With consumer spend hitting sporadic highs and lows, marketers are looking for segments of the population that show promise. And, who can blame them? There is news of consumer confidence that paints a choppy picture of consumer sentiment. But the U.S. is full of segments and sub-segments that can be drivers of success for any given brand. The entire population is made up of consumers, after all.
There are three segments that all brands should take a close look at. These segments may not immediately come to mind, and companies may respond that their segmentation strategy is different from others. Even though this is true, there are three segments that all consumer brands should consider specific strategies for: women, the affluent and millennials. Or WAM, for those who like catchy acronyms.
Let’s look at the numbers. The important ones are: 85 percent, 47 percent and 34 percent.
- 85 percent of consumer purchases are made by women with estimates of total purchasing power ranging from $5 to $15 trillion annually, according to the U.S. Women’s Chamber of Commerce.
- 47 percent makes up the amount of income growth in the affluent segment in the past 30 years, way surpassing any other income group, according to Pew Research’s “The American Middle Class is Losing Ground.”
- 34 percent will be the percentage of millennials in the workforce by 2024, far surpassing any other generation, according to Bureau of Labor Statistics.
Women are the purchasing officers of the household and the chief investment officer when it comes to the majority of purchases. Many brands already have this information, but how many of them truly delve into the experiences of women in order to adjust products and the buying experiences to them?
According to Pew Research’s “The American Family Today,“ 40 percent of women with children under 18 at home say they are the main income earner in the family. Along with this comes a busy lifestyle. If they have kids and a full-time job, how much time can they really spend on shopping? At a recent conference, I heard that consumers are now saying that convenience is as important as price in deciding where to shop.
As a result, brands who cater to this can expect a loyal following. What are the priorities of a busy mom? Reasonable prices, healthy items/safety, a quick shopping experience and some understanding. How many times have you had a sleeping child in the car and needed to buy milk, detergent or anything without getting out of the car? The ones who are nodding at their screens right now are busy moms. And, there are a lot of them out there. Brands who cater to the female customer and really know her needs and challenges can expect a loyal following.
According to a study by Pew Research, the affluent have seven times the income than the middle income segment, and their income has grown by 47 percent in the last 30 years. This reflects upward mobility, as middle class households attain greater incomes and rise to the affluent segment. As a result, affluents have a significant amount of purchase power.
What do they buy? They are not very likely to buy only luxury brands, and just as likely as non-affluents to shop at stores like Gap and Macy’s, per the February 2016 Synchrony Financial Affluent Study. In terms of future spend, they say they intend to spend more money on experiences, rather than things, and they intend to increase their spend on travel. As a result, brands who reflect these needs may tap into this growth trend.
Segment No. 3: Millennials
There has been a great deal of focus on millennials — they have been analyzed, debated, probed, viewed and quoted a great deal. A very great deal. A Google search on “millennial” yields about 18 million hits. That’s a lot of analysis. Well, they are a huge generation, and they are going to be coming into a good deal of discretionary income.
As they grow older, their incomes will outpace their student loan burden, and that means they will have money to spend. But their shopping habits are very different than past generations. They are all digital all the time. They are completely comfortable with digital shopping and becoming more interested in mobile payments. Social media drives a great deal of their spend, particularly for the younger millennial. According to a June 2016 Synchrony Financial Digital Study, about 75 percent of millennials say they have purchased something as a result of social media. As a result, marketers must look at this growing population and put strategies in place to attract them with digital technology and social media content.
This country is a beautiful combination of many segments and sub-segments. It is impossible to identify any one segment that will lead to success for any retailer. However, keep in mind WAM — women, affluents and millennials — as segments to watch, for future successful strategies.
Note: The views expressed in this blog are those of the blogger and not necessarily Synchrony Financial.