By Entrepreneur Staff

Demographics Definition:

A statistical view of a population, generally including age, gender, income, schooling, occupation and so on

Understanding the demographics of your target customers is critical for the success of your business. Not only do you need to understand them in order to decide exactly what your product and services mixes will include, but this information will also affect pricing, packaging, promotion and place.

Let's talk about just one of these factors to see how demographics affects your choices. In order to properly evaluate a community or neighborhood for the best location for your business, you must know the demographic profile of your potential customers. To see if the community you're considering offers a population with the demographic traits necessary to support your business, look at the community's:

  • Purchasing power. Find out the degree of disposable income within the community.
  • Residences. Are homes rented or owned?
  • Means of transportation. Do prospective customers in the area own vehicles, ride buses or bicycles, and so on?
  • Age ranges. Does the community consist primarily of young people still approaching their prime earning years, young professionals, empty nesters or retirees?
  • Family status. Are there lots of families in the area or mostly singles?
  • Leisure activities. What type of hobbies and recreational activities do people in the community participate in?

Detailed demographic information is available from the Census Bureau's website. Click on "State and County Quick Facts" for your state, and you can find county-by-county demographic information. You can also get this kind of information from established businesses within your industry or from a trade association. Gale's Dictionary of Associations, available in most libraries, contains listings for more than 30,000 trade associations' national headquarters. Many associations also have local or regional chapters that serve members in a variety of ways, with everything from newsletters to lobbying actions.

In addition, the Bureau of Labor Statistics publishes the Consumer Expenditure Survey (CES), which you can find at the Bureau's website by clicking on "consumer spending." The CES annually samples 5,000 households through its Quarterly Interview Survey and its Diary Survey to learn how families and individuals spend their money. Unlike other surveys that might ask only how much people are spending on household or home appliances, the CES collects data about nearly every category of expenses--from alcoholic beverages and restaurant meals to pensions and life insurance. Bureau of Labor Statistics analysts then sort the information and group consumers by income, household size, race, gender and other characteristics relevant to your business.

More From Market Research


A statistical view of a population, generally including age, gender, income, schooling, occupation and so on

Market Research

The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business's target market, the industry as a whole, and the particular competitors you face

Market Surveys

The study of the spending characteristics and purchasing power of the consumer who are within your business's geographic area of operation; a research method for defining the market parameters of a business.

Market Testing

To test multiple marketing scenarios and select the most promising for expansion.