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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill US Population Trends Shifts to Suburban Areas Shifts to Suburban Areas Changing Household Composition Changing Household Composition Aging Population Birthrate Regional Differences 5-4

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

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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Demographic Dimensions for Select Countries

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Market Share Market Share of Total Market = company sales in dollars (units) / total sales in dollars (units) Market Share Within Company’s Market = Company sales in dollars (units) / total sales in dollars (units) where the company competes.

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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 company’s market). Definitions of market share depend on how a company is segmenting the market

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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 company’s market?

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Market Share Answers Market Share of Total Market = 10,000,000 / 1,800,000,000 = 0.56% Market share within company’s market = 10,000,000 / 100,000,000 = 10%

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Market Share Implications Much easier to have rapid growth when a firm’s share of the total market is small When firm’s 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)

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Types of Income DISPOSABLE INCOME Income that is left after taxes DISCRETIONARY INCOME What is left of disposable income after paying for "necessities"

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Tony – The Alabama Grad Tony’s income is $30,000 annually Taxes are $7,000 Rent & Car Payments are $16,800 What is Tony’s disposable income? What is Tony’s discretionary income?

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Tony Disposable Income = $30,000 - $7,000 = $23,000 Discretionary Income = $30,000 - $7,000 - $16,800 = $6,200

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sue – an Auburn Graduate Income is $45,000 annually Taxes are $9,000 Rent & car payments = $20,000 What is Sue’s disposable income? Discretionary income? Would Sue say “yes” to a marriage proposal from Tony?

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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Changing US Income Patterns (Exhibit 5-8)

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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Income Dimensions of the US Market (Exhibit 5-9)

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 2004 Average Money Household Income Married Couple $58,109 Male Head of Household $4,893 Female Head of Household $14,009

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

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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 2004 Median Net Worth in 000’s 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 $ to 44 $ to 54 $ to 64 $248.7

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Buying Behavior Buying Behavior Median Income Growth Median Income Growth Accurate Target Accurate Target Growth Rate Growth Rate 5-6 Ethnic Dimensions of the US Market

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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Family Household Size 2004 HH Size Hispanic White 1 or % 46.6%