Chapter 5:

Demographic Dimensions of Global Consumer Markets

For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Chapter 5 Objectives
When you finish this chapter, you should
1. Know about population and income trends in global marketsand how they affect marketers. 2. Understand how population growth is shifting in different areas and for different age groups. 4. Know how consumer spending is related to family life cycle and other demographic dimensions. 5. Know why ethnic markets are importantand why increasingly they are the focus of multicultural marketing strategies. 6. Understand the important new terms.

3. Know about the distribution of income in the United States.

5-2

For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Identifying Potential Markets

Money
Focus: Relative Buying Power Focus: Rate of Growth Focus: Population Density Focus : Communication Concerns

Growth

Concentration

Literacy

5-3

For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

US Population Trends
Regional Differences

????? ????? ????? ????? ?????

5-4

Birthrate

Aging Population
Changing Household Composition Shifts to Suburban Areas
For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Changes in U.S. Birthrate, 1935-2005

26

25.0 After a peak between 1950 and 1955, U.S. Birthrates declined steadily until 1975. Following a brief rise in rates finishing about 1990, rates have again begun to fall.

Birthrate

19.4
19

18.7
16.6

13 1935 Exhibit 5-5

5-5

14.6
1970

14.0
2005
For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Median Family Income, 1960-1996

$44K

Median income

$34K

$26K 1960 Exhibit 5-7

5-6

Long term income trends are important to marketing managers because strategy planning must take into account realistic growth potential. A narrow focus on a high growth period that extends a temporary rate too far into the future can ruin chances for long term success
1980 1996
For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Income Distribution
50

Percent of Total Income

40

46.8%

30

20

23.1%
10

15.8% 4.2%
$0 19,680

10.0%
34,315 51,086 75,316 Top 20% Income Group

Lowest 20% Income Group

Middle 20% Income Group

Percent of Total Income Going to Different Income Groups in 1996

Exhibit 5-8
5-7
For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Consumer Spending Patterns

Disposable Income

Key Terms and Issues

Discretionary Income

Expenditure Data

Family Life Cycle

5-8
For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Family Life Cycle

Middle-aged divorced w/out children Young divorced w/out children Middle-aged married w/out children

Young single*

Young married x-child.*

Young married with children*

Middle-aged married with children*

Middle-aged married w/out dep. children*

Older married*

Older unmarried*

Young divorced with children

Usual flow

Middle-aged divorced with children

Middle-aged divorced w/out dep. children

Recycled flow

*Traditional family flow

For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Exhibit 5-9
5-9

Ethnic Dimensions of the US Market

Buying Behavior Median Income Growth

Growth Rate

Accurate Target

5-6

For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill

Key Terms
Gross National Product (GNP) Birthrate Metropolitan Statistical Area (MSA) Disposable Income Discretionary Income Empty Nesters Senior Citizens

5-11

For use only with Perreault and McCarthy texts. The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill