What is one risk associated with a lack of demographic data?

A lack of demographic data can lead to overly optimistic sales projections, as it prevents businesses from accurately assessing their target market's characteristics, preferences, and purchasing behavior. When demographic data is missing, organizations may assume that potential sales will be higher than they realistically could be, leading to projections that do not align with actual market demand.

Understanding demographics such as age, income levels, location, and lifestyle choices is critical for making informed decisions about product offerings, pricing, and marketing strategies. Without this information, businesses might set unrealistic expectations for sales, resulting in inventory mismatches and financial losses when those projections do not materialize. This highlights the importance of demographic data as a foundational element in strategic planning and forecasting for a successful merchandising strategy.