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Understanding Your Customers: How
Demographics and Psychographics Can
Help
If the retailer doesn’t know what the customer
wants, or ignores requests, clientele may lose
interest and choose to shop elsewhere. Instead,
the ideal course of action would be to learn
about their consumers and then to learn about
their interests. This provides the basis for
developing a product mix that would be
attractive to clientele.
As a retailer, knowing what to stock and sell can be a daunting
task. A retailer could select products based on his or her own
preferences. This may work if the retailer’s needs and wants
are similar to its customers’. However, if the retailer doesn’t
know what the customer wants, or ignores requests, clientele
may lose interest and choose to shop elsewhere. Instead, the
ideal course of action would be to learn about their consumers
and then to learn about their interests. This provides the basis
for developing a product mix that would be attractive to
clientele.
Though each consumer has a unique set of criteria they use to
make judgments about products, the practice of classifying
consumers by characteristics (based on their demographics,
interests, and other factors) into manageable groups, or market
segments, is common. It would be difficult to produce a
product that would appeal to every consumer. Hence,
successful retailers tend to focus on those consumers who are
most likely going to find their products appealing and
purchase them.
Existing retailers should determine what segments of
consumers they serve, understand the segment’s desires, and
learn about products that might appeal to them. Those
segments that spend significantly more money than others are
referred to as ‘core’ or ‘target’ customers.
New retailers may not have an accurate understanding of who
their ‘core’ or ‘target’ customers might be. However, learning
about consumers and product trends pertaining to their
industry is a must. By learning about core consumer segments,
the retailer could better focus attention on details that appeal
to these consumers and design an appropriate product mix and
promotional campaign.
• Those who grow plants and flowers can also market their
What are Demographics?
Demographics describe who we are as individuals, for
example: ethnicity, age/generation, gender, income, marital
status, education, and homeownership. These and other
characteristics categorize us without describing our
personality. Many demographic characteristics cannot be
changed and are directly related to our physical being. A
recognized definition is: “The characteristics of human
populations and population segments, especially when used to
identify consumer markets”. Retailers will find that most of
the demographic data they need in order to make business
decisions can be found on the U.S. Census website.
Demographics: Generations
Members of the lawn and garden industry have
promoted container gardening and the use of
raised garden beds as a way for ‘Baby Boomers’
and ‘Mature’ generations to garden without having
to bend over. Evidence suggests that the volume
of wine purchase annually by members of
Generation Y has a greater impact on the
economic viability of the wine industry than some
other generations.
products to ethnic groups who wish to incorporate these
items into traditional ceremonies.
It will be necessary to determine that there is a large enough
population of the target ethnic group in order to support the
retailer’s or producer’s efforts. Sources such as Holidays on
the Net describe the occasion, ethnic group(s) that celebrate a
given event, and what products make the celebration
authentic.
Demographics: Income
Disposable income (or net income) is the amount of money
that an individual has available to pay for expenses minus
taxes and deductions. Discretionary income is the amount of
money that remains after consumers pay for “needs” (food,
rent/mortgage, insurance, etc.) that are required to sustain a
reasonable livelihood. In general, the higher the level of net
income the greater the amount of discretionary income that
would be available for a consumer to purchase ‘wants,’ or
items not necessary to maintain their life but rather their
lifestyle.
• If the ‘core’ customer has a limited income then goods
and services marketed to them should be within a price
range that is affordable.
• Products marketed to more affluent consumers,however,
Terms, such a ‘Gen X,’ ‘Generation Jones,’ and ‘Baby
Boomers,’ were created as a way of classifying “a group of
individuals, most of whom are the same approximate age,
having similar ideas, problems, attitudes, etc.”. Marketers
have discovered that they can often work with producers and
retailers to provide goods and services that would appeal to a
majority of members of a particular generation, based on the
general needs and wants of consumers within the group. See
the sidebar for examples.
Demographics: Ethnicity
For the past several years, the population of certain ethnic
groups has increased, particularly those who are of Asian and
Hispanic or Latino descents. These changes present
opportunities for many agricultural businesses. It is necessary
for agricultural businesses to understand that within the Asian
ethnic group, that those of Chinese, Korean, and Japanese
descent will have different languages and cultures. The same
is true for groups within the Hispanic ethnic group.
• Agricultural retailers or producers who offer foods could
produce vegetables, flours, grains, and other ingredients
used by ethnic groups on a day-to-day basis and when
preparing meals for Chinese New year (mushrooms,
bamboo shoots, and bean sprouts). If this approach is
pursued, it will be important to know which vegetables are
commonly used by each ethnic group. It will also be
important to learn about the meaning that certain
ingredients convey. Examples include: Chinese lettuce
(prosperity) and turnip (good omens).
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would be manufactured, packaged, and promoted in a
manner that would reflect their level of quality and
prestige and would be priced accordingly. Agricultural
businesses that offer food items classified as specialty
foods might be considered as supplying a ‘want’ and
would have to develop a marketing strategy to appeal to
consumers with a higher income level.
Demographics: Geographical
The location where a consumer lives (e.g., the southeast vs.
the northwest U.S. and/or in a metropolitan area versus a rural
environment) can greatly influence his or her needs, wants,
and access to goods and services. Cultural ‘tastes’ and
traditions can affect food preparation, ingredients commonly
used, and availability of specialty cuisine. East Coast
consumers may include seafood as a staple in their diets, while
consumers living in the southwest may frequently use chili
peppers. Food retailers should be aware of entrees and recipes
commonly prepared in their area and provide as many
essential ingredients as possible. As a greater number of
consumers travel and experiment with new cuisines, they may
desire to recreate the dish in their own kitchen upon their
return. Specialty or gift shop retailers can offer gift baskets
that include these food ingredients or sell baking mixes that
customers can prepare with ease.
The availability and variety of food ingredients can also differ
based on consumer’s proximity to large metropolitan areas.
Consumers residing in metropolitan areas, such as New York
and Philadelphia, have access to a large variety of products
and outlets from which to purchase. Rural consumers,
however, may have fewer options. Retailers in these areas will
Understanding Your Customers: How Demographics and Psychographics Can Help
need to become educated about current trends and predictions
and what is needed to provide consumers with ingredients and
information necessary to cook a popular meal or to plant a
fashionable garden. Becoming a member of a national
association may be a wise decision. Subscribing to free
e-newsletters published by marketing associations and related
sources will also provide retailer with useful information.
Demographics: Homeownership
Knowing the level of homeownership within a market area is
particularly important for businesses that sell plants, vegetable
seeds, and lawn and garden services. Consumers who are
homeowners may be more willing than renters to: a) invest in
the establishment and upkeep of their lawn and garden and b)
purchase outdoor plant material and landscape services.
• Income level and amount of outdoor space may have an
influence on the amount of money spent and the types of
goods and services purchased.
• The types of plant material grown and marketed should
not only be appropriate for the ‘target’ market’s location,
but should also be the right dimensions for the consumer’s
outdoor lawn or garden space. Horticultural business that
find that there are several apartment complexes or
condominiums, with limited yard or no yard at all, within
their market area should consider marketing plant material
that can be grown in containers, in raised beds, or have a
more vertical growth habit.
Psychographic Trends
It is important to understand that just because a consumer
belongs to a certain demographic group that they do not
necessarily believe in or follow the customs, culture, or beliefs
that are representative of the generation, gender, ethnicity, or
other characteristic that describes them. Other factors, such as
an individual’s life experiences, personal preferences, and
opinions, have a great influence on interests and demand.
Therefore, along with learning about the demographic
characteristics that ‘core’ customers share, learning about their
interests and lifestyles also assists agricultural businesses with
choosing an appropriate product mix.
• Food is a major component of many agricultural
industries. Food is also a necessary component for daily
life, as well as a primary component for most entertaining.
Many consumers seek specialty food items and
ingredients that make their meals unique. Specialty foods
that consumers desire often follow trends that are the
focus of television cooking shows, related magazines, and
creations produced by chefs, as well as the result of meals
they have experienced when traveling.
It will be necessary to learn about trends and subscribe to
appropriate trade journals that discuss them and associated
products. To learn about appropriate sources, businesses
should consult their national and state-based industry
associations. Many associations offer newsletters that update
members on issues that could impact their businesses.
Associations may also organize annual conferences and invite
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speakers that inform audiences about timely topics.
Discussing Needs Directly with Customers
Once it is determined what consumer segments are, or will be,
important to the business, the next step is to effectively target
these consumers and convey the benefits that products offer
them. Hosting focus group sessions with a small number of
customers, between six and 12, is one way to discuss ideas,
show product samples, and learn about awareness and
interests. Discussions generated from focus group sessions
shouldn’t be used to make final decisions or judgments about
products. Rather, conversations with this small group of
individuals can provide insight into issues and offerings that
might need further investigation. Retailers can then conduct
more in-depth surveys and use consumer responses in the
decision-making process. Continuing to consult customers and
asking for their input should be a long-term goal for retailers
and products.
Choosing How to Communicate with
Customers
Effectively communicating benefits to the consumer is a
crucial step for all businesses. Though a variety of outlets
through which a good or service can be promoted exists, it
will be necessary to consider the preferred media of the target
audience.
• The Internet has been credited as an important resource
and provides consumers with easy access to news,
information, and shopping. In 2003, certain demographic
groups appeared to have increased access to the Internet;
primarily consumers with a higher level of education,
income, and who were under the age of 65 were using this
tool at a greater rate than their counterparts (Chessman et
al., 2005). Several sources also stress the importance of
the Internet as a form of communicating with working
women.
• Certain segments of the U.S. population choose to learn
about products through more traditional sources, such as
newspapers, radio, television, and direct-mail, hence the
use of these methods should be considered.
Evaluating Communication Efforts
Continued use of a certain promotional activity should be
contingent on consumer response. If an advertisement was
placed in the newspaper or local shopping paper, customers
should be asked if they saw the advertisement. If a coupon
was included in the advertisement then the coupon should be
collected, preferably with the customer’s name and address or
e-mail as a way to build a customer list, so that the number of
coupons redeemed can be compared to the number printed and
expense incurred. This information will also help the retailer
determine whether the amount of the promotional budget
spent on the advertisement resulted in the desired return on
investment. This evaluation method should also be used to
determine whether in-store promotions or public relation
efforts effectively informed customers about the business.
Understanding Your Customers: How Demographics and Psychographics Can Help
Market research will still need to be done after final product
selection is made. The best way to do this is to monitor
consumer reaction to goods and services offered and
determine whether foot traffic and sales have changed.
Additional decisions can then be made to further alter product
assortment. Consideration will also need to be given to the
number of ‘core’ or ‘target’ customers that live within the
selected market area. If relatively few consumers within the
area fit the profile of who would have an interest in the
products and/or don’t have the means to purchase them (i.e.
true demand), then the producer or retailer may need to
modify their plan. Agricultural businesses that accomplish the
task of learning about these audiences will certainly
experience rewards by knowing what products to offer that
would interest their customers.
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© The Pennsylvania State University 2017
Further Reading
Anonymous. Chinese New Year. Retrieved 1/19/2007.
Anonymous. Chinese New Year foods: Dishes to bring good
fortune to your home & family. Retrieved 1/19/2007.
Anonymous. Interim projections of the U.S. population by
age, sex, race, and Hispanic origin: Summary methodology
and assumptions. U.S. Census Bureau, Population Division,
Population Projections Branch. Retrieved 1/19/2007.
Butterfield. 2006. 2005 National Gardening Survey. National
Gardening Association. South Burlington, VT.
Cheeseman Day, J., A. Janus, and J. Davis. Computer and
internet use in the United States: 2003. U.S. Census Bureau.
Retrieved 1/3/2007.
Loechner, J. High Speed Internet in 60% of Online
Households. Center for Media Research Brief. Retrieved
1/9/2006.
Mitchell, S. 2000. American Generations: Who they are. How
they live. What they think. New Strategist Publications, Inc.
Ithaca, NY.
Pontell, J. About Generation Jones. Retrieved 1/19/2006.
Washingtonpost.com, Newsweek. com, and
Nielsen/NetRatings reprinted in 2005 in GreenProfit 9(2):21.
Prepared by Kathleen M. Kelley, Associate Professor of
Horticulture Marketing and Business Management
Contact Information
Kathy Kelley
Professor of Horticultural Marketing and Business Management
[email protected]
814-863-2196
Penn State College of Agricultural Sciences research and extension programs
are funded in part by Pennsylvania counties, the Commonwealth of
Pennsylvania, and the U.S. Department of Agriculture.
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Understanding Your Customers: How Demographics and Psychographics Can Help