Chapter 9: Trends that Impact Why People Buy Things They Don t Need


What does the future hold for companies in the business of manufacturing, marketing, and selling discretionary products--those things that people desire but don't need? How can these new insights about why people buy things they don't need help the companies selling the product categories analyzed in Chapters 6, 7, and 8 sell more of their products? How can companies divine the future for the sales of discretionary products and develop plans for action that will increase sales and build market share? The following sections will help to answer these questions.

KEY TRENDS SHAPING THE FUTURE OF THE CONSUMER MARKET

Tracking trends is one method many businesses use to foresee the future. Futurists—people who predict trends for businesses—make good copy sources in the media or as guests on television shows as they weave tales of what the future will look like. Who isn't fascinated when Faith Popcorn presents her vision of the evolving future coined in catchy names and phrases?

I am no futurist, but my company, Unity Marketing, does help our clients see what the future holds for their companies and how to maximize the opportunities that are just over the horizon. We use the same tools most futurists use—wide-ranging environmental scanning, including print and electronic media scans, continuous qualitative and quantitative market research, and ongoing dialogue with key business leaders. However, the results are often different and more specific to the client's business because we focus exclusively on consumer behavior and psychology in the context of industries that market discretionary products.

These trends were developing throughout the consumer psyche long before September 11, but that terrible, life-changing event has in many ways accelerated the rate of change.

Here are the key trends we are sharing with our clients today about what the future holds for their businesses. First, we will look at three demographic shifts in the population that are setting the stage for the continued evolution of the consuming trends on the horizon. These trends were developing throughout the consumer psyche long before September 11, but that terrible, life-changing event has in many ways accelerated the rate of change. It has made these trends a more prominent and more potent force in the U.S. economy.

Demographic Shift: Aging Population

Today the gigantic baby boom generation, roughly 76 million strong, is slowly advancing through its middle age and into maturity. In 2004, the vanguard of the boomer generation, born in 1946, reached age 58 while the trailing-edge boomers, born in 1964, celebrated their 40th birthdays. In the year 2011, the boomer vanguard will slip beyond age 65, marking the entrance into their senior years. By 2029, the entire baby boom generation will officially be "seniors." The boomer generation has had a profound influence on every socioeconomic and political trend they have touched, usually due to sheer numbers alone. In our democratic culture, a generation of that many people is bound to have a significant impact on everything it touches. As they age into their senior years, the boomers' influence will continue to be felt in strong and lasting ways.

In the next decade, the total number of U.S. households will grow by 10.3 percent, from 104.1 million in 2000 to 115.8 million in 2010 (see Figure 9.1). Due to the aging of the boomers, over that period the number of younger households headed by someone under age 45 will decline while the number of older households will continue to expand. The next generation with the comparable size and thus potential to impact the culture as strongly as the boomers is the millennial generation, comprised of the boomers' children, born between 1977 and 1994.

 

2000

2005

2010

% CHANGE 2000–2010

Total

$104.1

$108.9

$114.8

10.3

Under age 25

5.9

5.4

5.7

-3.4

25–34

18.8

15.6

17.5

-6.9

35–44

24.0

22.6

20.5

-14.2

45–54

20.2

23.9

26.3

25.2

55–64

13.6

17.3

20.7

52.2

65 and older

21.6

23.1

25.1

16.2

Source: U.S. Bureau of the Census


Figure 9.1: Household Projections by Age, 2000–2010 (in Millions)

As they age into their senior years, the boomers' influence will continue to be felt in strong and lasting ways

 

AVERAGE INCOME

AVERAGE HOUSEHOLD SIZE

AVERAGE NUMBER OF CHILDREN

Total

$43,051

2.5

0.7

Under 25

18,276

1.8

0.4

25–34

42,470

2.9

1.1

35–44

53,579

3.2

1.3

45–54

59,822

2.7

0.6

55–64

49,436

2.2

0.2

65 and older

28,581

1.7

0.1

 

AVERAGE NUMBER OF EARNERS

HOME-OWNERS

SOME COLLEGE

Total

1.3

65%

55%

Under 25

1.3

13

64

25–34

1.5

45

60

35–44

1.7

67

59

45–54

1.8

77

62

55–64

1.3

80

50

65 and older

0.4

80

38

Source: U.S. Bureau of the Census


Figure 9.2: Household Characteristics

Marketers who are planning for the future need to assess the impact of the aging population on their marketplace.

The two fastest-growing household age segments will be those aged 55 to 64 (52.2 percent growth) and 45 to 54 (26.2 percent). In most of the discretionary-product categories examined in Chapters 6, 7, and 8, we observed a marked change in consumer purchasing behavior starting at about age 55 and well established by age 65. This dramatic change in spending, combined with growth in the number of mature households, signals shifts in demand for most discretionary products.

Today, marketers who are planning for the future need to assess the impact of the aging population on their marketplace. Each company should understand how the aging of the population will affect spending behavior. When today's 35-to-44-year-olds reach age 45 to 54, will they behave the same as they did when they were younger or more like the 45-to-54-year-olds preceding them? The answer to this question will have profound implications for discretionary product marketers, because consumer purchases of discretionary products start to slow after age 55 and drop sharply at age 65.

start figure
  • Highest income: Households aged 45 to 54 have the highest average income, $59,822, followed by those aged 35 to 44, $53,579.

  • Largest households: Those aged 35 to 44 have 3.2 individuals on average.

  • Largest number of children: Households aged 35 to 44 have the largest number of children at 1.3, followed closely by those aged 25 to 34.

  • Most earners: Households aged 45 to 54 have the highest number of individual wage earners (1.8), followed closely by those aged 35 to 44 (1.7), and those aged 25 to 34 (1.5).

  • Home ownership rises with age: Households headed by persons aged 45 and older report the highest percentage of home ownership.

  • More-educated: Only 38 percent of Americans older than age 65 have completed at least some college, compared with 62 percent of those 45 to 54. The most highly educated age group in our society is those under 25, where 64 percent have at least some college.

end figure

Figure 9.3: Key Demographics Related to Aging




Why People Buy Things They Don't Need. Understanding and Predicting Consumer Behavior
Why People Buy Things They Dont Need: Understanding and Predicting Consumer Behavior
ISBN: 0793186021
EAN: 2147483647
Year: 2003
Pages: 137

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