What Demographics and Psychographics Mean for Small Business Marketing | Marketing & Advertising > Market Research & Analysis from AllBusiness.com
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What Demographics and Psychographics Mean for Small Business Marketing

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As you prepare to do market research for your small business or startup, it's important to understand two key terms: demographics and psychographics.

Demographics are the average or typical characteristics of your target market -- the people who buy your products or services. These characteristics might include age, annual income, educational attainment, type of occupation, region of the country they live in, or number of individuals living in their household.

Demographics can also include the age of children, status of home ownership, value of the average home, and whether that home is in an urban or rural location.

Psychographics take this idea a step further. As the name suggests, these characteristics go beyond the external to focus on your target customers' psychology, lifestyles, and behaviors. Psychographics can include such factors as where your target customers like to travel on vacation, the kinds of hobbies and interests they have, the values or opinions they hold, and how they behave. Unlike demographics, psychographics are not always easy to categorize into numbers.

It's been said that demographics help you understand who buys your product or service, while psychographics helps you understand why they buy. Another way to put it is that demographics are things that can be observed from the outside, such as age and race, while psychographics are internal attributes or attitudes.

To gather both the demographic and psychographic information you need to home in on your target market, you will need to conduct research. You can use both primary and secondary research to gain insights into your target market's demographics. However, to delve into their psychographics, it's likely you'll need to do primary research. (For more information, read "Secondary vs. Primary Market Research".) If your business is up and running, you can gain psychographic information by surveying people who have already bought your products or services; if your company is still in the startup stage, you can survey people who use similar ones.

Understanding your target market's demographics and their psychographics will enable you to advertise, market, and sell to them more effectively. You'll understand not only who they are, where they're located, and what media they use, but also what makes them tick, how they respond to marketing messages, and what motivates them to buy. Together, demographics and psychographics can give your business a critical winning edge.

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