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NOTE: This consumer trends blog is being re-branded and re-launched

On January 26, we unveiled a new and improved site as our home for Trend Observations and Marketing Implications:  TheMarketingMindBlog.com.  The Marketing Mind Blog will continue to offer the same great content, but with new and improved graphics, functionality and social/sharing tools that make your user experience better than ever.  

We're going to keep this blog site up and running until the word gets around.  But please be among the first to replace your RSS feed or desktop shortcuts to Elm Street Trends with this new URL address:  http://TheMarketingMindBlog.com.  

Study: Home prices climb in most major cities

Trend Observation:  Today’s edition of the Atlanta Journal-Constitution features the S&P/Case Shiller report about rising home prices in many U.S. cities.  19 of the 20 markets measured reported an increase in home prices from March to April, and a national index of home prices also rose 1.3%.  Click here to see the story.

Marketing Implications:  We have a lot of ground to recover, but this story suggests that home prices are now, on average, at the level they were in 2003.  A healthy housing market, of course, improves a lot of directly related categories, such as mortgage lending, home furnishings and home improvement.  But there are many indirect beneficiaries too… so this is very good news.

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

Should you be targeting by term of residency?

Trend Observation:  Once upon a time, it was not unusual for an advertiser to target consumers on the basis of an age or gender (i.e., adults 25-54, women 18-49, men 35-64, etc.)  But if you sell home improvements, electronics or furnishings, is that the best method of zooming-in to your target market?

Recently, I spoke at a conference of respected home furnishings professionals at the annual ART conference in New Orleans.  I was able to obtain some interesting research in advance of that talk, courtesy of Scarborough Research in New York.  Specifically, I was provided some data from Scarborough USA+ 2011 Release 2, and here is the information I was looking for:

New to the neighborhood:  28% of adults are living in a home they’ve been in for less than four years.  This is an attractive target group, wouldn’t you agree?  After all, they’ve just moved into a new place, and they’re doing all the things one does to make a new house their home.  Of this “new to the neighborhood” group, 40% are owners.  That means they didn’t just buy a new home… they got a great bargain on it!  After all, they purchased after the real estate bubble burst and home prices fell.  You’ll find a lot of first-time homeowners in this group; folks who likely moved from an apartment with sparse furnishings, who need a lot of goods to fill up their relatively spacious new home.  56% of the people in this group are renters.  While the foreclosure crisis has received a lot of press over the past few years, there is also a tremendous share of this group that could be called habitual renters… people who move around a lot and therefore prefer to rent, rather than own.  This transient lifestyle is also a frequent behavior of young adults who haven’t decided where they want to settle down, or haven’t the financial means to buy just yet.  (By the way, 4% of “New to the Neighborhood” residents could be classified as “other,” neither renters nor owners.)

Burned by the bubble.  20% of adults are living in a home they’ve been in for more than four years but less than eight years.  That means they bought near the peak of the real estate bubble.  But don’t write them off as a marketing target (see the marketing implications below)! Think about it this way:  While the number of foreclosures got a lot of press over the past few years, there are far more people who may have negative equity in their property but are not at risk of losing it because they remain gainfully employed.  When the bottom fell out of the market and their home equity vanished, it is likely these folks went through a period of outright anger.  But at the national level, the recession has been over for more than three years (at this writing).  After what might be called a financial grieving period, many of the folks in this group have decided they can’t stay angry with their home forever; they’re talking about what kinds of improvements might make this a place they can love again. 

Long-term homeowners.   More than half of U.S. adults—52 percent—have been living in their current home for eight years or more.  That means original equipment is starting to require repair or replacement, and original furnishings and features are beginning to look dated.  For the purveyor of home furnishings or home improvement, it’s the perfect storm… and it comes with a target consumer that is more likely than most to still have some equity in their home.

Marketing Implications: 

New to the Neighborhood.  If someone has been living in their home less than four years, they’re doing a lot of home improvements that could be classified as cosmetic and aesthetic.  Think paint, wallpaper, window coverings, rugs; anything that, in terms of décor, makes their new house their home.  If they were previously renters but are now homeowners, they are likely to have a lot of needs, along with plenty of money to spend on those new home furnishings and improvements.  If they were previously homeowners but are now renters, it is likely they had to shed larger furnishings, but are now in a position to re-furnish their new rental with smaller, more mobile goods.  If you’re talking to renters, position home furnishings as “home improvements you can take with you,” because renters seem to re-locate more frequently.

Burned by the Bubble.  If they can’t afford to sell (because they likely owe more than the home is worth) and move into their next dream home, they’re talking about the kinds of things they can do to make this house the home of their dreams.  So this group is an attractive target for what we refer to as experiential home improvements and home furnishings.  Think granite countertops, outdoor kitchens and patio fireplaces, hardwood floors, and home theatres.  Having gone through a financial reconciliation, these folks are living within their means… but that more pragmatic spending style is likely to include investing in a home they know they’ll be spending more time in, enjoying family and entertaining friends.  They now recognize their house as a place to… live.  Can you help them with that?

Long-term Homeowners.  The headline for this group:  Infrastructural Home Improvements.  When you’ve been living in your home for eight years or more, home improvement is more than a new throw rug from Pier One.  Think windows, siding, roofing, HVAC and more; the stuff that stings.  The good news:  These folks are likely to be among your most qualified buyers when it comes to credit-driven, big-ticket purchases.  They might not have as much home equity as they did five years ago, but they still have some value in their home.  If you sell home furnishings or décor, this is a group that is often tired of the overall look, and might still consider buying rooms of furniture at a time.

Summary:  Does your marketing message (from advertising to the way you talk on the sales floor) still target people based on age, gender or income?  It might be smart to talk with your biggest customers, and determine whether term of residency plays a role in the way they set purchase priorities for home furnishings and improvements.

[Editor’s note:  Our thanks to Deirdre McFarland, Haley Dercher, and Scarborough Research for providing the statistics that inform this perspective.  For more information, visit Scarborough.com, or contact them at info@Scarborough.com.]

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

The irony of the aging Baby Boomer

Trend Observation:  Two interesting (and very contrasting) stories caught my attention today, and both of them were focused on Baby Boomers.  First, USA Today published an article about Boomers that can finally afford the car of their dreams.  The observation is that once parents have emptied their nest of children and paid-down much of the consumer debt, they have more discretion over their income… and more money for toys (click to link).

But then I caught a second story, this one from the Minneapolis Star Tribune, talking about an overhaul of the traffic light system that will accommodate Boomers… who presumably don’t cross the street on foot as fast as they used to (click to link). 

Marketing Implications:  America’s biggest generation (and arguably still the most significant consumer base) is changing.  Does your company, product or service target these consumers?  Are you changing in response to their current life stage?  Boomers are changing in both their physical and financial stature, and those changes are sure to impact their purchasing priorities and preferences.

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

McKinsey: A progress report about the deleveraging process

Trend Observation:  Today’s newsletter from McKinsey takes a look at consumers’ progress in pairing-down their debt, a process widely known as deleveraging.  Click here to see the story.

Marketing Implications:  According to this analysis, consumers in the U.S. are getting a handle on their debt faster than some other parts of the world.  However, the study indicates that roughly 70% of mortgage debt and 80% of this deleveraging has come from default.  In other words, much of this “progress” has come from lenders writing-off the amount, rather than debtor’s paying-down the balance.  Further, up to 35% of defaults could be described as “strategic decisions,” where the debtor elected to walk away from a financial obligation.

The McKinsey paper seems to suggest that our deleveraging process will continue into the middle of 2013, but it might be over-simplifying the situation to suggest that means our storm of credit issues will be over.  Just because a consumer has little or no outstanding debt on their personal balance sheet does not necessarily make him or her a good risk; it could mean that someone else had to write-off an obligation that consumer once held.  If you sell big-ticket items where some form of credit often facilitates the purchase, this matters to you… and it makes qualifying your customers more important than ever.  (A process that can begin with the marketing message you create.)

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy

The changing dynamics of the American family

Trend Observation:  Not that long ago—perhaps 40 or 50 years—the stereotypical American family included a father, mother (the two were married), and two or three children.  The unit was celebrated in situation comedies like The Adventures of Ozzie and Harriet, or Leave it to Beaver.  But these days, the idea that all families look like June and Ward Cleaver, Wally and the Beav are far from accurate; things have changed, and not just in wardrobe, vocabulary and parenting styles, but in the composition of the family itself.

Evidence of this shift is difficult to overlook, especially after data started rolling out following the 2010 Census.  (As one example, see this post from the Elm Street Economics consumer trends blog in August, 2010, or the story that it referred to from USA Today.)   But it’s a good idea to check-in, consistently, when information is changing this fast.  So, with help from my respected friends at Scarborough Research, we did just that.   The data set we considered is from Scarborough USA+ 2011 Release 2, and here’s what we found:

Barely one in four U.S. adults describes themselves as “Married with Children.”  Specifically, just 26% of adults describe themselves as being married with one or more children aged 17 or under in the household. 

Just 56% of adults are married, according to the research (without regard to the presence of children in the home), while 85% of adults say they live in a home where two or more adults are present.

In other words, more American adults live in a non-traditional household than in what we used to think of as a traditional family unit.  Just subtract the percent of adults that are married from those who live in a two adult household:  85% - 56% = 29%.   So, more than 29% of adults live in a two-adult household, but are not married… while just 26% are married with children.

Just to be clear, that non-traditional household could be composed of many different relationships.  It could be a male-female couple that is living together but not wedded.  It could be two folks who live together so as to pool their financial resources during difficult economic times.  It could be couples described as gay, lesbian, bi-sexual or transgender.  It could be a single mom with an 18-year-old daughter (in the eyes of the research that is still two adults).  It could be a middle-aged man whose aging mother lives with him.  We don’t know precisely how to define these non-traditional households.   But these estimates make very clear:  Today’s traditional American family doesn’t always look very traditional.

Marketing Implications:  If you sell furniture that’s perfect for the family room… does your message reflect what today’s family really looks like?  If you sell “the perfect family automobile,” does your marketing consider—or even celebrate—the diversity of family styles that are out there today?  Once upon a time, Ozzie and Harriet were presented in black and white.

Today’s family is not.

[Editor’s note:  Our thanks to Deirdre McFarland, Haley Dercher, and Scarborough Research for providing the statistics that inform this perspective.  For more information, visit Scarborough.com, or contact them at info@Scarborough.com.]

Mike Anderson, for The Marketing Mind consumer trends blog, a service of The Center for Sales Strategy.  

Generational Economics: Pre-adulthood (Teens and Adolescents)

Trend Observation:  Do you know what the average teenager spends during the course of one week?  Before you settle on a specific number, let me confess that I do not know the answer to that question, at least not as a marketer.  But I do know the answer from the perspective of being a parent.  How much money does a teen spend in a week?  All of it!

In fact, it could be argued that they spend more than 100% of their money.  Because in addition to the income they might generate through a job or allowance, they often spend at least some of their parents’ money, too.  Teenagers are not a wise market to overlook, because the money they have access to could be described as almost entirely discretionary. 

(Caveats and counter-trends:  Many teens are responsible for maintaining their own smartphone contract and paying for their monthly gaming expenses.  Some buy their own clothes, and some even have a car payment.  And post-recession, more teens are helping out with general household expenses when a family has been impacted by job loss.)  

Marketing Implications:  If you’re not convinced just how big the potential is in marketing to pre-adults, just ask some people who sell X-Box or PlayStations, Droids or iPhones, or Abercrombie & Fitch.  In addition to being ravenous about their consumption of entertainment and fun (in-theater movies, theme parks, parties, etc.), they are playing an ever-growing role in procuring goods for the household; grocery and other shopping needs are often delegated to the youth of a household, especially when there is more than one head-of-household that is employed outside the home. 

And by the way, the older-end of this spectrum is also behind the wheel.

Which of your products and services fit into the pre-adult life stage?  Have you found the best ways to connect with these consumers?  (Beyond traditional media, they are fanatics about social networking and micro-blogging; but getting into their group is not always easy and requires both finesse and authenticity.)  And when you think about the life-value potential of gaining customers in their youth… the payoff can be remarkable.    

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

Upside of cautious economy: Lower gas prices

Trend Observation:  A story in today’s edition of USA Today suggests that gasoline prices could stay low—or fall even lower—between now and fall.  That’s a far cry from what we were hearing last winter, when there were concerns about stability in the Middle East and problems with major refineries.  Click here to see the story.

Marketing Implications:  Some businesses might profit from going after this “commuter’s dividend” of lower gas prices.  Many drivers anticipated the kind of peak gas prices we saw in the summer of 2008, when the average price per gallon hit $4.11.  With each commute costing less, the consumer might feel as if they have a windfall of found money in their pocket at the end of each week or month.

Any ideas about what they should spend it on?

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

Grocery shoppers stick to their more strategic ways

Trend Observation:  A story from Supermarket News indicates that consumers are making fewer trips to the grocery store, and more diligently looking for bargains.  The article cites a study by Acosta, and suggests that this more prudent approach is in response to food inflation; consumers are paying about 11% more for groceries, largely due to increasing food prices, according to the story.  Click here to see it.

Marketing Implications:  Consumers are more nimble about changing their habits in response to changing conditions.  Is your company just as nimble about responding to a changing consumer?  How has their purchase experience changed in your particular business category?  What are their current purchasing priorities when they’re considering your product or service?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE on “Merged Households”

Trend Observation:  Let me revisit the story I published just a few moments ago [see “Merged Households” immediately below].  The Washington Post story I cited goes on to include this observation:  “Economists estimate that there are more than 2 million fewer occupied homes in the country than there would have been had Americans continued forming households at the rate they did before the recession. The slowdown has lowered demand for housing as well as for furnishings and appliances, placing a further drag on the economy.”

Marketing Implications:  Let’s focus on the fact that the story is talking about Census data with a window from 2007 through 2010.  So I’m wondering:  What happens when people living in a merged household decide their financial house is in sufficient order that they are ready to once again move out on their own?

The pent-up demand for home furnishings, home improvement—indeed, homes—could be amazing.

Are you watching the real estate market where you live (sell goods and services)?  If you sell appliances, home furnishings, or almost anything else that might fit into the traditional American home, you should be.  I may be stating the obvious, but jobs and housing will be a harbinger of sales opportunity in a lot of categories.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Number of merged households jumped 11.4% between 2007 and 2010

Trend Observation:  Census data published in a story from the Washington Post last night indicates that more than 1 in 6 households across the U.S. are home to more than one family.  22 million households hold combined families or returned family members, which is 18.7% of U.S. households.  The number could include any kind of merge, including return-to-nesters, left-left-the-nesters, multi-generational households, or simply people sharing a place as a means of coping with economic reality.  And adults 25-34 made up about two thirds of the increase.  Click here to see the whole story.

Marketing Implications:  Among those choosing to retreat from tough economic times by moving in with parents or other friends and family, the strategy seems to be working.  According to the story, fewer than 1 in 10 young adults who live with their parents are living below the poverty line (8.4%), when entire household incomes are taken into consideration.  Among this group (co-habitants), the poverty rate would be more than 45% if calculated by individual income. 

Parents, friends or other hosts have helped create a situation where many young adults who would be otherwise impoverished are creating a situation where the guest can re-group, stash some cash, or afford more discretionary spending like out-of-home dining, entertainment, or asset acquisition (whether that means a car, clothing, home furnishings for the day they move out, etc.)

“I live with my parents” might not be a comfortable statement for the proud young adult to make.  But it’s setting them up to live a little, while they become more financially comfortable to set off on their own.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.