What is Demographic Business Environment?

The term ‘demographic’ denotes characteristics such as age, income, education, asset ownership, home ownership, employment status, etc. of the population in an area, district, country or world.

Data with respect to these factors are of interest to businessmen because of their impact on the business.

In particular, the following demographic characteristics or elements of a population are of interest to a business:

demographics · GetACoder Blog

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(i) Population Size:

It is very important to understand population size and the changes in a population size like:

(a) Changes in a nation’s birth rate and/or family size

(b) Increases or declines in the total population


(c) Effects of rapid population growth on natural resources or food supplies

Such study is very helpful in framing suitable strategies for a business.

(ii) Geographic Distribution:

Population shifts from one region of to another like from non-metropolitan to metropolitan areas to search for employment. It may have an impact on a company’s strategic competitiveness. Some important issues may be as follows:


(a) Attractiveness of a company’s location and respective governmental support

(b) Need to relocate the company if population shifts

(c) Concept of working-from-home electronically, implying changes in recruitment and management of the workforce.

(iii) Ethnic Mix:

This reflects the changes in the social value system of a population and has implications both for a company’s potential customers and for the workforce. Issues that should be addressed include the following:

(a) What changes in the ethnic mix would need a new product and service design and delivery?

(b) Will new products and services be demanded or can the existing ones be modified?

(c) Are the managers prepared to manage a more culturally diverse workforce?

(iv) Income Distribution:

Change in income distribution is important because it determines the purchasing power, disposable income, consumption and savings patterns, etc. Tracking, forecasting, and assessing changes in income patterns may identify new opportunities or even threats for companies.

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