clothing to wear to work. Marketers may use reinforcement by providing good product performance, excellent post-purchase services, or some similar rewarding experience. Social interaction may include a combination of modeling and reinforcement in a variety of social settings. These variables can influence learning by having an impact on the relationship between the consumer and other people.

    Social Class

    Some manifestation of social class is present in virtually every society. It’s determined by a combination of factors including family background, wealth, income, education, occupation, power, and prestige. Like culture, it affects consumer behavior by shaping individuals’ perceptions of their needs and wants. People in the same social class tend to have similar attitudes, live in similar neighborhoods, attend the same schools, have similar tastes in fashion, and shop at the same types of stores.

    In some nations, the social class system is quite rigid, and people are strongly encouraged to stay within their own class for friendships, marriage, career, and other life decisions. In other countries, such as the United States, social class is more permeable, and people can move between classes more easily based on their circumstances, behaviors, and life choices. Social class mobility is an important value in mainstream American culture and is part of our collective belief system about what makes the nation great.

    In the U.S., the most common social classification system is illustrated in the figure below.

    Social Class in the United States

    Upper Class makes up 1% of the population. Characteristics of the upper class include

    • Heirs, celebrities, top corporate executives
    • $500,000+ income
    • Elite education is common

    Upper Middle Class makes up 15% of the population. Characteristics of the upper middle class include

    • Managers, professionals
    • $100,000+ income
    • Highly educated, college and graduate degrees are likely

    Lower Middle Class makes up 32% of the population. Characteristics of the lower middle class include

    • Skilled contractors, craftspeople, artisans, semi-professionals, autonomy in work environment is common
    • $35,000 to $75,000 income
    • Some college, training, secondary education is likely

    Working class makes up 32% of the population. Characteristics of the working class include

    • Clerical, blue- and pink-collar workers, job security is often a problem.
    • $16,000 to $30,000 income
    • High School Education

    Lower Class makes up 20% of the population. Characteristics of the lower class include

    • Poorly paid positions and/or reliance on government assistance
    • Some high school education

    Source: Thompson, W. & Hickey, J. (2005). Society in Focus. Boston, MA: Pearson, Allyn & Bacon.

    For marketers, social class may be a useful factor to consider in segmentation and targeting. It provides helpful context about how consumers view themselves and their peer groups, their expectations, life experiences, income levels, and the kinds of challenges they face. For example, if a marketer wishes to target efforts toward the upper classes, they should realize that, first, this is a very small proportion of the population, and second, the market offering must be designed to meet their high expectations in terms of quality, service, and atmosphere. Having enough money is a persistent concern for people in the lower, working, and lower middle classes, so price sensitivity and value for the money are important for products targeting these groups.

    Family

    A young Asian family shop together in a household goods store.

    One of the most important reference groups for an individual is the family. A consumer’s family has a major impact on attitude and behavior, and families themselves are critically important in society as consumer units. Many consumer decisions are made by family members on behalf of the family, so understanding the family consumer decision-making dynamics around your product is essential.

    Depending on the product or service under consideration, different family members may be in the role of primary decision maker or influencer. In some cases, the husband is dominant, in others the wife or children, and still other cases, families make joint decisions. Traditionally the wife has made the primary decisions around store choice and brands for food and household items, although this has evolved somewhat as more women participate in the workforce. A joint decision is typical for purchases involving a larger sum of money, such as a refrigerator or a vehicle. Teenagers may exercise a lot of influence over their own clothing purchases. Children may heavily influence food and entertainment choices. Of course, decision dynamics within any individual family can vary, but marketers need to understand the general tendencies around family decision making for the product or service in question.

    1. Holland, Stephanie. “Marketing to Women Quick Facts.” She-Conomy, 15 Sept. 2016, http://she-conomy.com/report/marketing-to-women-quick-facts. ↵
    2. https://journalofinternationalmanagement.wordpress.com/2011/05/16/walmarts-downfall-in-germany-a-case-study/ ↵
    3. www.foxbusiness.com/industries/2015/10/12/why-procter-gamble-mcdonalds-ford-are-chasing-black-consumer/, http://targetmarketnews.com/storyid06071201.htm ↵
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