Evolving Consumer Demographics
Regardless of where you live, demographics are changing and must be a factor in your planning on how to tackle the marketplace. Demographics affect all Marketers as not one sector of your economy (regardless in what country you live in) will go untouched by these changing trends.
In the U.S., demographically, the country is growing, aging and diversifying. Everyone knows, or should know, that the Baby Boom generation is aging. The most rapidly growing age segment in the US, is and will be, the 55+. As such, Marketers must be aware of, and plan for the fact that as time goes on, spending on services will grow at the expense of spending on goods.
Looking ahead, the two charts below give a sense of how the population will break-out by 2015.
Note that Baby Boomers are probably the only well defined generation. Every other cohort has been defined in relation to the Baby Boom generation. As such, there is no precise definition of the other generations. For some demographers, Gen Y (or the Echo generation) is a subset of Gen X. Gen Y has been defined as persons born between 1977 - 1980; others have defined them as 1980-1999 and others 1976-2000). Hence we have taken what we perceive to be the safe and generally accepted route of including Gen Y in the Gen X generation and have broken out the Millenials.
By 2015, the median age in the U.S. will be 37.4 years of age, steadily increasing and, somewhat, plateauing at 39 years of age by 2030.
There will be growth at the younger end of the age spectrum as Gen Y reaches its prime household formation years. Marketing to this generation will be challenging as their mind set and approaches to the marketplace are radically different from preceding generations (strong skew toward diversity, recreation and entertainment).
Another key demographic change is the multi-cultural make-up of the U.S.
Since 1980, the number of Hispanics in the U.S. has grown five times faster than the rest of the population, making the United States the third largest Spanish-speaking country in the world. Seventy percent of net US population growth is the result of immigration, with 50% coming from Hispanic immigrants - a trend that is forecast to continue for the next two decades.
By 2015, nearly half of the population younger than the age of 25 will be non-white (45%). The affects of this evolution have touched every facet of our everyday lives e.g. today, salsa has passed ketchup in United States sales. Granted that this first occurred in 1991 and salsa certainly tastes better than ketchup, but changing demographics will continue change the landscape of America and the rest of the world.
The population explosion and geographic dispersion of Hispanics are a key driver of diversity in younger generations.
Across the United States, every facet of life is being affected by these changes. The aging population is being distributed unevenly. Midwestern states have larger percentages of elderly inhabitants, and the consequent shortage of workers has encouraged migration of immigrants beyond the East and West coasts. Among immigrants from India, for example, population growth was 38% nationally over the five years from 2000 to 2005, while in parts of the Midwest it exceeded 50%.
By 2015, expect smaller households and fewer traditional family households due to the aging population, empty nesters and singles, both young and old. As such, expect to see products and living spaces become smaller and more personalized - and experiences that are fun... for one.
Baby Boomers will have new needs driven by smaller households, increased emphasis on health and general welfare and increased service demands. "Help me" replaces "do it yourself." They will have new requirements - such as smaller, closer, easier. They will have new desires - such as quality of life, experiences, entertainment, enrichment, leisure and legacies. And they think and will continue to think of themselves as being early "middle age" and that "old age" is still almost 20 years in the future. As such, as the Baby Boomers move on, expect to see softgoods take the earliest and biggest hit in terms of purchasing - homegoods and consumables will soon follow.
On the other hand, Gen Y and the Millennials (also collectively known as the Digital Generation) will be very interconnected. Anything goes; everything is available and nothing is private. They will place a high level of importance on individualism, self-fulfillment and personal involvement in the creation process. To prosper with these folks, companies and organizations will need to provide this generation with the tools needed to create and co-create - all the while tapping into their in control, indulgent and individualized psyche; summed under the credo of "why not?"
Compared with the big-spending Baby Boom generation, these new spenders will be less attractive as fewer will have reached their big-spending life stages. They will not only have less buying power, they will also be more fragmented into niche interest markets. They will demand more personalization and be harder to reach with conventional marketing.
Between now and 2015, the aging of the Baby Boom will affect the ability of many companies and organizations to grow and prosper. The coming Digital Generation will also affect how companies and organizations can grow and prosper. As Marketers, understanding changing demographics is critical for success. As such, plan to tackle the marketplace with age and attitude appropriate solutions.
Sites of Interest:
U.S. Bureau of Labor Statistics
American Demographics Magazine
CensusScope - Easy-to-use tool for investigating U.S. demographic trends
In keeping with our site's mission to represent CRM best practices, we reiterate our call that should you come across content and links that, in your opinion, represent the best of the Internet, we strongly encourage you to pass them along so we can continue to keep our community abreast of the latest and best. |
