Demographics vs Psychographics for business

28/09/2021 20mins
Prasobh V Nair


Demographics have always been fundamental in marketing because it allows businesses to target specific customers accurately and without spending too much on advertising. Being able to define an audience and categorize them on their choices in various segments has been used by marketers for a long time to specify their audience profiles even more. For small businesses, it means a better gauge of who they are looking for in a limited area and how they can apply their restricted budgets for advertisements.

Demographics are the classification of individuals living in an area by ethnicity, age, gender, income, marital status, education, and other factors.  Demographics generalize groups to identify customers. These characteristics are recorded without ascribing to the type of personalities they are. These major characteristics of populations in an area will focus on the market and the type of audience they are appealing to. Retailers will use demographic data from the Census Bureau to make major decisions in advertising their product. For small businesses, in their local area, this is important to grab all the attention in their reach.

Psychographics has the same power as demographics, but the information is not about age, income or marital status but more about a possible buyer's spending habits, hobbies, and values. Marketers can focus on what the product or service could mean to a customer and why they should get it. In the healthcare sector, providers will use psychographics to help with patient education and ways to market their business in insurance. In other words, it provides business a window into one’s ideas of what they want out of a business, especially if they value small, local ones over major businesses.

Demographics can provide something for a small business to lead on when developing what audience they are trying to reach. But when it comes to digging deeper you can see the power of psychographics coming to play, because this tells them about the factors that influence their customers into using their services. This helps them in coming up with innovative ways to reach out to their audience and receive profitable returns from marketing and engagement. Psychographics is important, but it becomes a moot point if they don’t follow through when they match it with the right demographics they are surrounded by.  

Demographic trends are important as the size and nature of demographic groups change over time due to economic, cultural and political circumstances.  The combination of demographics and psychographics paints a detailed picture of the people you do business with and whom you want to associate with in future. Research, analysis, and ad targeting not only makes it possible to convert psychographics into the foundation of a robust market research and marketing strategy but also develop products and services that specific customers require. They factor in what a young woman, single, and advancing in her career or an older man who is married and retired. This includes hobbies and lifestyle, whether it is active or more domesticated. They have to reach their target audience by understanding X and Y, demographics, and psychographics. While demographics explain ‘’ who ‘’ your buyer is, psychographics explain ’why’ they buy. For small businesses, it is about survival against the big businesses that threaten to take whatever clients they have left.


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