How Demographics Can Improve Your Business Ads

Using Demographics for Business Marketing
Using Demographics for Business Marketing. John Lund/Getty Images

What are Demographics? 

Demographics is the study of populations. A demographic analysis looks at a specific population to describe the population and its characteristics, such as average education level, average age, income level, ethnic distribution, and other characteristics. A demographic analysis is useful in a business plan, to describe the population where the business is located.

How is Demographic Analysis Done? 

There are a variety of ways of doing demographic analysis.

Most demographic analysis is done by marketing researchers, who survey individuals within specific areas or use census date to come up with this information. 

If you would like to do  your own demographic analysis, check out the Small Business Administration's Business Data and Statistics page for a list of potential resources. For example, you can use the U.S. Census Department's "QuickFacts" data base to find information about the people in every U.S. state and county, and most major cities. The information includes: average age, income level, race, average home price, male and female percentages, and more. 

How is Demographic Analysis Used in a Business Plan?

Demographic analysis is part of the marketing plan in an overall business plan. Demographics are used in several parts of the marketing plan: 

To analyze your target market. A target market is the group of people in the area you have targeted for your business advertising and promotion efforts.

Within that geographic area, there are people who meet your criteria to be potential customers. 

The process of creating a target market is first, to identify the area you want to market your products or services to. Then, to identify the demographic characteristics of the people in that area, then compare those to the kinds of people you think will buy your products or services.

 

To analyze your competition. You can use the same approach and information to identify the competition within your target market area, and look at the demographics of your potential customers against the number and type of competitors in that area. 

You will also have to do research to determine what type of people are potential customers for your products or services. Then you can use demographic analysis to determine if the market for your products or services is large enough to support your business. 

How is Demographic Analysis Helpful in Marketing? 

Once you know the demographic characteristics of the people in your target market area who might potentially buy your products or services, you can use those characteristics to create your advertising materials. 

For example, let's say you know that the kind of people who will buy your products are mostly female, ages 21-34, with annual incomes of $20,000 to $50,000.

You can buy mailing lists, or find out where they hang out online, or use other research to tell you (a) what kinds of ads appeal to them, and (b) where to place those ads. some specific possibilities: 

  • Radio stations can tell you their demographics very specifically,
  • You can target your audience with ads on social media like Facebook,
  • If you have a local audience, you can use targeted mailing lists or Google local.