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The People Are Demanding
“EVERYTHING IN BUSINESS—EVERYTHING—IS affected by supply and demand.”
That’s the first sentence in the first chapter of my first book—The Age Curve: How to Profit from the Coming Demographic Storm (AMACOM).
So, why are you reprinting it here? you ask.
Because this book is all about the demand part of that quote. When I wrote The Age Curve in 2008, I did so in an effort to bring readers into my world, the world of counting people. It is a lonely place, really. Demographics is not a household word, and the science of demography often takes a backseat to the science of economics. I find this quite ironic because demographics precipitate economics, not the other way around. So while The Age Curve was a big-picture overview from 30,000 feet high on this relatively unknown and misunderstood science, Upside represents a deep dive. Readers of The Age Curve often asked me how the science of demography applied to them specifically. Readers of Upside should be able to bring demography into the world where they live, work, and play. It represents demographics up close and personal.
People.
Without people, there is no demand, and without demand there’s no need for supply and, of course, without the two of them there’s certainly no need for business.
As noted in the previous chapter, I count people, and you should, too. Especially if you are in business. But it’s not only the counting of people that’s important; it’s figuring them out.
And I’m not talking about figuring out their tastes, style, fashion, or anything that might be the hottest seller in a given market; I’m talking about figuring them out on a demographic basis—figuring out what their numbers mean. Counting people is the easy part; working out the implications of those numbers can prove more difficult, but it shouldn’t be that way. Both the numbers and implications of those numbers are right there before our very eyes, and yet we so often remain totally blind to them.
I recently had a comprehensive eye exam. The doctor dilated my pupils with a medication that really irritated my eyes to the point that I could not open them comfortably in the sunlight. I was glad that one of my daughters was with me so she could drive home. On the walk back to her car I held her arm, and she cautioned me about approaching cars and when to step up on curbs. Trust me, I am not saying I suddenly understood what it would be like to be blind, but I certainly got a taste. When you can’t see, things can hide in plain sight. In this case, where was my daughter’s SUV? It is big and red and hard to miss, unless you can’t see, and I couldn’t see it.
On the way home, the irritation slowly subsided, but I could not stop thinking about the experience. Knowledge is all around us, the answers to big questions. Why can’t we see it? Seems to me that we collectively have our eyes closed and allow ourselves to be led around by other people. So let’s open our eyes and have a look at why counting people is so important.
Voltaire is quoted as saying, “Common sense is not so common.” What an understatement. I am amazed at how few people really think things through, how few folks employ simple logic. I believe that a working knowledge of demographics is an enormously powerful tool, especially for marketing and advertising. But the real beauty of a working knowledge of demographics is its simplicity. Presented correctly it is very easy to understand. If you can count and comprehend how population numbers can impact just about everything, I can help you become a demographic expert in no time.
I make demographic presentations all over the United States and Canada. I get rave reviews, not because I am really smart and able to dazzle people with esoteric data. It is because I simply remove the mystery of the science of demography and present it in a way that almost everyone can understand and use. It is the use part that makes a difference. It is a way of looking at the mysteries of the world in a way that people can understand.
Is an understanding of demography the beginning of wisdom? No, but it is a perspective that will change your thinking forever, especially relative to marketing and business.
Are demographics a new science? Hardly; they have been around for as long as people have been on the planet.
Then why aren’t demographics common knowledge? Good question. I believe it is because really smart demographers like to write articles and books for other really smart demographers and not for the general public.
I know, go figure. I am a marketer turned demographer. I know how to write to the public only because I am accustomed to writing advertising copy. I want everyone to know what I know. Listen, I know I make generalizations, but if you want to dive into the esoteric DNA of demographics, you won’t understand anything. My simple theories stand the test of time, and that is my validation. Once you understand the principles of shifting demography, you can forecast their impacts on markets, politics, economics, commerce, and cultural change.
Can you count? Can you tell the difference between large and small? It is people who drive the world. Not systems, governments, or management styles. The most important question that anyone who markets anything must ask is: How many people are in my market and is that number getting bigger or smaller? An understanding of this simple concept will shape your success or failure. If you don’t know how many people you are dealing with, you simply don’t know what’s driving the world.
Ever notice how the Wall Street Journal humanizes its stories about the stock market? The stock market can “shrug off” disappointing updates, “get jittery” about bad news, “be giddy” about good news, and even “embrace” federal reports. The stock market is not a person. People are people. And only people are people. If you understand the dynamics of the people and populations that drive a particular market, you can capitalize on this information in the stock market. People drive sales, and more people generally leads to more sales, while fewer people usually indicates declining sales. It is so simple.
So simple that back in 2008 I started a demographically based investor newsletter designed specifically on this concept. I would pick out business sectors that were likely going to be impacted by generational population shifts, and my colleagues—who were better versed in securities knowledge such as price-to-earnings ratios and other stock valuation indicators—would pick stocks in the sector that would benefit the most from the expected demographic changes. In two and a half years our demographically based model portfolio was up more than 100 percent compared to the S&P 500, which had gained just over 35 percent during that same time period.
It wasn’t rocket science. America’s Generation Y, composed of about 86.6 million people born between 1985 and 2004, is big, and as they aged there was little doubt that they would have a big impact on specific companies.
Which companies, you ask? Well, consumer electronics, toys, and youth apparel were definitely feeling Gen Y’s impact, and played a key role in the portfolio. As did specific food and beverage companies that we felt would appeal to what we perceived as the refined taste of this generation.
For an example of this latter point, consider the Boston Beer Company. We determined that not only would the number of people reaching the legal age for drinking alcohol increase dramatically going forward with Gen Y, but also that members of this generation seemed to have higher standards with regard to their consumption habits. Thus, Boston Beer had a much greater chance of capitalizing on Gen Y than did, say, Budweiser. We recommended Boston Beer when its stock was selling for about $25 per share. Its price in the closing days of 2015 was north of $200, for an increase of about 700 percent.
One of our most bearish calls was based on the Baby Boomers. Perhaps we called it a bit too early, as the Boomers just don’t want to age, but we were (and still are) convinced that demographics do not support Harley-Davidson, which is definitely a Boomer brand. I mean, Grandpa is eventually going to get too old to handle that Hog. One of these days he’ll pull up to a stoplight, kilter a bit off balance, and be unable to stop the Hog from falling over on its side.
On Wall Street you are a visionary if you think out to the next quarterly report, that is, three months. In demographics the people who will shape the world fifty years from now are already born. Want to be a real visionary? Count them and figure them out.
The science of demography is nothing more than good statistical information seasoned with common sense and logic. It is the world I live in, and with a little luck I can bring you into my world. You will never read the newspaper or watch the news from the same perspective again. Demographics precipitate economics, politics, commerce, and culture. Why do so many people think it’s the other way around? I’ll say it without reservation: A working knowledge of demographics could be the best marketing and business tool you or your organization will ever have.