Finding a niche for your business is generally a major key to success. If you try to be all things to all people, you’ll likely end up being the top choice for no one.
When working on that niche, people often look to demographics, or the statistical data about the population: age, race, marital status, income, education, etc. Those things can be a fine way to start to narrow down your ideal audience, but there is a different angle you could consider.
Psychographics is grouping people by their attitudes, aspirations, and other psychological criteria. Age, income and other demographic stats don’t matter here — it’s about what people feel and who they think they are. This is an area that Apple has mastered, as they focus on emotions and work to help their consumers feel the same way.
For most companies, it’s important to pay attention to both. For example, if you’re a business coach you want people that have certain demographics (likely a fairly narrow age range, income range, etc), but also people that have goals and dreams. Or back to the example of Apple, they tend to key on certain psychographic traits, but they also need consumers that are above a modest income level.
Finding the right targets inside of both areas can pay huge dividends for all of us.