What Are Demographics and Psychographics?

The Two Types Of Marketing Data Needed To Start A Business

Nov 16, 2009 Bonny Albo

Market research involves studying people. Key terms used in this information retrieval process are demographics and psychographics. Learn what they mean now.

The primary purpose of market research is to learn how people behave in the hopes to attract enough of a target market to break even. With this in mind, demographics and psychographics are two types of market research information, and thus knowing what they mean is crucial to business success.

Demographic Definition

Demographic information is the kind of stuff that can be categorized and labeled from a statistical perspective. Things like age, race, gender, income, religion, schooling and kind of work are all demographic information, as are memberships the target market belongs to, how many and which credit cards they hold, what car they drive, where they live and how big their houses are, whether they rent or own, and how many people are in the household. Demographic information consists of the facts and nothing else.

Examples Of Demographic Information

For the purposes of this example, several different businesses will be used to demonstrate what demographic information looks like. First the business type will be named, and then the sample demographic information:

• An upscale bakery in a trendy neighborhood: Married, 30- to 50-year olds, $50,000 to $100,000 income that either work in the area or own homes in the area.
• Cell phone dating service: Single, 18- to 25-year-olds, $20,000 to $40,000 a year that rent or share rent with roommates.
• In-home medical care service: Single women, 65- to 86-year olds, higher-than-normal health needs but still living independently in their own home.

Psychographic Definition

Psychographic information, as opposed to demographic information, isn't quantifiable with numbers. Psychographics define how the target market feels, what they want, how they go about their day to day lives, what is important to them and how they make purchasing decisions. Psychographic information derives from demographics, and can only be created after a demographic profile has been created.

Most good marketing plans use psychographics to focus in on a target market, because an entrepreneur can directly use the psychographic information to see how and why a service or product is appealing enough to pay for. Although there are a great many books and reference materials that talk about psychographics, the best and easiest way to gather this kind of information is to speak with the target market directly to learn what makes them tick.

Examples of Psychographic Information

Using the same information as the examples for demographic information, the following businesses are listed along with sample psychographic information about the target groups:

• An upscale bakery in a trendy neighborhood: Status seekers, love the finer things in life, professionals, busy with little time to cook for their family.
• Cell phone dating service: Politically liberal, technologically savvy, urban, first adopters.
• In-home medical care service: Conscious about money matters, strong want to stay in the home they raised their child(ren) in, practical, fond of the way things used to be, appreciative of good customer service.

For more information about market research, try The Marketing Section Of A Business Plan, and Market Differentiation Strategies.

The copyright of the article What Are Demographics and Psychographics? in Entrepreneurs is owned by Bonny Albo. Permission to republish What Are Demographics and Psychographics? in print or online must be granted by the author in writing.

Demographic Information