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.  

What can we learn from the electronics category?

Trend Observation:  I live in Minneapolis, the home-base to retail giants like Target and Best Buy.  So I take no pleasure in sharing a story from today’s New York Times about the shake-up in the retail category of electronics, which focuses particularly on Best Buy.  Click here to see it.

Marketing Implications:  In part, Best Buy’s success was in using their massive size to create a price advantage; their sheer scale and buying power let them out-price competitors (remember Circuit City, or other smaller retailers who are long gone?).  In a way, Amazon and Walmart are doing some of the same things.  Amazon skips the expense of a physical store and staff by selling online, and can thus sell cheaper.  And while Walmart might offer a more limited variety of electronics, it can sell those products cheaper, again, due to scale.  It might seem that a couple of big competitors are doing unto Best Buy what Best Buy did unto others only a few years ago.

While they don’t disclose revenue in the story, Best Buy competitor Abt Electronics is attracting customers with experiences.  Target is also less enchanted with the price strategy, opting to begin carrying more Apple products. 

What is your competitive advantage?  Could it be used against you, in months or years from now?  Is your competitive advantage as relevant as it once was, or should you be considering new approaches?  All of these are questions, of course, that are best answered by involving your best customers and target consumers.  After all… they’re the ones who will decide whether or not someone is “best.”

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

How to respond to trends and opportunities

Observation:  This week’s Springwise.com newsletter delivers on their reputation for reliable business ideas.  In this case, there are three examples of business ideas which respond well to emerging or important trends.  The first is a smartphone that detects radiation, which comes out of Japan in response to greater anxiety about that issue in the aftermath of the tsunami and resulting nuclear tragedy of last year.   Capitalizing on peoples need to know now, the Tim Horton chain in the United Arab Emerates prints the most recent headlines on the sleeve that insulates a customer’s coffee cup.   Respecting the more diligent behavior of today’s consumers, a hotel in London working with a furniture partner to facilitate a “try before you buy” campaign.  You can own the furniture in your hotel room.  Click on any headline to see that particular story, or click here to see the most recent Springwise.com newsletter for yourself.

Implications:  It’s not enough to be a trend watcher.  One must ask how emerging trends can be exploited for the happiness of your customers and the profit of your company.

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

Millennials as the “unbanked” generation. (Could your category face the same fate?)

Observation:  A story from USA Today this morning builds on the body of opinion that banks are losing significant market share to check-cashing services, payday loan operations and other alternatives to traditional banking.  Click here to see the story.

Implications:   As one reviews the stories we’ve posted about banking at this site, this issue has become a frequent topic and an important focal point as the banking industry evolves.

What kinds of tools or services could banks offer to become more relevant to young adults?  While direct payroll deposit and online bill-pay services have become an important service to young adults… they’ve also reduced the face-time bankers used to get with these customers and prospects.  How could banks begin to re-build a personal relationship with their young customers?

By the way, the impact of this issue is not limited to banking.  More and more life tasks are either automated or performed online as time goes by (consider the way people research, shop and buy things like cars, plane tickets, music, personal electronics, etc.)  Is the product or service you sell subject to this same frustration within the next few years?  How will you respond?

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

Using digital to offer the right thing at the right time

Observation:  The Springwise.com newsletter is frequently a source of consumer-focused innovation, and this week’s issue did not disappoint.  It featured a story about one bookseller in Spain, who is offering a free sample—the first chapter of a book—via a QR code on in-train advertising.  Click here to see the story.

Implications:   Effective marketing focuses on a consumer with the motive, the means and the opportunity to commit a purchase.  In this case, the motive might be boredom during a train ride, and because most folks on a train are commuting we can assume they have the means (money) to spend on a book.  And opportunity is facilitated by the use of QR codes, which most smart phones are capable of reading with the download of a simple app. 

Think about your product or service.  What would be the best possible timing for you to deliver your message or invitation to a consumer?  Are you doing it?

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

UPDATE: Emerging adults

Observation:   For quite some time now, we’ve been following a trend that could be classified as multi-generational households, or if you prefer, emerging adulthood (links to some of those stories appear at the bottom of this post).   

Today, another story on the topic was published by Research Brief, and it sheds more light on both the benefits and frustrations associated with adult children who return to their parents’ home, or never left.  Click here to see the story.

Implications:   In a conversation with one of our clients this week, we were talking about the potential that could exist among consumers in this category.  People who have returned home—or never left—might be benefiting from housing at very low rental cost, or at no cost at all.  That means any income they generate is much more discretionary than the money held by someone who rents or owns their own place.

Think about it:  What would you do if you could skip your next five or six mortgage or rental payments?  There would be more money for travel/vacations, restaurants and nightclubs, cars, home and personal electronics (from cell phones to tablets to gaming), and more.  Further, it is likely that this group of twenty-somethings (and some thirty-somethings) will be a part of any future real estate market recovery.

Think twice before you ignore or overlook this potential pool of discretionary income.

[For more on this topic, see “Return-to-nesters” from 11/4/11, “More people under one roof” from 5/5/11, “Multi-generational households” from 4/15/10, and “Emerging adulthood” from 1/5/12.

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

About two-thirds expect a tax refund, and more folks intend to "save" it

Observation:   A recent story from Marketing Daily indicates more than 66% of respondents to a BigInsight survey expect a check from the government this tax season, and 43.8% say they plan to save it.  Click here to see the story.

Implications:   My question is, “Save it for what?”  Are they saving it for retirement?  Or are they simply planning to spend it more strategically on one of many big-ticket needs that has gone un-sated over the past several years?  They could be saving it until May when they buy a new car, or until Fall when they buy a new suite of appliances.  To many folks, “saving” money might just mean not squandering it immediately, instead spending it thoughtfully on something they might be able to afford with a regular paycheck.

What is your company doing to convince consumers that your product or service is worth their investment, whether it be using their regular income… or the extra boost their tax return often feels like?

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

Is our house big enough for this TV?

Observation:   Like anyone who was out-and-about before the Super Bowl last week, I saw more than a few people walking out of discount or big-box stores with a grand new television to watch the game.  And I noticed that people are not just buying typical TVs.  They’re choosing between large, extra-large, and ridiculous!

A recent story from the New York Times provided an interesting look at the trend toward owning a massive television.  Click here to see it.

Implications:   Tremendous televisions purchased during a still fragile economic time might seem counter-intuitive, but for many consumers, it makes all the sense in the world.  First, not everyone is feeling financially pinched… in fact, more and more people are feeling confident about their job security and the economy. 

But even for those who are still in a frugal state of mind, a big television is easy to rationalize.  It can be cheap entertainment for households who are going out less.  And it’s not just a place to watch games or shows… it’s a gaming screen, a Skype monitor, and even a computer display.  Like almost any marketing message… it is simply a matter of how the consumer puts it into context.

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

Trade-in value: It's not just for cars anymore

Observation:   Back in October, we shared a posting about “Re-commerce,” where more consumers are trying to sell something they own before buying the replacement for that item (i.e., listing a couch on Craig’s List before spending the money for a new sofa).  Click here to see that Elm Street consumer trends story from October 4, which was based on an article from Trendwatching.com.

In today’s Marketing Daily, there is another story of interest to this trend.  It suggests that more women are considering resale value before they buy a product (and we’re talking about everything from clothing to electronics, no just cars).  Click here to see that story.

76% of the women surveyed indicate that they participate in a site where consumers buy or sell from each other.

Implications:   Should your company consider adding a trade-in policy for the products you sell?  Should it at least start thinking about the long-term resale value of the products you offer, and talking about those attributes with customers?

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

Consumers unleash their pent-up demand to chase Black Friday deals

Observation:  By almost all accounts, Black Friday weekend was a record breaker, with more than $52 billion spent by more than 220 million shoppers.  For more details, read this account from today’s Marketing Daily (click to link).

Here's another retail wrap-up, this time from today's New York Times.

Implications:   I will admit that I was among the people who were less than excited about the Thanksgiving Day debut of all those Black Friday deals.  But apparently, the masses responded by shopping on Thanksgiving Day in sufficient numbers as to give the move a consumer stamp of approval. 

Black Friday weekend was, in effect, extended by a half-day (or full day, depending on the retailer).  It will be interesting to see what the total holiday season numbers look like at the end of the year… and whether the retailing of Thanksgiving Day actually helped grow revenue, or simply moved the money to an earlier date.

Regardless of how one feels about shopping on Thanksgiving, it is good to see that consumers are seemingly prepared to spend this holiday season.  That’s a sign we can be thankful for.

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

Consumers remain somewhat credit-averse

A story in today’s USA Today suggests continued restraint with regard to the use of credit.  Click here to see the story.

Implications:  This is one of the major tenets of Elm Street Economics:  Consumers won’t just buy your product because you offer financing; they will consider financing because they want to buy the product or service you sell.  Sell the value that your product or service will add to the consumer’s life.  Then, if applicable, mention that you have cash management options to help them soften the expense over time.

If you think a financing plan is the most important part of your offer… you may not be on the same page with a significant number of your customers.  It's not that people won't use financing.  It is that they'll use it with considerable caution and deliberation.

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

Bigger families, smaller spaces

This week, I had the privilege of talking to a conference of executives from the home furnishings industry, including a diverse range designers, manufacturers, textile companies, furniture retailers and more.  Obviously, the fortunes of this group are tied to the housing market (at least to some extent).

I challenged this group to think about how the housing market (and the family) has changed.  First of all, household size has grown, according to recent Census statistics (see how in this USA Today report).  This expansion is due both to immigration (from cultures where multi-generational households are more common), as well as the foreclosure mess, which caused many families to move in with someone after losing their home. 

At the same time, the number of household has contracted.  I recall a report from last year suggesting that up to 1.2 million households were lost during the great recession (click here to see that MSNBC report).  Presumably, these are households lost to foreclosure, in which one family/owner moved in with someone who could help, be that a parent, sibling, other relative or friend. 

Implications:  First, how long can it be before families that sought shelter with friends or family decide they’ve had enough of multi-family housing, and strike out to re-form their personal households?  This might mean renting a down-sized living space, or perhaps a home very similar to the one they lost!  Or, depending on credit default forgiveness and evolving credit options, perhaps getting back into a home of their own.  This market could soon become a significant opportunity for folks in the home furnishings industry.

Second, aside from those companies who cater to co-op owners in places like Manhattan… who is catering to the needs of families who find themselves crammed-in to a rental, or those multiple families who are jammed into a conventional house?  This lifestyle calls for smaller home furnishings than the huge, mini-mansion-style furnishings that were popular just a few years ago.  Smaller furnishings and accessories might be a really big opportunity.

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

Parents hit the “off” switch on electronics

Sales of laptop computers and other electronic devices for back-to-school have been resilient even through the recession and most of the recovery; that is, until this year.  According to a report covered today in Marketing Daily, fewer parents intend to equip their kids with those gadgets before heading back to the classroom.  Click here to see the story.

Implications:    If you’re in the business of selling personal electronics, smartphones, touch pads or laptops… it would be a good idea to focus on the functionality of the product (what the machine will help accomplish), rather than the hipness of the product.

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

UPDATE: Back to School forecasts

A few days ago (7/21/11) we offered a post about the Back to School shopping, as pundits begin their annual speculation about the revenue potential of this selling season. 

Yesterday’s Advertising Age had another story on the topic, this one suggesting that more parents will delay BTS shopping until the last moment… or even finish some of their shopping after school has started.  (Click here to see the story.)

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

Predictions start rolling in about Back to School season

A couple of stories hit my desk today on the topic of Back to School.  One, from Marketing Daily—and citing research from NPD Group—suggests that consumers will hold the line (click to link).  Another, which I discovered through Len Stein’s newsletter, explores the tendencies and shopping patterns of young men, women, and various ethnic and race groups (click to link).  That piece was published by YPulse.

Implications:    A lot of people are watching—and counting on—the back to school season as the first major shopping rush of 2011.  How are your customers thinking about BTS?  Are they towing the line, or are they going to see this season as a time to catch-up on their kids’ outdated wardrobe after three or so years of restraint? 

Watch, also, for the electronics people spend on this season.  From smartphones to iPads, a lot of people who are “cutting back” will mysteriously find the money to buy devises that didn’t event exist just a few short years ago.

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

Smart phone trends

A story from Nielsen Wire shows current ownership trends for smart phone operating systems.  Click here to see the brief story.

Implications:  Android and Apple seem to be in firm control of the smart phone market for now.  It is worth noting that roughly 3 in 4 Android or Apple owners report having downloaded an App in the past thirty days.  So it’s not just the novelty of the device we’re talking about here… but the utility.

 Is your business set-up to deliver through these preferred channels of contact?  Is doing so right for the kinds of target consumers you serve?

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

Gas pains continue to affect other spending

A story from the New York Times this week explores how consumer spending is being impacted by higher gas prices.  Click here to see it.

Implications:  There is an inarguable relationship between what consumers are spending on gas… and what they can spend on everything else.  How is your company impacted by the cost (to consumers) of high fuel prices?  How can your company help the consumer manage this challenge?  (More accomplished on fewer trips to your place of business?  Online purchasing or planning?)

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

More people under one roof

This morning’s USA Today offered a story about an important trend in housing:  It appears that more people are sharing the typical residence.  Click here to see the article.  

Implications:   There’s a bit of irony to this story.  It was affluence that led to bigger houses holding few people over the past fifty years or so.  But it was economic hardship that led to the reversal over the past several years.  The recession forced foreclosures and unemployment hardships; people who lost their homes moved in with family or friends, adult children were more likely to put-off moving out of the house, and some college grads were more likely to move back home than strike out on their own.

If you sell home furnishings, appliances, or home improvement, it’s critical to pay close attention to this trend.  Think about your industry or inventory and ask:

Are their accessories that let someone cordon-off their bedroom as if it was an apartment (think home electronics, headphones, personal TVs, laptops, room dividers, dorm-room style refrigerators, etc.).

Are there smaller furnishings that fit more comfortably into a crowded house or apartment?  (Down-sized versions of the recliner, a loveseat instead of a sofa, and perhaps with a pull-out bed?)  I’m having flashbacks about beanbag chairs and futons, here!

Do you offer an escape, when someone simply needs to get away from the crowd?  (I’m thinking about how coffee shops, bars and restaurants could benefit from this issue!)

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

"Me, too!" versus iPad: Why Apple wins.

Former colleague and continuing friend Todd Storch sent me this story from The Business Insider (click to link).  It offers some great thinking about why, even in a stressed economy, so many people will pay a premium for Apple’s original.

Implications:   The iPad is not just a device, it is also a facilitator.  It helps the user accomplish… catching up on the news, playing a game, reading a book, using an app.  And contrary to popular convention, it does it without adding more bells and whistles; their current campaign explains that the iPad is what happens “when technology gets out of the way.”  (See their current ad in the video box below.)

Could your company benefit from some innovation?  Instead of thinking about what to add, ask whether your offering might be improved by taking something away.  Being intuitive—anticipating what the consumer wants—is the path to profitable innovation.  And it’s what can keep any company, product or service from being seen as a commodity.

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

Supply chain shortages ahead?

Saturday, another story from the New York Times explained the stress on supply chains that involve Japan, in the wake of the recent calamities there. Click here to read that story. Where the auto industry is concerned, the theme was echoed in today’s Marketing Daily (link) and Automotive Industry Digest (link).

Implications: It’s not just the cars coming out of Japan that will be in short supply… but also, cars and other products that are made elsewhere, but use parts that might come from Japan.

If a desired part or product is in short supply, does your company, product or service represent a reliable alternative?

And to repeat a theme from last week… if your parts or products could be perceived to be in short supply, should some of your short-term messaging focus on reassuring your customers that it won’t be a problem?

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