Demographic Environment

Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. The demographic environment is of major interest to marketers because it involves people, and people make up markets. The world population is growing at an explosive rate. It now exceeds 6.6 billion people and will grow to 8.1 billion by the year 2030.4 The world's large and highly diverse population poses both opportunities and challenges.

Changes in the world demographic environment have major implications for business. For example, consider China. More than a quarter century ago, to curb its skyrocketing population, the Chinese government passed regulations limiting families to one child each. JkAs a result, Chinese children—known as "little emperors and empresses"—have been showered with attention and luxuries under what's known as the "six-pocket syndrome." As many as six adults—two parents and four doting grandparents—may be indulging the whims of each only child.

The little emperors, now ranging in age from newborns to mid-20s, are affecting markets for everything from children's products to financial services, restaurants, and luxury goods. Parents with only one child at home now spend about 40 percent of their income on their cherished child, creating huge market opportunities for children's educational products. For example, Time Warner, the American media conglomerate, targeted the lucrative Chinese coddled-kiddies market with an interactive language course called English Time, a 200-lesson, 40-CD set that takes as long as four years for a child to complete. The course sells for $3,300, more than a year's salary for many Chinese parents.5

At the other end of the spectrum, Starbucks, the chain of gourmet coffee shops, is targeting China's older little emperors, positioning itself as a new kind of informal but indulgent meeting place.6

China's one-child rule created a generation who have been pampered by parents and grandparents and have the means to make indulgent purchases. Instead of believing in traditional Chinese collective goals, these young people embrace individuality. "Their view of this world is very different," says the president of Starbucks Greater China. "They have never gone through the hardships of our generation." Starbucks is in sync with that, he says, given its customized drinks, personalized service, and original music compilations.

Thus, marketers keep close track of demographic trends and developments in their markets, both at home and abroad. They track changing age and family structures, geographic population shifts, educational characteristics, and population diversity. Here, we discuss the most important demographic trends in the United States.

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