Report suggests consumers are loosening some of their aggressive money-saving tactics

Observation:  Today’s Research Brief indicates some consumers are less likely to forgo that morning cup of specialty coffee, less likely to brown-bag their lunch, and slightly less likely to buy store brands.   The observations are fueled by a Harris Poll survey from December, 2011.  Click here to see the full story.

Implications:   Saving money became an extreme sport during the Great Recession, but it should not be surprising that those extremes were not comfortably sustainable for the long haul.  As breadwinners are expected to do more and more at work—with some indeed carrying two or more jobs to replace one that was lost—it only makes sense that fatigue would set in… and some of those small indulgences or conveniences we used to enjoy would return.

Are you seeing any indications of a consumer that has given herself permission to spend just a little bit more freely?

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

Generational Economics: The Age of Acquisition

Marketing Observation:  Generally speaking, the Age of Acquisition refers to the collection of people are between the ages of 18 and 34.  (Therefore, at this writing, we could loosely refer to this group as The Millennials.)  Acquisition is a great moniker for this life stage, because their appetite for consumer spending seems insatiable.

I realize the term “Acquirers” can sound a little cliché, just like so many other terms the advertising industry has invented for itself.  So to fully appreciate the true significance of this group, think about this line of questioning: 

• Did you own your first NEW car on the day you turned 18?  Did you by the time you turned 34? 
• Did you have a place of your own by the time you were 18?  Did you by the time you were 34? 
• Had you filled that place with furniture when you were 18?  34? 
• Did you have a spouse or significant other by the time you were 18?  But by the time you turned 34? 
• Did you have children when you were 18 years old?  Did you by the time you turned 34? 

This line of questioning helps illustrate just how little you had at age 18, and just how much you had acquired by the time you turned 34.  That’s why we call it the Age of Acquisition:  People in this life stage seem to be consuming everything in their path.

Not everyone will answer these questions precisely the same.  But generally speaking, at age 18 we’re often born into consumer adulthood with virtually nothing, except that which our parents let us take from home.  And by the time we’re 34, many of us owned at least one copy of almost anything it takes to run a typical household.  (And some stuff you don’t need to run a household!)

In addition to those young adults who will leave their parents home, go off to college and then venture off to start their own life, there is a large and growing segment of young adults that are having difficulty with this move, or are purposefully delaying it.  Often, this hesitation is in response to the post-recession labor market.  Often unable to find a full-time job in their chosen field after graduating from college, many twenty-something adults return to their parents’ home until their income can match the cost of striking out on their own.  Think of them as return-to-nesters.  By the way, this can still be a very attractive target group, as they often earn an income that is not going toward a rent or house payment (if they are living in a home that is paid for by someone else).  That leaves a lot of discretionary income for things like entertainment, clothes, electronics, etc.

Marketing Implications:  Serving people that are in the Age of Acquisition is no small challenge.  Yes, with all the spending they do, one might be tempted into believing “this’ll be easy.”  But adults 18-34 are busy building families (although later than ever), climbing their corporate ladders, and still drawn to engaging in a highly active social life. 

Millennials are doing things differently, right down to the homes they live in.  Where there may once have been a living room, there is now a game room (equipped with at least one game console and a plasma flat-screen).  Where there once was a formal dining room, there might now be more of a social center, which can be used for homework (career or college), entertaining, or board games with the family.  They’ve never known a world without very advance personal computing, and they’re driving the break-neck speed of innovation in smartphones, tablet computing, and more. 

The Age of Upgrades is ready… to spend with companies that have upped their game.

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

Generational Economics: The Age of Upgrades

Marketing Observation:  To fully appreciate why people age 35 to 49 behave the way they do, we have to reflect on the type of spending that was going on when they were younger (age 18-34, or “the Age of Acquisition”; see immediately above).

Think about all those belongings the typical consumer acquires in their 20s and early 30s, which they usually did not own when they turned 18:  New cars, homes, furnishings, appliances, educations, spouses (or partners), children and more.  How did we acquire all of these things while earning what amounts to the median salary of a 26 year-old?

First, we had to make choices.  Compromises.  While we were buying almost everything, we could not afford to buy the BEST of everything.  So, we purchased a lot of entry-level goods.  From cars to starter homes to knock-down furniture… you know the routine.  Secondly, we racked up a lot of consumer debt.  There’s a reason credit card companies so often target young adults and teenagers.  A lot of people use credit cards to feed their insatiable consumer appetite during the age of acquisition.  And finally, we got help from the Bank of Mom and Dad.  Plenty of middle-age and older parents can tell you how expensive it can be to help their adult children get up-and-running.

But, lets get back to the Age of Upgrades.  By the time we turn 30, 35, or 40 years old, our purchasing priorities change a bit.  By now, most folks have their career well established, and a family underway.  And since you already own much of what you need, you shift from simple need-based purchasing to more want-based purchasing. You already have a (home, car, furniture), but now you’re ready for a nicer (home, car, furniture).   You decide it is time to jettison the knock-down furniture, and replace it with a solid oak wall unit.  Out with the entry-level domestic hatch back, in with the imported SUV. 

Note that for the Age of Upgrades, I’ve arbitrarily drawn the line at 35 to 49.  You might draw the line differently for different categories of products and services.  But either way, it is that life stage where low cost is replaced by quality as a purchase priority.  You’re often after products that are thought of as premium, rather than famous for being low-priced.

Marketing Implications:  A good word for people in their Age of Upgrades is “momentum.”  Their careers are moving forward, their children are growing, and life is moving at a very fast pace.  It’s a lot of work… and this group has every right to start feeling like they deserve a taste of the finer things (which is a relative term). 

What does your company sell that might be seen as a small reward or a well-deserved indulgence?  Does your marketing talk about the value-added services that might make this group feel like a pampered guest?  What do you offer that might be particularly active to their pride and joy (their children)?  Does your company, product or service help solve the time-sensitivity issues that can exist in households where people are juggling the demands of their career with the needs of their family?    

The Age of Upgrades is ready… to spend with companies that have upped their game.

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

Generational Economics: The Age of Increased Equity

Marketing Observation:  Draw an arbitrary line around that segment of the population that begins at around age 45 and runs up to around age 59.  This is the Age of Increased Equity.  Why do I make that assertion?

In this life stage, there is a very good chance that the careers in a household are very well established.  People in this age group are often earning at a higher level than at any other time in their lives.  (Of course, some households have had to adjust that relative income due to recession-related job loss.)  Still, many people in this life stage are working in professional occupations (doctor, lawyer, engineer), as upper managers and executives, or have been in a blue-collar job long enough that they could be called, “Blue Chip Blues.”   

Meanwhile, this pinnacle income is happening just as the fixed expenses in their lives are beginning to fall.  Think about this combination of events:  By now you have a solid career, lots of experience, and you’re probably earning more money than ever… and it’s happening just about the time you’ve pared-down your consumer debt, kids are leaving home, and you may even be close to paying off your mortgage. 

True, there is probably college tuition to worry about, and helping young adult children get their feet on the ground… and a lot of folks in this life stage are starting to realize they have some catching-up to do with their investments and retirement savings.  But each of these expenditures is nonetheless, “discretionary.”  That’s the best way to describe the Age of Increased Equity.

Marketing Implications:  Life for many people age 45-59 looks a bit different today that it did just five or six years ago.  Their post-recession realities have them revisiting how much equity they have in their home and other hard-earned investments.  (A lot of us have some catching-up to do!)  They’re helping adult children get on their feet under economic circumstances that seem more difficult than when they themselves were that age.  (I don’t mean to speak for all Baby Boomers, but when I reminisce, I’m more inclined to think of things like the moon landing and rock & roll, rather than the oil embargo of the mid-seventies and the stagflation of the late 70s and other woes.) 

Few people age 45-59 were born into technology… they’ve had to adapt.  They’re competing with a younger labor force that has never known a world without the personal computer.  They’re likely to plan on working longer to compensate for shrunken investments and the fear that social security won’t survive their full lifetime.

In spite of all the challenges they face, the Age of Increased Equity has earned the right to indulge.  Nicer cars.  Nicer homes.  And not just travel… but experiences.

Is this a group you are (or should be) selling to?  Have you stopped to think about—or better yet, talk to them about—what their preferences and priorities are?

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

Generational Economics: New Age Seniors

Marketing Observation:  Once upon a time, you might have referred to people age 60-69  as “upper demos.”  But that is an outdated notion, one that has not kept up with the changing face of demography, at least in the industrialized parts of the world. Here’s why I say that:

Fifty or sixty years ago, life expectancies were different than they are now.  People often retired from their careers at 62 to 65 years old… and then enjoyed life for a few years before their health began to deteriorate (or they just plain tipped over).  Now, life expectancies are much, much longer—approaching eighty years old—and of course many people are living into and through their 90s and beyond.  These longer lifespans are having a dramatic effect on how we’re living life, especially after age sixty.

Retirement savings have to last a lot longer.  So we’re finding that “retirement” rarely means, “the end of employment.”  For folks in their 60s, it often means quitting the job they’ve always had to have—for economic reasons—so they can take the job they’ve always wanted to have.  Someone who has worked in a confined space for a lot of years might decide to find a job where they can get out and meet people.  Others take a position that lets them fulfill a passionate interest or hobby.  In fact, the concept of “retirement” is making way for the idea of “re-hirement.”  And to the New Age Senior, that return to the workforce serves two purposes.  First, it can be an important supplement to a retirement savings plan that simply has to last longer than it might have, say, fifty or sixty years ago (retirement will last longer than it did back in the fifties for most people). 

But also, the right job can be a source of stimulation and self-actualization for the New Age Senior.  Just realize that their motives for wanting to work might be different now than they were during an earlier career.  Changing jobs can actually be seen as a way of, “giving back.”

Marketing Implications:  Whether you want to sell financial products and services to people who are re-thinking what retirement means, or goods to help people get established in “Career 2.0,” there is a tremendous amount of opportunity in targeting consumers in their 60s.  They still want to travel, spoil grandkids, and play golf.  But they’re looking for ways of fitting all those activities (and more) into a lifestyle that is busier than generations before them at this age.  They’re very health-conscious, eager to stay active, and more technologically savvy, too.

Is this a group of consumers you’d be smart to reconsider, or consider in new ways?

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

A look at the chasm between rich and poor

Observation:   A recent Research Brief newsletter suggests that the chasm between those who have and those who have not can look differently, depending on the group you are in.  The article cites Pew Research in suggesting that 66% of those surveyed think the conflict between rich and poor is “very strong.”  But feelings can vary significantly depending on political view, socio-economic status and ethnicity.  Click here to see the briefing.

Implications:   We’ve been referring to the current economic climate—and the chasm between rich and poor—as the dumb bell economy.  A lot of people at least perceive that the middle class has shrunk… and that there are lots of people on either end of the financial spectrum, and fewer folks in between. 

How are your customers feeling?  Are they, like many people, trying to decide where they fit into the spectrum?

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

Bank loyalty higher than thought, according to survey

Observation:  A survey conducted by TD Bank indicates that more people are loyal to their bank than wide-spread negative press might lead one to believe.  That’s according to a story in today’s Marketing Daily (click here to see it).

Implications:   This is positive news for people in the financial industry… but I bet the satisfaction level varies widely from one institution to another, depending on the extent to which a bank nurtures their relationship and refines their service to customers.

Like many consumers, my wife and I are satisfied with our primary bank due to the fact that we seldom come into contact with it, directly.  With direct deposit, automated bill pay and online services, it is rare that we actually talk with a human or walk into a bank branch. 

If the relationship that your company, product or service has with consumers is similarly automated, in what ways might you maintain an element of contact or communication with customers that is truly valued and appreciated?

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

Coupon use remains strong

Observation:  An article from yesterday’s Supermarket News indicates that consumers redeemed an estimated $4.6 billion in packaged goods coupons last year, up 12.2% from 2010.  The story, citing data from Valassis, explains that 27% of coupons required multiple product purchases (up 2% from 2010), and had an average face value of $1.54.  Click here to see the full story.

Implications:   The difference between a fad and a trend is much like the difference between a wave and a tide; one comes and goes quickly, and the other stays for a longer period of time.

It would seem that coupons have found favor not just as a quickly-fading fad, but that they will be an attractive incentive to consumers for a longer period of time.  More evidence that consumers continue to reconcile their purchasing behaviors, and adapt to the new realities that exist in the wake of the Great Recession.

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

Some good news for the end of the week

Observation:  This morning’s Commerce Department report indicates the economy grew at an annual rate of 2.8% during the final quarter of 2011, for a net expansion of 1.7% in 2011.  Click here for more details, provided by a Washington Post story released earlier this hour.

Implications:   It’s always fun to end the week with a little good news, and this is that.  But any business owner, marketer or manager should enjoy this story, and then remember that the most important economic indicators come not from Washington or Wall Street, but from the consumers they serve on a daily basis.  In this age of reconciliation, most people are more focused on their household (micro) economy than the station of the national or global (macro) economy.

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

Seniors that just won’t quit

Observation:  One of our favorite ESE topics is Generational Economics… which is to consider how consumer behaviors and purchasing priorities evolve as we move through life.  In today’s USA Today, there’s a story about a man who left retirement to re-join the workforce.  While the article focuses primarily on just one individual, there are scores of people who have come out of retirement, literally, due to both an uncertain economy and sheer boredom.  Click here to see the story.

Implications:   As more seniors continue to work, they continue to commute, dress for success, and grabbing lunch with a colleague.  They’re eager to be entertained or relax after work, and looking forward to having some fun this weekend.

Does anything in that lifestyle sound like a sales opportunity for your business?

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

Walgreen’s morphs the niche they are in

Observation:  It is an interesting time to watch the nation’s largest drug store.  First, in a gutsy revolt against the healthcare system, the chain recently announced they would no longer accept prescription orders reimbursed by insurance-giant Express Scripts.  According to a recent video from supermarket expert Phil Lempert (click here to see that footage), that move could represent as many as 80 million prescriptions.  But that was a hit Walgreen’s was apparently willing to take, in defiance of the prescription management company’s effort to shrink the store’s profit margin on medications.

Another story—this one from Forbes—suggests that Walgreen’s is moving toward a business model that is much more consumer-centric, with product offerings that include a widely expanded beauty products, select groceries (including “wellness” organic foods), wine and cheese shops, and even coffee shops.  Click here to see that story.

Implications:   This is just my opinion, but I see this move as Walgreen’s decision to not let Express Scripts define the business they are in… and take control over that decision for themselves. 

What business are you in?  Is the answer to that question decided by a landlord, vendor or supplier?  Or is it defined by you and your customers?

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

With growing fuel prices, shrinking modes of transportation

Observation:   Today’s Marketing Daily features a story about the increasing number of people who are adding a motorcycle or scooter to their family’s transportation fleet.  This is a trend driven less by recreation than hedging the household budget against  the price of gas.  (To sift through all of our postings about The Fuel Economy, click here.)  This story gives hope to cycle shops that were having a hard time replacing their now-aging profile of baby boomer customers.  (To see the full MD story, click here.)

Related to today’s story, the North American International Auto Show was held in Detroit earlier this month, and there was no shortage of news about the futuristic cars of tomorrow.  Again, much of the pitch was related toward higher fuel costs in the years ahead.  Several stories—this one from the New York Times—explained that alternative fuel and hybrid cars are showing up in droves at this year’s auto show, even though consumers are not lining-up to buy them.  Click here to see that story.

Another recent story in USA Today explains that cars have grown in sheer size over the past several decades… and logic suggests the pendulum will swing the other way sooner rather than later.  Click here to see that story.

Implications:   If you’re an auto dealer or motorcycle manufacturer, this issue could have an important impact on your company, products and services.  But what if you sell furniture or any other large, lumpy object?  All of a sudden, will more customers be in need of delivery, absent the truck, van or SUV that allows them to bring that merchandise home on their own? 

What of real estate?  If fuel stands to influence the way we drive, it certainly could influence where we live.  Rather than the suburbs or even x-urban homes which have grown so swiftly over the last several decades, might we see a renewed migration toward the city?

What about the business you’re in?

I offer not answers, but questions to consider… as the long-term effects of more expensive fuel is likely to be felt in a variety of ways.

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