Demographics and Psychographics
Business Plan
Target markets can be described using two major categories of data: demographics and psychographics.
- Demographics are measurable statistics, such as, age, gender, or race
- Psychographics are attitudes, feelings, and values of customers that are not easily measured
To create a target market profile, we combine demographic data with pyschographic characteristics like the example below.
Example Target Market for Quantcast.com
FOX TV's American Idol Quantcast.com |
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| Demographics | Psychographics (VALS) |
Age: 35 - 49 |
Strivers Strivers seek motivation, self-definition, and approval from the world around them. They are striving to find a secure place in life. Unsure of themselves and low on economic, social and psychological resources. Strivers are concerned about the opinions and approval of others. Money defines success for Strivers, who don't have enough of it, and often feel that life has given them a raw deal. Strivers are impulsive and easily bored. Many of them seek to be stylish. They emulate those who own more impressive possessions, but what they wish to obtain is often beyond their reach. |
Sex: Female |
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Race: Caucasian |
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Income Level: |
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Education: Some College (minimum 1 year) |
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The 20/80 Rule
Keep this target market rule in mind: 20% of your customers provide 80% of your revenue. This 20% represents the most loyal and active group of customers, so when determining the specific demographics and psychographics for your target market, think about who this group might be.
Determine Demographric Categories
Select 5 demographic categories from the list below that you think best represents 20% of your customer base.
- age
- gender
- marital status
- family size
- income – it might help to look at monster.com to get an idea of income levels for different occupations
- occupation
- education
- religion
- culture or ethnic background
Determine Psychographic – US Framework and VALS™ Types
First, an explanation of psychographics and the VALS types.
VALS segments US adults into eight distinct types (see chart below) – or mindsets – using a specific set of psychological traits and key demographics that drive consumer behavior. The US Framework, a graphic representation of VALS, illustrates the eight types and two critical concepts for understanding consumers: primary motivation and resources. The combination of motivations and resources determines how a person will express himself or herself in the marketplace as a consumer.
Primary Motivation: Ideals, Achievement, and Self-Expression
The concept of primary motivation explains consumer attitudes and anticipates behavior. VALS includes three primary motivations that matter for understanding consumer behavior: ideals, achievement, and self-expression. Consumers who are primarily motivated by ideals are guided by knowledge and principles. Consumers who are primarily motivated by achievement look for products and services that demonstrate success to their peers. Consumers who are primarily motivated by self-expression desire social or physical activity, variety, and risk. These motivations provide the necessary basis for communication with the VALS types and for a variety of strategic applications.
Resources
A person's tendency to consume goods and services extends beyond age, income, and education. Energy, self-confidence, intellectualism, novelty seeking, innovativeness, impulsiveness, leadership, and vanity play a critical role. These psychological traits in conjunction with key demographics determine an individual's resources. Various levels of resources enhance or constrain a person's expression of his or her primary motivation.
When paired with demographic data, psychographics can be leveraged as a powerful tool to select the best targets (potential customers) to position your products and brand, and communicate effectively.
Now that you've learned about psychographics and the VALS segment types, determine the psychograpic of your business by taking the VALS survey
Click here to take the VALS Survey
The results of the survey will tell you what psychographic category YOU belong to. Do your results tell you which psychographic dominates your Target Market?
The answer: it depends. Think about who you are and why you chose this business in the first place. Does that line up with who think your most loyal and active customers will be? If not, select the one that does.
Need to learn more about the VALS Types?
Create Your Target Market Profile
You will make three Target Market Profiles for:
- Your Business
- Your Direct Competitor
- Your Indirect Competitor
*Use the same direct and indirect competitors from the SWOT Analysis
You need to include at least five demographic descriptions and at least one VALS psychographic profile in its full description.
The Target Market Profile should look like the table below.
Download this Target Market Profile Template (Word)
Name of Business |
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Demographics |
Psychographics (VALS) |
Save as > "demo-psycho-profiles" in your Business Plan folder.
These Target Market Profiles will be inserted into the Market Segment Analysis
