Related Terms: Market Segmentation
Demography is the statistical study of populations; the roots of the word come from the Greek for people (demos) and picture (graphy). Demographics, thus, are pictures of the people derived from statistics. The largest single, consistent collection of data on the population is the U.S. census conducted every ten years under the auspices of the U.S. Census Bureau. The Bureau also collects partial data every year, published as "population estimates." The census itself is at least theoretically a 100 percent count, although controversies about "under-counted" elements of the population break out every decade. This national count covers numbers, gender, age, family relationships, ethnicity and/or race, location, income, occupation, and data on housing patterns. The geographical coverage is down to the census tract level (just a few blocks in extent), so that, for census years, anyway, data can be obtained down to the zip-code level.
All demographics are ultimately based on the census, although the data are extended by many other surveys, many conducted by government agencies. The U.S. Department of Health and Human Services (HHS), for instance, tracks health issues; U.S. Department of Labor follows employment trends; U.S. Department of Education captures data on educational levels; U.S. Department of Agriculture collects and publishes data on farmers; and state vehicle registration offices collect data on driving. And so on.
Added to this are many, many private surveys which attempt to track consumer preferences, buying habits, attitudes, opinions, and so on ad infinitum. The best-known private survey is probably the TV-rating service provided by Nielsen Media Research. People who use discount cards at major grocery or other retail stores are supplying demographic data every time they purchase something. Every subscriber to any kind of print publication is generating demographic information for the publisher—which the publisher uses to set advertising rates. In the mid-2000s the Internet has become a major engine for collecting demographic information if the user bothers to fill out brief questionnaires in which he or she supplies a home address. That home address—plus demographic data from the census—reveal much about the person filling in the boxes: his or her likely ethnicity, age, income, and more. The values obtained are approximate because the census does not reveal individual household data, but people with similar profiles tend to live together.
It is simply to state the obvious that in the modern American culture data collection in some form or another accompanies most commercial transactions done using credit cards. Vast amounts of information come to be stored in countless computers. Techniques of "data mining" from such stores have developed over the years providing companies information better to target their customers.
The public sector (defined to include the academic) is also a major generator and user of demographic information. Health surveys, for instance, are based on doctors' patients' records. Voter registration records trigger selection of juries. HHS tracks birth and death records to generate projections of life expectancy—which in turn serve commercial purposes, e.g., life insurance. Companies and agencies can, if they make the effort, construct quite accurate "pictures" of many different aggregations of people—Superbowl attendees, large boat buyers, first-time voters, and adherents to religions or parties. Demographics is simply an aspect of modern life.
Extensive collection of demographic data by virtually all larger institutions is both necessitated and motivated by a mass culture. In contrast to Colonial times when sellers knew their customers and principals knew their students, information could be left to ordinary human memory. The gradual evolution of very large institutions far removed from what we are pleased to call "the action," the actual interchange between people, has produced disconnects between decision makers and their constituencies.
The costs of collecting precise demographic data are high, even when in part subsidized by public services like the census. A major trend in this field is to automate data collection using computers and incentives. Free information on the Internet (but you must register) or small discounts available when you use a discount card (but you had to tell something about yourself to get it) are two examples of incentives provided. The data collected are then consulted using specialized analytical software the reports from which are integrated into the decision stream.
Indirect marketing by mail or advertising are notoriously hit and miss. Producing ever better profiles of people who watch a show or people who live in a zip code helps advertisers and marketers to pinpoint the right "venue" on which to spend money to reach its most desired audience, be that that the "young" or the "young-at-heart."
The high costs of mass marketing can be made more effective by ever more precisely targeted marketing aimed at pre-qualified buyers. But for this method to work, it must remain automated. The highest costs are associated with actual contact between a researcher and a would-be customer; and for this contact to yield any meaningful results, it will require 20 minutes of interaction. Such contacts are only made with tiny samples.
The vast stocks of demographic data held by many thousands of institutions in easily searchable and correlatable forms has spawned a debate about privacy. The issue has heated up since Internet browsing became widespread and techniques were developed, through search engines or Internet portals, to track and to record the interests of a user. Articles appear at regular intervals in which a savvy investigator shows just how rapidly he or she can determine intimate details about the life of a celebrity. The issue will continue to evolve, of course. The simple fact is that privacy is attainable, if attainable at all, only by opting out of any and all transactions that require electronic mechanisms or filling in forms. The real protection consumers have is that the exploitation of the data by marketer or others is costly and difficult. As anyone leafing through the day's mail can attest, despite a vast amount of information out there, many people sending letters to us are aiming at an altogether wrong profile.
It is something of a truism that the business close to its clientele can do without fancy demographics to reach its market. Some small businesses, of course, are in business precisely to provide such data to their customers. They will, therefore, be very knowledgeable about demographics; they are still not likely to use such data to reach their markets. Other small businesses may be servicing a national market through a Web site, for instance, and, through that web site, may have access to data on their customers that might be exploitable. For most small businesses thinking of turning demographic data to good use for expansion, through a direct mailing for instance, might explore the field by using the services of an advertising agency. The agency will have knowledge of and access to much of the tooling required, including existing and well-honed mailing lists.
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