Why you should use the US Census to set your age and income brackets
It’s crucial that you align your income and age brackets with those used in the American Community Survey (ACS), a streamlined version of the US Census conducted annually by the government.
Here’s are links to the resources you need.
Use these standardized brackets so you can accurately calculate your market penetration and make informed decisions about which demographics to target next.
For example:
Suppose you sell a premium daily greens powder (Think Athletic Greens). After surveying your customers and collecting age and income data using the ACS brackets, you discover that over the past two years, approximately 34,500 shoppers, aged 25-44, with an income exceeding $200,000, have purchased from your brand.
According to the ACS, the number of households fitting this demographic is approximately 4.1 million.
If we assume that 20% of these households have either purchased a daily greens powder or are interested in trying one, your potential market size amounts to roughly 800,000 individuals, which means your current market penetration is approximately 4%.*
Which is great.
But your investors want more growth.
You examine the ACS data to identify the best the most profitable strategy. You find that by lowering your target household income threshold to $150,000, your potential market expands from 4.1 million to approximately 7.7 million households.
Should you consider reducing your prices and targeting shoppers within this expanded market?
You decide.
Point is, while age and income brackets may not appear intellectually stimulating at first glance, they serve as a critical foundation for sizing up your market and making informed growth decisions.
*The e-commerce brand Athletic Greens holds approximately 5%* of the same market.
