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Small Business Basics

Exploring the difference between psychographics and demographics

The difference between psychographics and demographics may seem fuzzy if you're new to these concepts. We'll show you how to use each in effective marketing strategies.

May 06 · 15 min read

Demographics and psychographics are two of the core components of effective marketing. You can think of them as foundational tools that guide the rest of your marketing efforts in the right direction. However, the difference between psychographics and demographics can seem fuzzy, especially if you’re new to these concepts.

In this article, we’ll walk you through the purpose and unique qualities of each of these marketing tools, as well as show you how to employ them to create more vibrant, more effective marketing strategies.

What are demographics?

Demographics is a way of separating groups of people by categorical, qualitative data. In simpler terms, that means identifying who your market it through simple metrics. This includes age, gender, race, etc. Knowing these metrics will help you refine your marketing strategy and develop marketing tactics that directly speak to your audience.

There are two stages to collecting demographics. The first is before you’ve marketed your product; this is where you determine who you think will be using your product based on market research and your own goals.

The second is after your product hits the market. At this point, you’ll be able to pull data from your sales to determine who is purchasing and using your product, not just who you anticipated would use your product. This helps you better target that audience or redirect your focus to tap into another market.

Demographic metrics

  • Age. This metric is simple; you want to know how old your target audience is. This metric is typically broken down by generation.
  • Ethnicity. Ethnicity plays a vital role in how interested a person might be in your product, as well as how they will perceive your marketing efforts.
  • Gender. Similar to ethnicity, gender is a metric that will affect how a person does or doesn’t identify with your product and marketing.
  • Education. Education is closely tied to a person’s class and social status. This will impact how interested they are in your product as well as whether or not they can afford your product.
  • Income. Like education, income is a metric closely associated with a class. People with different levels of income have very different shopping habits.
  • Number Of Children. Adults with children will typically have less purchasing power than those without, but they will also be big spenders in specific categories.
  • Location. Location can determine the types of products people purchase (someone who lives inland probably won’t buy a boat) as well as their preferences when it comes to marketing.
  • Profession. The job a person works may determine the products they look for (i.e., mechanics are more likely to purchase tools) and their purchasing power.
  • Marital Status. Marital status can affect a person’s spending power and likelihood to purchase certain products (i.e., married couples are more likely to buy a house).

What are psychographics?

Psychographics is a subtler set of metrics that you can use to categorize your customers, typically to a more significant effect. These metrics include values, opinions, and interests. Psychographics are less qualitative than demographics, which can make them more challenging to measure.

Psychographics are much more subjective, which means it’ll require more effort on your part to understand your customers than demographics. Psychographics tend to be more specific as well, whereas demographics are more general. For this reason, you may need to implement a more one-on-one approach to gathering psychographics.

While demographics allow you to tighten and focus your marketing on a specific group of people, psychographics enables you to personalize that marketing. This can help you develop closer bonds with your customers and add a voice to your brand that other businesses don’t have.

Psychographics metrics

  • Values. Values are probably the essential psychographic metric, as they’re the most powerful to connect with your customers on. Values consist of things like trust, eco-friendliness, veganism, freedom, independence, success, etc.
  • Opinions. Opinions encompass anything your customers might think about topics like politics, social issues, quality standards, etc.
  • Attitudes. Attitudes are similar to opinions, though they focus more on the emotional context of the opinion. Are your customers supportive of, against, or neutral on a particular topic? This will help you choose a tone for your marketing.
  • Interests. Interests are anything that your customers like doing or discussing, like fitness, art, reading, movies, cooking, gaming, yoga, family time, socializing, and so on.
  • Preferences. Preferences are what your customers choose when given an “either/or” choice. For example, do your customers prefer living in the city or the country? Would they prefer a low-cost product or a product with the highest standards?
  • Habits. Habits are the things that make up your customers’ routines, both good and bad. This can be positives like exercise and meditation, or negatives like overeating and poor sleep hygiene. Knowing your customers’ habits will help you target their pleasure and pain points.
  • Lifestyles. Lifestyle refers to how your customers choose to structure their lives. Is being outdoors a big part of your customer’s life, or do they prefer to stay in? Does your customer travel a lot? Are they religious?

Important differences between psychographics and demographics

Although demographics and psychographics both touch on a similar area of marketing (knowing your audience), they each approach marketing from very different angles. Here are the key differences between psychographics and demographics to help you better understand when to use which.

Ease Of Gathering Data

Demographics are substantially easier to obtain than psychographics for several reasons. For one, they’re made up of qualitative measurements. This means you can create specific data points for them (e.g., Age: 30-40, Gender: M, Income: $50,000/year, etc.). On the other hand, you might not know what psychographic measurements you’re going to use until you start asking your customers questions.

This is the other challenging component of psychographics: you can really only gather them by directly asking individual customers to answer your questions. Demographics can be collected through analytical tools, social media, and even purchase history. But psychographics requires customer participation.

For this reason, psychographics is much newer to the realm of marketing than demographics. Demographic data has been readily accessible for the better half of the last century or more, while psychographic data only became readily available thanks to the spread of the internet.

Ease Of Implementing Data

Again, demographics take the point when it comes to implementing data. Because the data is more straightforward and measurable, it’s much easier to put demographic data to use.

Psychographic data, on the other hand, requires significantly more nuance. You may not be able to implement psychographic data on any general scale. Instead, you’re likely to find that you can only use this data to target better individual customers, not whole swathes of your customers.

This is one of the reasons why many companies ignore psychographics altogether; it only requires more time and resources than their marketing team is capable of outputting.

Effectiveness Of Data

Finally, there’s the effectiveness of the data gathered through demographics and psychographics. Not only is psychographics more effective than demographics, but the difference is hugely significant. When implemented correctly, psychographics can significantly increase the effectiveness of your marketing.

The reason for this is two-fold. First, psychographics speaks to your customers on a personal level, not on a generic, statistics level like demographics. They’re unique to the different subsets of your customers, allowing your brand to build a resonant connection with your audience.

Second, psychographics is emotional. They tap into a side of your audience that demographics simply don’t. One of the best examples of psychographic-centric marketing is Apple. Apple’s marketing often ignores the specs, stats, and hardware associated with its products and instead jumps straight to the heart of its customers. “Why do people want these products, what are they going to do with them, what do we value that no other company does?”

Using Apple as a marketing example may feel tired, but they are arguably the most successful company of all time, so it’s a dead horse worth beating.


Psychographics vs Demographics: Which is more important?

In case it isn’t clear yet, psychographics is significantly more important than demographics when it comes to lead generation strategies. They keep your customers coming back, yield greater results, and will build your brand in ways that demographics never will.

Now, that isn’t to say that demographics should be ignored. On the contrary, you can think of demographics as the backbone of your psychographics. This is where you focus your early efforts and build the foundation of your marketing, determining the niche your company best fits into.

Once you’ve got a solid base of demographics established, you can move onto gathering psychographics, building up a richer vision of your customers. This will allow you to strengthen your marketing and speak to your customers directly rather than stats and generalities related to your customers.

How To Gather Psychographics

As mentioned, gathering psychographics can be challenging, as you’ll get different answers from each of your customers. Demographics, on the other hand, is much simpler, as you can easily predict and categorize your customers’ responses.

To help you out, here are a few methods you can use to gather psychographics successfully.

Focus Groups

A focus group is a sampling of your customers that you use to (in a very general sense) represent all of your customers. Focus groups need to be demographically diverse for you to be able to get the most accurate results. You should be able to find participants for a focus group by reaching out to your customers via email or social media.

Once you have this group, you can ask them the sorts of questions you would typically ask all of your customers and record their answers. This provides you with a semi-holistic overview of your customer base that you can use to feed your psychographic data.

The benefit of focus groups is also its weakness, and that’s that it consists of very few people. This makes it much easier to organize, but it can inhibit the accuracy of the results you acquire. For this reason, focus groups are better suited to smaller organizations with a relatively small customer base.

Questionnaires and Surveys

For businesses of all sizes, there are questionnaires and surveys. Most of us have filled out a questionnaire at one point or another, so you’re more than likely familiar with what they are. But for those who don’t know, surveys and polls are documents that have a set of multiple-choice and/or open-ended questions that your customers can fill out.

These are great because, thanks to the internet, you can easily send these out to all of your customers, gather the results, and quickly sort through the answers, often for free. This makes it an excellent solution for just about any business, so long as you have a way of sending surveys and polls to your customers.

The only real challenge (or two) or surveys is knowing what to ask and how to ask it. Asking specific questions (or asking them in a certain way) can skew your results (e.g., “Why don’t you like chocolate?” instead of “What’s your favorite flavor?”). Be careful when creating questions, and know when to use multiple-choice or open-ended questions.

Social Media Analytics

For large companies that have too many customers to benefit from polling or focus groups effectively, you can use social media analytics. Data from social media has a few pros and cons, which we’ll get into now.

The pros are that it’s easy to gather social media analytics because you don’t have to collect them! Most social media apps will do this for you automatically; all you have to do is find where these analytics are and share them with your marketing team. You can gather data from multiple social media apps, providing you with a well-rounded picture of your customers.

The cons are that this data tends to not go very deep, with most of it falling closer to demographics than psychographics. Social media analytics also represent your followers, not your customers, which may benefit you better in growing your social media following, not necessarily in boosting your sales.

Interview Current Customers

The most personal and in-depth approach is to interview your existing customers one-on-one. This involves reaching out to customers, usually based on what type of customer they are (dedicated, first-time buyer, casual, etc.), and setting up an interview where you can ask them questions over the phone or in person.

Interviewing customers in this way has the different pros and cons of social media analytics. It requires a lot of work and time to set up one of these interviews and only provides you with a small subset of results to use.

On the other hand, these results will be so rich, personal, and authentic that you can truly take them to heart; you’ll get much more than you would out of a multiple-choice question. Businesses that are looking to develop personal insights into who is on the other side of their transactions should take this approach.


How To Create A Demographics Persona

Speaking of getting personal, we’re now going to dive into the process of creating demographics personas. In marketing, personas are imaginary people that you create based on your demographics and psychographics to help you visualize your target audience. In this section, we’ll walk you through turning your demographic data into a marketing persona.

Generations

Generational data is one of the most popular and vital bits of data in your demographic toolkit. It separates your customers into different age groups based on the well-known generational divisions, such as The Greatest Generation, Baby Boomers, Generation X, Millennials, Generation Z, and so on.

Knowing what generations your different subsets of customers fall under can help you determine which customers make up the majority of your sales. For example, some industries find that older generations are their financial backbone, while other markets resonate with younger audiences.

Once you’ve determined the group(s) that brings in the majority of your sales, you can start using marketing tactics that are proven to work on that generation. Each generation has different opinions, values, and preferences, which you can use to your advantage when creating a marketing persona.

Homeownership

Homeownership is essential for a few key reasons. It tells you a bit about a person’s level of income as well as which stage of life they are at. Homeownership transcends age groups, with people of all ages living in varying circumstances.

To be more specific, homeownership will tell you what kinds of products a person is likely to be interested in. If you’re a local gardening business, renters probably won’t be your target audience. On the other hand, if you live in an area with lots of apartment buildings, you can sell indoor plants through the same gardening business to take advantage of your local market.

Homeownership can be broken into different categories as well. Are you looking at new homeowners or long-time homeowners? How much space does this person have inside and outside of their home, and what are they planning to do with it?

Ethnicity

Like, different age groups, different ethnicities have different buying habits and are interested in various products. Incorporating ethnicity into your demographic personas is especially crucial in diverse regions and online businesses, as your customer base will more than likely be a different group.

Something that marketers may not be aware of is that different ethnic groups have different expectations when purchasing a product. For example, negotiating is a normal and expected part of Indian culture. So, if you’re operating in an area with a large Indian population, have a strategy in place for managing and appealing to these expectations.

You can also look to the holidays specific to certain ethnicities to plan out special deals or products, as well as stock up on products that will be in high demand by one ethnicity or another. During Chinese New Year, for example, you may see an increase in sales of fish, cabbage, and pork.

Geography

Geography plays a huge role in the types of products that a person is likely to buy, with a small exception being the tech industry; some regions may purchase less tech than others, but overall, it’s a universal industry. Geography can be divided by things like rural and metropolitan areas, cultural distinctions between different locations, and even the supply/demand of certain products (particularly in agriculture).

Food is a straightforward place to spot these distinctions. People from different areas will have different taste palettes; for example, you’ll find more meat-eaters in the U.S. South and more vegetarians in the U.S. West Coast. People from different regions will also have different lifestyles, which can help you picture your customers in different locations.

Even more impressive in geography is how it limits or creates specific industries. As a simple example, jet skis are going to sell much better in Florida than they will in Arizona. But other cases are less obvious, though equally important. Transportation, environment, weather, and population will all vary by locale, which can significantly impact your marketing strategies.

Income

Last but not least, there’s income. Income will be a deciding factor in who purchases your product and who doesn’t. Specifically, you’ll want to look at your customers’ net income or disposable income. This is the amount of money they have leftover after they’ve paid all of their bills.

The more gross income a person has, the more money they’ll be able to spend each month, which will inevitably determine whether or not they can purchase your product. This affects your demographics persona in three ways.

First, who can afford to purchase your product? If your product costs several hundred dollars, you’re more than likely going to be looking at middle-class customers at best, and if it’s several thousand, then your customer base will be closer to the upper class. Neither of these is right or wrong; it just depends on which market you’re targeting.

Which brings us to the second point, who do you want to buy this product? If you’ve created a streaming service for young children, then your market is largely going to be new parents. Being a parent will affect the amount of disposable income a group has, which will impact how you price your product.

And that brings us to the final point, whether you should scale your price up or down. Comparing who can afford your product with who you want to purchase it will help inform you of whether you need to cut the cost of your product or if you can afford to raise it.

How to create a psychographics persona

Now that we’ve covered the basics of creating a demographics persona, let’s look at what one might look like:

  • Laura
  • Female
  • 35
  • Single
  • Lives in the big city in Connecticut
  • Works as a receptionist

All of this data covers the basics of what makes Laura “Laura,” but it doesn’t tell you anything about what motivates Laura, why she would be interested in your product, what type of marketing would be most effective on her, etc. To understand these factors, you’ll need to create a psychographic persona. You should create this before you have customers to draw from, but should also update it once you do have customers.

Laura’s psychographic persona might look like this:

  • Loves nerdy movies
  • Is close with her family
  • Has an active social life
  • Lots of friends
  • Is active on social media
  • Wants to climb the ladder at work

When you compare the two personas, you can see how the demographics persona helps you structure your marketing and product to appeal to Laura’s persona, while the psychographics persona tells you how to style your marketing, tone, brand, and values in a way that speaks directly to Laura’s interests and values.

Using demographics in your marketing

Choose how you communicate with your audience

There are several marketing channels you can use to reach your customers, from the mail, email, television, YouTube, Facebook, Instagram, TikTok, billboards, text messages, word of mouth, etc. Different demographics respond to and use these channels in very different ways, which will affect the way you market to your audience.

For example, email and mail are more popular with older generations and professionals, while social media works better with younger people. This doesn’t mean you can’t use both channels, but that you should consider keeping things professional over email and fun over social media.

Determine your customers’ needs

Demographics can inform you of what your customers need as well. For example, new homeowners might be looking for furniture, electronics, and clothing, while athletes will primarily being purchasing fitness-related items.

Using your demographic persona, try to imagine what the imaginary person you’re thinking of wants most when they’re scrolling through Amazon or social media. Then, you can use this persona and your psychographic persona to come up with a marketing strategy that will speak to this need.

Know what your customers can afford

One of the pitfalls that startups often run into is that they rack up so many costs during the development of a product or service that their product becomes much more expensive than they initially anticipated. Then, when it finally hits the market, the target audience completely overlooks it because it has moved beyond its price range.

This happens a lot in the tech industry, though it can happen to any business. To prevent this from happening, do your research early on and set a strict budget for the project. If a product can’t meet budget constraints, look to features that you can cut or substitute to help bring the price of the product down.

Using psychographics in your marketing

Add emotion to your marketing

Management and product development tend to think about a product or service by its specifics. It can do XYZ, it has ABC features, and it will cost MNO dollars. Your customers want to know this information, but this is not the information that will draw most customers to your product.

Instead, the majority of customers want to get a feel for your brand, understand what your product represents, and learn about your motivations for creating the product. Psychographics will help you tap into these factors by helping you relate your product to your audience. This adds emotions to your product, like humor, empathy, pleasure, hope, and surprise, which will help drive traffic.

One of the most successful examples of this of the last few years is Purple Mattress’s ad campaign. Rather than merely stating all of the facts, pain points, and unique qualities of their product, they found a way to convey all of these points most excitingly and humorously possible. Like a fun teacher, this caused people to want to learn more about Purple’s product, testing and discussing the claims, among others. It’s a great example of how important emotions are in marketing.

Find your social media niche

One of the struggles that anyone, business or not, faces when trying to build a social media presence is realizing how vast social media is. It can make finding a niche that consumers relate to seem impossible. That’s where psychographics comes in.

If you’ve built up a psychographic persona, then you already know what your social media niche is. Are your customers young athletes driven by hard work? Hopeless singles looking for love? Older generations in need of a vacation? Young artists seeking inspiration?

Use this type of information to direct the way you manage your social media. Post content that appeals to your psychographic personas, tapping into their needs, motivations, and desires. This will help you cast a smaller, but much more effective, social media net.

Craft your brand values

Your brand’s values are the principles that give your business a moral center; they’re something that your audience can get behind. Sustainability, inclusion, craftsmanship, hard work, transparency, privacy, passion - these are qualities that you can give your business that will resonate with your audience.

The trick is being able to use your marketing and your research to tap into this side of your customers. And to do that, you need to use psychographics. Psychographics will give you an idea of the things that your customers value and help you craft a brand that speaks to them.

Start improving your marketing today

If you’ve made it to the end of this article, congratulations! You’re now on your way to improving your marketing strategy, understanding your customers, and creating a brand that consumers can relate to. For more marketing expertise, check out the rest of our articles right here at B12.

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