Economics
Issue No. 35 - June/July 2007
Demographics: Where the buyers are
It is widely accepted that careful and informed short-term and long-term planning is critical to the success of any business activity. Anticipating shifts in the level and nature of demand for particular goods and services before one’s competitors can provide an important competitive advantage. Detecting such shifts depends upon being informed of three types of changes occurring in the market being served:
•Shifts in economic indicators.
•Evolving trends in societal attitudes and tastes.
•Demographic changes in the population being served.
Ironically, it is the third of these which is most often neglected in business planning in Australia. Yet, as the quotation indicates, demographic change is profoundly reshaping OECD economies.
All private and public sector activity ultimately aims to produce or deliver goods or services to people in a cost-efficient and profitable way. It would appear axiomatic that a necessary and fundamental preliminary is a sound and detailed knowledge of the population being targeted by a business, yet too often the demographics are overlooked. People are seen as a static backdrop to the interplay of political, economic and social forces which are closely monitored.
I would argue in the strongest possible terms that this is highly misguided because:
The Australian population is changing in many profound ways. Much demographic change is incremental rather than sudden, so it does not attract as much attention as major shifts in exchange rates, interest rates etc.
These demographic changes are on their own reshaping the need and demand for almost all goods and services.
The aim of this short paper is firstly to make a plea for the wider and deeper incorporation of demographic analysis into the corporate planning processes and the development of marketing strategies in Australian business. My argument is that demographics provides business with some very sharp tools which ca...
