Basic%20Marketing,%2013th%20edition

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Chapter 5 Demographic Dimensions of Global
Consumer Markets
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Demographic Dimensions

• Important operational dimensions for
  understanding market segments and developing
  marketing mixes
• Much good data is available
• Important for determining size of consumer target
  markets
• Is the market substantial?
• Seeing demographic trends helps identify
  opportunities
• Shifts in age distribution
• Geographic growth/decline

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US Population Trends
5-4
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Demographic Dimensions for Select Countries
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Market Share

• Market Share of Total Market company sales in
  dollars (units) / total sales in dollars (units)
• Market Share Within Companys Market
• Company sales in dollars (units) / total sales in
  dollars (units) where the company competes.

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Market Share

• Consider Harley Davidson
• Market Share of total passenger vehicles in the
  US (Market share of total market)
• Market Share of motorcycles in the US (Market
  share within companys market).
• Definitions of market share depend on how a
  company is segmenting the market

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Market Share

• Company X sells 10,000,000 and industry sales
  are 1,800,000,000. Total sales in markets where
  the company competes are 100,000,000.
• What is Company X market share of total market?
• What is Company X market share within companys
  market?

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Market Share Answers

• Market Share of Total Market
• 10,000,000 / 1,800,000,000 0.56
• Market share within companys market
• 10,000,000 / 100,000,000 10

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Market Share Implications

• Much easier to have rapid growth when a firms
  share of the total market is small
• When firms share becomes large (30), it is
  much harder to gain additional market share
• If a company becomes really big, it becomes very
  hard for it to grow faster than the total US
  economy (Wal-Mart)

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Types of Income

• DISPOSABLE INCOME
• Income that is left after taxes
• DISCRETIONARY INCOME
• What is left of disposable income after paying
  for "necessities"

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Tony The Alabama Grad

• Tonys income is 30,000 annually
• Taxes are 7,000
• Rent Car Payments are 16,800
• What is Tonys disposable income?
• What is Tonys discretionary income?

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Tony

• Disposable Income 30,000 - 7,000 23,000
• Discretionary Income 30,000 - 7,000 - 16,800
  6,200

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Sue an Auburn Graduate

• Income is 45,000 annually
• Taxes are 9,000
• Rent car payments 20,000
• What is Sues disposable income?
• Discretionary income?
• Would Sue say yes to a marriage proposal from
  Tony?

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Sue Answer

• Disposable income 45,000 - 9,000 36,000
• Discretionary Income 45,000 - 9,000 - 20,000
  16,000
• Marry Tony? Clearly not. Tony is a low
  discretionary income loser boy bama fan.

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Changing US Income Patterns (Exhibit 5-8)
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2004 Household Income

• U.S. Average 44,684
• Alabama Average 36,709 (42nd)
• New Jersey Avg. 61,359 (1st)
• States lower than Alabama are
• West. Va., Kentucky, Mississippi, Arkansas,
  Louisiana, Montana, New Mexico, and Oklahoma

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Income Dimensions of the US Market (Exhibit 5-9)
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2004 Average Money Household Income

• Married Couple
  58,109
• Male Head of Household 4,893
• Female Head of Household 14,009

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2004 Median Family Money Income by Education

• US Average 45,996
• Less Than High School 22,476
• Finish High School 37,378
• Some College 47,390
• Finish Jr. College 54,004
• Finish College 74,527
• Masters Degree 80,282

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Wealth

• Wealth (or net worth) Total Assets Total
  Liabilities
• Some families have great income but little or no
  wealth
• Wealth is essential for
• Retirement
• Ability to purchase capital items
• Some capital (wealth) almost always needed to
  start a business

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2004 Median Net Worth in 000s

• Median 93.1 Average 448.2
• Own Home 184.4 Rent 4.0
• White 140.7 Nonwhite 24.8
• Head of Household is
• Under 35 Years Old 14.2
• 35 to 44 69.4
• 45 to 54 144.7
• 55 to 64 248.7

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Ethnic Dimensions of the US Market
5-6
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Hispanic Market

• Avg. Hispanic Household has 3.7 people compared
  to a 2.7 average for the U.S.
• Avg. Hispanic in the US is 26 years old vs. 34
  for the general population
• Implications?
• Hispanics are growing faster and will continue to
  do so if the trends hold
• Consumer package goods consumption is much higher
  for Hispanics.

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Family Household Size 2004

• HH Size Hispanic
  White
• 1 or 2 23.5
  46.6
• 3 23.0
  21.5
• 4 25.2
  19.7
• 5 28.4
  11.3