Page 53 - Introduction to Business

CHAPTER 1 What Is Business? 27

of the decade) is female; 13 percent is African American and 13 percent is Hispanic;
approximately 7 percent of the population is in the 15-to-19-year age group, 14 per-
cent is in the 25-to-34-year age group, 16 percent (highest concentration) is in the 35-
to-44 year age group, and 14 percent is in the 45-to-54-year age group. Furthermore,
currently 23 percent of the U.S population is over 55 years old, and this population
9
group is expected to increase to 25 percent by 2010 and to 31 percent by 2050. And,
the Hispanic population is projected to rise to 24 percent by 2050. What do all these
statistics mean to business? Does anyone care? Yes, these statistics reflect the diver-
sity of U.S. consumers and are of great interest to businesses as they try to determine
what to produce and for whom. For example, magazine publishers in the United
States have analyzed this information to come up with such magazines as Black
Enterprise, Golf for Women, Latina Magazine, Seventeen, and Sports Illustrated for
Kids to cater precisely to the needs of specific audiences. Among the wealth of sta-
tistics available from the Census Bureau is information on where and how the U.S.
population is distributed. That information enables businesses to identify the right
location for manufacturing and marketing different products and services.
We all know for sure that not all consumers are alike. People have different
tastes (and therefore different needs for goods and services), which might depend
on various demographic and social characteristics like gender, age, race, national
origin, income, education, employment, physical location or residence, sexual orien-
tation, and marital status. However, a group of people can be identified who have
similar tastes and who for all practical purposes can be lumped together as one of
several target groups that businesses may want to cater to. Depending on the type
and number of consumers in it, the target group may have a critical mass, a size that
makes business viable. A target group could be U.S. teenagers in the 15-to-19 year target group A population segment
age group (7 percent of the U.S. population), who more or less have similar con- whose members have more or less
similar consumption habits
sumption habits like eating at fast-food restaurants, listening to certain types of
pop music, and wearing certain types of clothes. Here, what businesses are trying
to do is to break up the consumer population on the basis of age to see which goods
and services could be sold to each age group.
Mercedes Benz cars, for example, have traditionally been purchased by a spe-
cific segment of the U.S. population, that is, those with relatively high income and
around middle age. Income and age are some of the demographic characteristics
that DaimlerChrysler may use for market segmentation. Depending on the prod- market segmentation The breakdown of
uct or service that is being considered, businesses may include product-specific target consumers into categories on the
basis of age, gender, education, ethnic
demographics. Psychographics, on the other hand, deals with an analysis and
background, or other criteria to
understanding of the consumer’s mind to identify likes, dislikes, or preferences and determine the products or services that
develop commercials that try to manipulate the recipient’s mind to create a desire could be made to suit the segments’
specific needs
for certain goods or services. Here businesses try to go across demographics to
psychographics The analysis and
identify and arouse certain consumer tastes to sell their products.
understanding of the consumer’s mind
to identify consumer likes, dislikes, or
preferences and develop commercials
Cultural Diversity that manipulate the recipient’s mind to
create a need for certain new goods or
Culture plays an extremely important role in business, especially in such functional services
areas as human resource management and marketing. Domestic and international culture The behavior patterns, beliefs,
companies that have been successful in identifying, designing, and implementing and institutions that underpin all human
strategies that take into consideration cultural differences in their business envi- activities, explain much of our behavior,
create an awareness for learning, and
ronments are the ones that are most likely to succeed. Businesses, big and small,
vary by social grouping
are slowly recognizing that to succeed, they must please individual customers of
many national origins with many different national cultures.
The challenge with culture is that it is as easy to grasp as a wet frog. Yet, cultural
awareness is paramount to business success. Culture underpins all human activities,

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