Demographics and Consumers’ Decision-making

There are reasons why you will not see alcohol-based drink manufacturers gain a massive market in Muslim-majority countries. There are also reasons why you will not see a Louis Vuitton store or sports car dealership here in my small rural town. The main reason perhaps is an obvious one: the demographic doesn’t fit. This is how demographics and consumers’ decision-making relates in the marketing perspective.

It is common knowledge that Muslims don’t drink alcohol and low-income villagers don’t casually ride a sports car out of their farm, but this is just a clear example of how demographics influence behavior and decision-making. In more complicated cases, companies have to delve deeper by examining demographic features before they plunge into the market. This is a crucial aspect as every company wants to avoid offering their products to a market that doesn’t need their product.

Mothersbaugh et al. (2019) specified demographics as a description of the population in terms of size (number of individuals), structure (age, sex, education, income, religion, etc), and distribution (rural, urban, geographic location, etc.). It can influence consumption behaviors directly and indirectly by changing the personal values and decision styles of others. Consumer personality traits were also found to significantly affect consumer ethical beliefs (Lu et al., 2013).

For example, higher educated and higher income females tend to have a green awareness or pro-environment value, according to a poll by J Walter Thompson (Levin, 1990). This demographic may influence their decision styles in purchasing green products over other similar products. Furthermore, these green consumers are thoughtful people, and if they are disappointed by a product, they may not only switch to other brands but also take others with them (Shrum et al., 1995). Thus, the demographic does not only influence their own consumption behavior but also influences others.

Demographics also influenced consumer information acquisition (Schaninger & Sciglimpaglia, 1981). Information acquisition is crucial to how a person process information, and hence it influences how the person makes a decision. For example, a person with higher education, middle-income, and white-collar occupations is more likely to conduct extended decision-making (Engel et al., 1973). This will also shape their consumption behavior as they tend to conduct more comprehensive decision-making before they make a purchase.

One of the critical aspects of demographics for marketers is income, especially the distribution of income (Mothersbaugh et al., 2019). Income can be translated to purchasing power, which makes purchases possible. However, it does not generate a cause or explanation for the purchases. For example, here in my town, a teacher may have the same income as a bus driver. Both have similar purchasing power, but both have very different consumption behavior. Teachers don’t have to buy energy drinks to help them do their job. The combination of demographic features, such as occupation or education, along with income, usually provides a better reflection of consumer behavior, and thus it is generally more effective as a segmentation variable (Mothersbaugh et al., 2019).

Demographic information usually is available in databases around the world (Principles of Marketing, 2015). Researchers, students, and marketers can easily access this information and analyze how a certain demographic behaves in terms of making a purchasing decision, related to a certain product or industry.

These are various reasons why demographic is one of the main variables usually used as bases for segmenting the consumer market (Stone et al., 2007). Demographic features can be translated into consumption behavior. Some of the demographics have a very clear purchasing decision (such as Muslims don’t buy alcohol), and some have a tendency (such as highly educated females tend to buy green products). It is reasonable to think that demographics and consumers’ decision-making is closely related. This kind of information is pivotal for every business.

Quoting from Exter (1988, p.20):

“When marketers think like demographers, they gain an understanding of how things work that can help them increase market size, deepen market penetration, and carve out market share”

Exter (1988, p.20)

References

Engel, James F., Blackwell, Roger D., and Kollat, David T. (1978). Consumer Behavior, 3rd edn., Hinsdale, IL: Dryden Press.

Exter, P. (1988). How to think like a demographer, The Insider’s guide to demographic know-how. Ithaca: American Demographic Press.

Levin, G. (1990). Consumers Turning Green: JWT Survey. Advertising Age, 61, 74.

Lu, L. C., Chang, H. H., & Chang, A. (2013). Consumer Personality and Green Buying Intention: The Mediate Role of Consumer Ethical Beliefs. Journal of Business Ethics, 127(1), 205–219. https://doi.org/10.1007/s10551-013-2024-4

Mothersbaugh, D., Hawkins, D., & Kleiser, S. B. (2019). Consumer Behavior: Building Marketing Strategy (14th ed.). McGraw-Hill Education.

Principles of Marketing. (2015). [E-book]. University of Minnesota Libraries. https://open.lib.umn.edu/principlesmarketing/

Schaninger, C. M., & Sciglimpaglia, D. (1981). The Influence of Cognitive Personality Traits and Demographics on Consumer Information Acquisition. Journal of Consumer Research, 8(2), 208. https://doi.org/10.1086/208857

Shrum, L. J., McCarty, J. A., & Lowrey, T. M. (1995). Buyer Characteristics of the Green Consumer and Their Implications for Advertising Strategy. Journal of Advertising, 24(2), 71–82. https://doi.org/10.1080/00913367.1995.10673477

Stone, M. A., Desmond, J., & McCall, J. B. (2007). Fundamentals of Marketing (1st ed.). Routledge.

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