2.1: Demographics - Numerical Data

Chapter 2 Learning bjectives

• Understand demographics and the usefulness and limitation of numerical data.
• Comprehend the psychographic nature of customer attitudes, interests, and opinions.
• Understand the importance of customer behavioral characteristics.
• Understand the importance of generational differences.
• Apply the customer decision cycle for making purchases.
• Gain the ability to define your customers.
• How to gauge your customers across various considerations.
• Understand how customers equate price and assign value to products.

“The key is to set realistic customer expectations, and then not to just meet them, but to exceed them — preferably in unexpected and helpful ways.”

Richard Branson

“There is only one boss. The customer. He can fire everybody in the company from the chairperson on down, simply by spending his money somewhere else. “

Sam Walton

“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”

Peter Drucker

Customers

Every restaurateur understands that customers are the life's blood of the operation. But having said that, many foodservice operations fail to accurately identify just who their customer is, or engage in the analysis of a marketplace to determine if enough of the desired customers exist in numbers large enough to consistently support the operation continually. The importance of knowing one's customer is not a proverb. Construct menus around the wants and need of a clientele. The facility itself should be attractive and entice the desired customer the operation wishes to attract and retain. Customers will not know what an operation is about or the types of food served until the restaurant informs them but marketing is difficult when you have not defined whom it is that you want to attract. Thus in order to define a specific target market, or market segment, defining the "market" (city, neighborhood, location and so forth) clearly is an important first step, preferable before you refine your concept and consider an actual location.

Concept to Market

There are generally one of two ways is used to enter a marketplace. First, an operation can develop a restaurant concept, theme, menu, facility design, align suppliers, and so on, and bring the entire package to a marketplace - the method utilized by established chain operations, as in Figure 1. This method assumes well thought out components and systems that have undergone testing in other markets. Any weaknesses will have come to the surface by this time. The one unknown is ‘how’ the marketplace will respond to the concept. Adjustments to an existing concept can be difficult. This can be a weakness in a competitive market long standing.

Concept Tailored to Market

Second, the location can be determined and the concept, menu, facility, and suppliers can be ‘tailored’ to fulfill the needs and wants of the target market that resides in that trading area. If there are several target markets in a trading area, it is vital that that the operation determine which ones best match the strengths of restaurant - especially in the areas of food and service.

If a particular market segment were not a good match for the menu and service you intend to offer, it would be fruitless and expensive to develop a marketing strategy that attempts to attract those guests. It would be much better to select and match the best possible segments with the abilities of the operation. In this way, your marketing strategy is more likely to yield positive results.

Consider all segment possibilities afforded by trading area. Your restaurant's offerings may be attractive to numerous segments of that market. Additionally, you do not want to unnecessarily or unknowingly ignore a target market that may seem marginal today but proves to be a substantial profit contributor with a little shaping and your restaurant's positioning. For example, what about the 'delivery' of your products? You may not initially consider take-out business important in your full-service restaurant. You should consider it, though, if you are located near state government offices, medical offices and hospitals, colleges, or an industrial complex. Guests introduced to your restaurant through a take-out experience may become regular in-house diners someday. If they do not become in- house diners you have developed a clientele that does not pressure your dining room which allows you to continue to market for in-house guests. In any case, most of your important decisions begin with the clear understand of exact who your customer is. The purpose of this chapter is to present ways to make those determinations.

Demographics – Numerical Data

Now this form of data is readily available on Web sites and in census reports (see, www.censusscope.org). This form of data is also easy to obtain from private companies that specialize in nation or geographical data customized to your needs. Finding demographic information is no way near as difficult as in the past (see Figure 1.1).

Table: 1.1 Resources for Demographic Information

Where to Ask	What to Ask For
Department of Economic Development, Chamber of Commerce, City Planning Office	Maps, employment statistics (average income, unemployment rates, plans for upcoming commercial and residential developments, data about retail, food, and beverage sales, shopping habits and patterns, major employers, and industries
Building Department, Planning and Zoning Department, Commercial Realtors	Area master plans, residential occupancy and housing statistics, property values, urban renewal projects, zoning information - property laws, about parking, signage, building height, permits, and any other construction-related restrictions.
Local Publications (newspaper, magazines)	Dining guides, advertising rates, restaurant reviews, some business demographic data
Transportation Department	Proposed road improvements, types and routes of public transportation, traffic count data by roadway.
Department of Revenue and Taxation	Property taxes by address (for neighborhood averages), breakdowns of real estate taxes, Income and sales tax figures.
Utility Company	Past patterns of gas or electric bills at an address, information about typical rates, seasonal usage, conservation discounts.
Convention and Visitors Bureau	Tourist information - data on numbers, spending habits, annual events, and average attendance, dates and sizes of upcoming conventions and meetings.

Demographics are the statistical characteristics of human populations in a specific geographical area. Demographics are useful to identify the study of quantifiable subsets within a given population, which characterize that population at a specific point in time. Themes such as the number of people (adults, children, other), ages, mobility, or lack of mobility, gender, income levels, education, ethnicity, employment status, and housing are related to the eating-out and drinking-out behavior of consumers. While demographics essentially reflect numerical data, such data can reveal characteristics of interest to a restaurant operation. For example, a large number of two-income households in the treading area would indicate the potential for considerable dinner take-out business. Why take out? While two individuals working in a household would appear to drive sit-down business, and often this is the case, the key aspect is that both individuals are working. At the end of the day both are more apt to be tired and only interested in picking up a meal on the way home. This drives another important point. Income alone is not adequate to determine how consumers will spend their disposable income. A new neighborhood with nicely appointed homes and a late model car in the driveway can be an indication of an affluent neighborhood, or you could in fact be observing families who are financially overextended and are truly candidates for continual support for your operation - research situations thoroughly. If the trading area contains a large number of retiree population, there is probably a strong potential for the effective use of 'early-bird' specials. Age is an important demographic variable. For example, baby boomers typically reflect a market segment that dines out a lot and is interested in trying new foods and beverages.

A demographic or demographic profile is a marketing term used to describe a demographic grouping or a market segment. This will typically include 'age bands' (such as teenagers who do not wish to purchase the same products that appeal to an older population). 'Social class bands' (as the rich may want different products than middle and lower classes and may be willing to pay more), and gender (partially because different physical attributes require different hygiene, eating, and clothing products, and partially because of the male/female mindsets).

A demographic profile is also useful to determine the ‘when’ and ‘where’ of advertising placement to achieve maximum results. In all such cases, it is important that the advertiser get the most results for their money, and so careful research is necessary to match the demographic profile of the target market to the demographic profile of the advertising medium. This, understand the demographic profile of a trading area is vital to operational decisions as well as marketing decision.