Consumer

Challenging Popular Myths about Who Controls Household Spending

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Who controls more consumer household spending ... women or men?
Who controls consumer household spending? Women ... men ... or both?
Among the “everyone knows” factoids in marketing, it’s accepted pretty much without question that women are the purchasing decision-makers in households far more than men. Whether it’s decisions on consumer spending or healthcare services … women are much more likely to be making those decisions compared to men.

And the figure commonly cited? Women are responsible for ~80% of the decisions. But how accurate is this … or is it time to reconsider this notion?

A survey conducted last year of ~4,000 Americans age 16 and older by The Futures Company, a London-based marketing consulting firm, found that ~37% of women claimed they have primary responsibility for shopping decisions in their household, while ~85% claimed they have primary or shared responsibility.

And the figures for the male respondents in this survey? Substantially the same, it turns out: 31% claimed they have primary shopping responsibility and 84% claimed that the responsibility is shared.

Emily Parenti, marketing director at Futures, concluded that the survey results “tell a different story” than the common perception of how much women control the purse-strings in households.

Indeed, the Futures survey is one of the first ones that actually goes so far as to quantify the issue. Ira Mayer, president of EPM Communications which publishes the newsletter Marketing to Women, has attempted to find the origin of the accepted 80% figure – but has come up empty.

“There is never any sourcing of the number,” Mayer says. And yet, “it’s become accepted folklore.”

When challenged to cite corroboration, students of marketing point to the book Marketing to Women, published in 2002 by Marti Barletta, wherein the claim is made that women “handle 80% to 90% of spending and purchasing for the household.”

And yet … Barletta has never been able to cite the source for this claim, either. Instead, she considers it “one of those rules-of-thumb numbers that everyone in the industry uses.”

Perhaps marketers need to take a look at this rule-of-thumb again. Because in addition to the Futures survey, a 2008 online research survey conducted by Boston Consulting Group asked women and men to estimate what percentage of household spending they influence or control.

True to form, the average answer given by women in the BCG survey was 73%. But the average answer given by men was 61%.

So in essence, both genders are claiming responsibility for a controlling or influence more than 50% of the spending in their household.

This points to a difference in perspective that likely won’t be going away anytime soon. Indeed, Marti Barletta still claims to be “pretty comfortable” with the 80% figure for female control over household spending. “Even being conservative, I wouldn’t go below 75%,” she asserts.

Whatever the correct figure actually is, one thing we can be certain of is that the notion of women having overwhelming control of household spending is off-base. And so, consumer product manufacturers would be wise to recalibrate their thinking as they engage in their product development and marketing activities and programs.

The Limits of Delivering “Cheaper Value”

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Nano vehicle

Tata Nano car on fire
Tata Nano ... Tata "No-No"?
About a year ago, the international press was abuzz about the latest new “value” entry in the automobile business. Amid great fanfare, Tata Motors, part of India’s largest corporate conglomerate, was introducing the “Nano,” a car designed to appeal to India’s mass market.

The Nano, which can seat five people and has a surprisingly roomy interior for its size, carries a base price of only ~$2,200 — lower than any other car in the world — which proved irresistible to families of modest means whose finances had required that they make do with motorcycles or scooters before.

Some 9,000 Nano vehicles were delivered in July, but since then, sales have slowed dramatically – to just around 500 shipments to dealers in November.

How did Nano’s star fall so far, so fast – especially for a vehicle which Tata Motors thought was impressive enough that it planned to introduce it in other developing markets … then Europe … and finally to the United States?

Production delays have something to do with it. But the real problem is the performance of the car. Most alarming are reports that the vehicle can catch on fire, with one widely broadcast incident where a Nano caught on fire and was engulfed by flames on the way home from the auto showroom!

In response, Tata, while denying anything is wrong with the design of the Nano and studiously avoiding any language of “recall,” is offering to retrofit the automobile with extra safety features. It’s also extending the warranty on the car from 18 months to a solid four years.

Will these moves change the impression that the car is more of a “No-No” rather than a “Nano” and move its sales trajectory back into positive territory? Perhaps. But it’s interesting to note that sales of a rival “value” car made by Suzuki – the “Alto” – have now overtaken those of the Nano. The Alto carries a higher base price of $6,200, and yet it posted unit sales of ~30,000 in November, making it India’s best-selling car that month.

[The success of the Suzuki Alto in India is nice news for a company whose cars in the U.S. have been on a downward plunge all this year – with sales off ~42% in 2010 compared to 2009.]

The experience of the Nano and the Alto in India brings up an interesting question: Is it possible to make small, cheap version of products that are significant purchase items and win the confidence of a broad customer base?

To a degree, yes. But there are limits to “how low you can go” in value-engineering a product for performance and safety, below which customers just turn and walk away. (Or, in this case, drive away.)

Moreover, just like the experience of the Yugo or the Trabant, there’s a risk of forming a poor market image that’s impossible to shake off.

And in this particular case, the brand names don’t help at all. It’s just too easy for disgusted consumers to say “Ta-Ta” to Tata Motors and “No-No” to the Nano.

The “Skinny” on 2010 Holiday Spending

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Consumer Holiday Spending
Holiday spending on the rise? Yes, but ...
The “early returns” from this year’s Black Friday retail sales are quite encouraging. Online retail sales are experiencing an even bigger bump in activity. The question is, do these positive early results foreshadow a strong holiday season overall?

Each year, Gallup attempts to answer that question in advance by conducting a poll every November in which it asks U.S. consumers for a prediction of the total amount of money they plan to spend on holiday gifts. This year’s poll findings were published this past week.

And the results? The good news from the consumer economy’s standpoint is that the average personal spending expectation has risen to $714 for 2010, which is ~12% higher than last year’s $638.

The not-so-good news is that we’re still in the doldrums when measured against most of the previous decade. In fact, only in the years of 2009, 2008 and 2002 has expected personal spending been lower than it is this year.

If we take an average of the ten years covering 2000-2009, the expected personal spending found by Gallup’s survey is $747, which means that 2010’s dollar amount doesn’t even come up to the average of the past decade.

Here’s another interesting finding from the survey: Evidently, the increase in expected holiday spending compared to last year is being driven by only a small percentage of consumers. Half of the Gallup respondents reported they would be spending “about the same” this year, whereas one third reported they would actually be spending less.

The remainder – fewer than 15% — reported they would be spending more.

And all of that activity on the Internet? We can be sure a goodly amount of it is driven by the desire to find the very best price available. And to prove that out, the latest online holiday shopping report survey from rich media firm Unicast finds that more than half of consumers are using the Web to research and compare deals between online stores and retail outlets.

The bottom line on all this: It’s a mixed picture with a slight lean on the scale in favor of optimism. Which is a darn sight more positive than what we saw in 2008 and 2009.

Happy Chris-kwanz-ukah, everyone.

Updating the Marketing “4 Ps”

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The Four Ps of MarketingIn business, we like our checklists and concise bullet points. It’s all part of our impulse to distill ideas and principles down to their essence … and to promote economy and efficiency in whatever we do.

In marketing and communications, it’s no different. Most everyone who’s studied business in school knows about the “4 Ps” of marketing: Product, Place, Price, and Promotion.

Today, that listing seems woefully incomplete and inadequate – even quaint. Stepping in to fill the void are additional attributes that have been proffered by marketing specialists. Several of these newer lists — one coined by Robert Lauterborn, a professor of advertising at the University of North Carolina, and another from technology marketing specialist Paul Dunay — consist of a group of marketing “Cs”: Consumer, Cost, Convenience, Content, Connection, Communication, and Conversion.

But I like a new group of “Ps” as popularized by Jennifer Howard of Google’s B-to-B market group. She offers up five new “Ps” of digital marketing, and they go a long way toward filling the yawning gaps in the original list.

These new digital marketing attributes are Pulse, Pace, Precision, Performance, and Participation.

Beyond the fact that fair dues should be given to anyone who manages to come up with an additional set of five new attributes that likewise begin with the letter “P,” they happen to be worthwhile additions to the original list, and they help bring it into the interactive era.

The new set of marketing “Ps” can be further described like this:

Pulse – active listening and attention to customer, brand and competitor insights.

Pace – the speed at which marketing campaigns are carried out is critical. “Slow and steady” usually doesn’t cut it.

Precision – assuring that marketing messages are delivered to the right customers … at the right time … and place (e.g., PC or mobile device).

Participation – creating conversations with customers via rich media ad formats and social media platforms to enable them to “join the conversation.”

Performance – meeting expectations for results that notch ever higher, via measurable and accountable marketing and media tactics.

In the world of digital marketing and e-commerce, marketers like to borrow a term from the realm of traditional retailing. It’s the “moment of truth,” and it was first coined by Procter & Gamble executives to describe those critical 10 to 20 seconds when someone is standing in a store aisle and making decisions on what to purchase and what to pass by.

In the online world, Google refers to this phenomenon as the “zero moment of truth” (ZMOT) – when a potential buyer interfaces with a brand or a product on a computer, smartphone or other digital device. Why zero? Because instead of 10 or 20 seconds, many people take only a split second to decide whether they’ll stay and engage … or whether to ditch and switch.