Demographic changes affect consumer needs and wants, which stimulates entrepreneurial innovation. For example, the population has been aging significantly as the baby boomer generation reaches retirement. In order to be successful companies must figure out how to please these customers, as well as to prepare for future demographic shifts.
The great part of using demographics as entrepreneurial innovation is that you can plan ahead. Since 1945 we knew that baby boomers would begin to retire around the year 2000. The good companies started to prepare for this change a long time ago. Those that didn’t are really behind the eight ball.
Now, be careful. Don’t just go jumping on the baby boomer bandwagon because I said those who haven’t yet are behind the eight ball. That ship has sailed. You need to be looking at another 20 years into the future. What will our demographics look like in 2025-2030? Will the population still be aging significantly? Who will be your key target markets? Let’s take a look at the 2010 census, shall we?
Now, complete data nerds will love what comes next. Those that don’t like charts and graphs, will not. Fair warning. Take it or leave it.
This chart represents the median age from 1960 to 2010, courtesy of the 2010 U.S. Census briefing on Age.
Clearly the median age has been increasing since 1960, indicating that entrepreneurs focusing on the aging consumer were right on track. The question is will this trend continue. Let’s do some math!
Ok. Several things. You will notice two major number discrepancies. First, the Under 25 number does not take into account any children born in the next 20 years. I have no idea how many children will be born, nor do I dare speculate; so I left that number as it is. The Census bureau expects birth rates in 2011 to be higher than ever before, so interpret as you would like. The second number is the 100% growth of those 65 and over. I have not taken into account any deaths. While the population of those over 65 is not likely to double in the next 20 years, this segment will continue to get larger. In other words, continue innovating for those older generations. Perhaps you didn’t miss the boat, after all.
Now, let’s take a look at race.
So, this graph shows that overall the U.S. population is predominately white. No surprise, but check out which populations are growing the most: Asian, Hawaiian, and Hispanic. If you look at just the growth numbers, it looks like you should target all three of these races in the future; but first you must consider which ones have reached critical mass. The Asian population makes up 4.8% of the U.S. population, Hawaiians/Pacific Islanders make up .2%, while Hispanics make up a large 16.3%. There’s your key. The Hispanic population is likely to continue to grow in the coming years, and as it already composes nearly one-fifth of the population, you should probably innovate something that serves this growing demographic.