Demographic data lets businesses know if the customer base can support expansion. Knowing the age and income distribution helps tailor pricing and product offerings. Businesses predict demand shifts by analyzing demographic data changes.

In the context of business and commerce, the most frequently requested demographic data is age, population structure, and purchasing power. Reliable data is updated regularly, internally consistent (when added up, percentages equal 100), and has transparent sources.

Using too much data is a common mistake when planning local business expansion. Instead, the focus should be on choosing the right data. Analyzing data on a zip code level might be enough, but if your goals are more concrete, you might need small, fixed-size raster cells. Mapping tools help select content and determine whether data is current, compatible, etc.

Population size and density

Understanding the population size and density in different regions allows businesses to determine if there is a sufficient customer base to support their expansion. US dining and retail foot traffic has grown almost every month between June 2023 and May 2024, with the growth ranging from 3.8% in June to 5.1% in May. Physical retail is expected to comprise almost 84% of US retail sales by the end of 2024, up to a total of $6.234 trillion.

A high-density area is more suitable for retail businesses that rely on foot traffic. Zip codes are one of the most basic identifiers of a geographic area. While they don’t provide demographic data directly, they serve as a key that can be used to access the data associated with that area. If you plan on expanding in California, you will benefit from access to a California zip code or codes of the respective area. A reliable mapping service can provide this information and access to the demographic data associated with the location.

Income levels

Knowing the income distribution in a target area helps in tailoring pricing strategies and product offerings. Companies selling expensive goods will look for areas with higher average household incomes, whereas discount retailers may target areas with lower-income populations.

Age distribution

Businesses targeting young adults, such as gyms, may look for areas with a high concentration of Z-generation members and millennials. Some businesses will consider a combination of income and age. Baby Boomers, born between 1946 and 1964, are the wealthiest generation in the US. The next generation is Gen X and includes everyone born until 1980. They made up just under a fifth of the US population in 2022 and are known for having the highest brand loyalty. 60% of Gen X will always buy from brands they are happy with. They are also the biggest consumers, with annual expenses averaging over $80,000.

Trends and shifts

By analyzing changes in demographic data over time, businesses can anticipate shifts in demand. An increase in young families in a neighborhood could indicate a growing demand for childcare centers, schools, or family-friendly restaurants. Demand for these facilities is expected to increase long term. The childcare market was worth $61.70 billion in 2023 and is expected to grow by 5.86% annually until 2030.

FAQ

What are the considerations for business expansion?

Businesses should consider customer demographics, market size, purchasing behaviors, and competitor prices and pricing strategies. Expansion financing costs include loans, cash flow, etc.

What is the key demographic for your business?

Essential demographic variables include age, income, gender, job, education, and marital status. Individuals aged 18-49 spend more on goods and services, which is why advertisers consider this demographic the most valuable target.

What are the most important demographic statistics?

They are divided into vital statistics and population statistics. Vital statistics include fertility rates, mortality rates, life expectancy at birth, and natural growth rates. Population statistics indicate the population size, density, sex ratio, and dependency ratio.

Is there a connection between buying power and fertility rates?

Wealthier countries have lower fertility rates. Women in countries with a GDP per capita of over $10,000 per year have a maximum of two children, while they have at least three in countries where the GDP per capita is less than $1,000.