• by J. Walker Smith , Op-Ed Contributor, Yesterday

From all my years in research and consulting, I think I’ve learned a thing or two about marketing worth sharing. Enduring fundamentals, mostly—yet often overlooked. So, over the course of my biweekly column this year, I want to share some snippets for your consideration. I hope they’re helpful.

This week’s thought: Demographics matter most.

For all the talk of futures, macro forces, trends and market dynamics -- STEEP, SWEETP, STEEPLE, STEEPLED, PESTEL, PEST, DESTEP, DEPEST, GEISTE -- demographics matter most. There are many external factors shaping market conditions, but they are all conditional on demographics. Everything derives from household needs which are themselves rooted in the demographics of household structure.

Obviously, I am over-simplifying, but not by much. We see this clearly in the demographics shaping the marketplace today.

The critical demographic trend since the Industrial Revolution has been fertility. Higher fertility at first and now lower fertility.

Vast improvements in the quality of life led to longer lifespans, but this statistical phenomenon was mostly the math of averages. While adults are living longer, it was the dramatic decline in infant mortality that raised average lifespans. It was centuries before family sizes began to reflect the lessening need to compensate for high infant mortality with large families. So, the population grew.

And not only grew but grew at an accelerating rate. High fertility was compounding. The global population was just under one billion in 1800. It took until 1928 to reach two billion. Then 32 years to hit three billion. Just fourteen years to hit four billion; thirteen years, five billion; a dozen years, six billion.

But during this time, high fertility gave way to low fertility. The post-WW2 peak in annual population growth came in 1963 at 2.3%. It was 1% by 2019 and less than that today. Global population growth is slowing. The size of the global population is projected to top out before century’s end at just over 10 billion, then decline.

When Africa is excluded from growth projections, peak population will be reached much sooner. Many developed markets are struggling already with fertility rates below replacement and declining populations or populations that are growing only because of immigration.

Underlying everything that’s happened since the Industrial Revolution has been a population that grew rapidly but now slowly. A rapidly growing population is pretty much a recipe for strong economic growth. Conversely, a slowly growing population means slower economic growth. And economic growth is the engine of consumer demand.

But more than that, a rapidly growing population looks different than a slowly growing population. Historically, the former has been characterized by larger households, more children, younger marriage, younger mothers, women tethered to household demands and responsibilities, and populations skewing younger overall. It’s the opposite today and in the future.

Generally speaking, the prosperity generated by a rapidly growing population affords women more control over fertility. That, in turn, has meant declining fertility rates and thus slowing population growth.

From this base of demographics comes everything else. It’s the economics of creating, realizing and taxing surplus value. It’s the politics of who shares in that surplus and to what extent. It’s the corollary cultural tensions of gender, race, class and geography, rural versus urban. It’s the environmental and social impacts of demographically driven growth, both high and low. It's the technologies needed to drive productivity by making work and life more enjoyable and more convenient. It’s the ever-changing mix of lifestyle needs rooted in the demographics of household structure.

No matter how you look at it, the macro force of demographics is the deepest root. Because demographics matter most.

Yet, demographics are often the least studied and most under-appreciated dynamic in the marketplace. Demographics are not flashy. Demographers tend to be sober-minded and data-true. Only rarely will a demographer indulge in hyperbole for the sake of a click-bait headline.

Demographics have been in the headlines lately, though. Because demographic change has a relentless momentum that ultimately reaches a threshold of multiplicative consequences. That has happened in recent years. Slowing population growth has finally become so consequential that it cannot be ignored. Even politicians like J.D. Vance are now taking judicial notice of declining fertility rates. He meant ‘childless cat ladies’ rhetorically in order to bring attention to the demographics that matter most to the future.

The best way to predict the future, at least in broad outlines, is to start with demographics. Everything else flowers from that soil. Demographics is not going to predict an iPhone or COVID-19 or the election of Barack Obama, but the shift in demographics opens up possibilities like those while closing others. Marketers cannot ignore other macro forces, but demographics set the stage for everything else.

Our demographic future of fewer children, smaller households, more singles, delayed adulting and longer lifespans is wholly different than our demographic past. Meaning past is not prologue. The demographic foundations have changed utterly. And that matters most.