When creating a new small business, sometimes it is not always obvious who the target customers should be. Fortunately, there are three marketing concepts which can assist the new small business owner in developing appealing products and services: demographics, ethnographics, and psychographics. Here are some of the ways these concepts are useful:
Demographics identifies that people in the same age range tend to make similar purchases, not only in terms of individual products, but even across categories. For example, younger children tend to be interested in the latest toys, while older children are more interested in increasingly sophisticated recreational pursuits, such as music and bands, and eventually, more mature adult interests. A new small business owner must carefully consider what stage of life their target market is in, and develop strategies to fully satisfy these needs. With time, nearly every target market will change and move on to other interests, and there is no guarantee that others will automatically replace them. For this reason, new products and services must be developed to serve other target markets for continued business success.
Ethnographics identifies that people from similar ethnic backgrounds will often have similar needs, and make similar purchases. In many countries, there are products and services which are not yet offered in the country where your small business is, yet there will be some customers of those products and services whose needs go unfulfilled. As a small business owner, if your background gives you special insights into the demands of these niche markets, you should capitalize on this. At the very least, consider whether offering the foreign products/services would be profitable for your business, and you could dominate a new market category if demand for these products and services becomes widespread beyond the niche market.
Psychographics identifies that people with similar beliefs and values will tend to make similar purchases. Common group membership is but one trait which can be used to identify common consumer cultures. In fact, any common purchasing patterns or repeated behaviors by otherwise different groups of customers tend to indicate that common psychographics for these customers have created a new market segment.
By using demographics, ethnographics, and psychographics, small businesses can effectively market their products and services to the ideal consumers. These three methods when used together make it possible to identify potential new products and services, which can be highly profitable for the perceptive small business owner.