Log In
Or create an account ->
Imperial Library
Home
About
News
Upload
Forum
Help
Login/SignUp
Index
Chapter 1: Why do People Buy Things They Don't Need? OVERVIEW Because they do need! That is the simple answer to a profoundly challenging question. Consumers buy things to satisfy a concrete, distinctly felt need. Many consumer marketers go little further than this: uncover the need, target it in advertising, and, voila, products get sold. But in today's diverse, networked, information-crowded marketplace, it is hard to rise above the background noise of commerce with practical, needs-based advertising. What do any of us really need? More fundamentally, how do you reach a mass-consumer market where my need is so different from your need and your need is so different from that of each of your neighbors? What about where the need cannot be defined in conscious, rationally based criteria, but is ephemeral, based on emotions and feelings? Any psychologist will tell you that each of our individual needs extends so much deeper than the simple physical subsistence level. In today's consumer-d
Chapter 1: Why do People Buy Things They Don't Need?
WHAT DO CONTEMPORARY AMERICANS NEED? Economists and social scientists who study the realm of consumer spending can tell us much about what consumers buy, where they buy it, when they buy, and how much they spend. They chart it, graph it, and measure it. However, the flood of numbers emanating from this research cannot reveal the why that ultimately drives consumer behavior. Yet, by understanding the why, practicing marketers can communicate with potential consumers to entice them to buy products using the emotionally based, right-brain-inspired language. The overall message of so many books that explore modern American consumerism is to shake their fingers at our wasteful consumer behavior and call on consumers to stop their unnecessary, throwaway spending. Think if Americans directed their economic might toward the public good and infrastructure, rather than the extravagant weekly, even daily, shopping trips to the malls, armed with credit cards and insatiable consumer appetites. For
ONCE A CONSUMER NATION, ALWAYS A CONSUMER NATIONAs long as the U.S. Department of Commerce, under the Bureau of Economic Analysis, has tracked the nation's gross domestic product (GDP), consumer spending has been the very underpinning of the economy. Consumers' insatiable appetite to buy has contributed between 60 and 70 percent of the GDP since 1929, with only a slight downturn to about 50 percent during the war years of the 1940s. In 1929, 1930, and 1940, personal consumption as a percentage of GDP topped 70 percent, demonstrating the long-standing foundational role consumer spending has played in the American economy, as displayed in Figure 1.1. YEAR GDP PERSONAL CONSUMPTION PERCENT OF TOTAL ECONOMY 1929 $ 103.7 $ 77.5 74.7% 1930 91.3 70.2 76.9 1940 101.3 71.2 70.3 1950 294.3 192.7 65.5 1960 527.4 332.3 63.0 1970 1039.7 648.9 62.4 1980 2795.6 1762.9 63.1 1990 5803.2 3831.5 66.0 1995 7397.7 4975.8 67.3 1996 7816.9 5256.8 67.2 1997 8304.3 5547.4 66.8 1998 8747.0 5879.5 67.2 1999 9268.
CONSUMERS SHIFT AWAY FROM NECESSITY-DRIVEN SPENDINGConsumer spending has kept the American economy afloat throughout the twentieth century, but the way consumers spend their money has changed significantly over the past 70 years. Consumer-durable spending as a percentage of personal consumption expenditures has hovered in the range of 10 to 13 percent since 1929, with a slight peak in 1950 at 16 percent, but the share of consumer spending on nondurable goods and services has varied significantly. Nondurable spending includes such essential categories as food and clothing along with discretionary categories of gasoline, fuel oil, tobacco, toiletries, semidurable home furnishings, cleaning supplies, drugs and sundries, toys, stationery, magazines, newspapers, flowers, seeds, and potted plants. Nondurable spending accounted for as much as 51 percent of personal consumption expenditures in 1950 to as little as 30 percent in 2000. One reason for the significant decline is that essentials (f
TODAY, OVER 40 PERCENT OF CONSUMER SPENDING IS DISCRETIONARYWhile one can convincingly argue that a significant share of medical care is discretionary in nature, for purposes of this exploration we consider medical care, housing, and household operations essential expenditures in the services category. In the nondurable category, we categorize food and clothing as essential. Finally, among durables, we classify only spending on furniture and household equipment as essential, though, like medical care, a significant portion of spending in that category is discretionary in nature. Excluding consumer spending that is allocated to essentials, over 30 percent of consumer spending in 2000, or $2,812.5 billion, was discretionary spending. That is more than gross private domestic investment ($1,767.5 billion) and government consumption expenditures and gross investment ($1,741 billion), the other two segments that make up the national gross domestic product.
UNDERSTANDING THE DISCRETIONARY SPENDING EQUATION OR WHAT YOU WILL LEARN FROM READING THIS BOOK In sum, consumers and their discretionary spending—on wants, not needs—make a surprisingly large contribution to the nation's overall economy. If consumer marketers can harness the power of Americans' need to consume, they can gain market share, build brand recognition, and increase profitability. In later chapters, we will explore the whys that propel consumers in their search for emotional satisfaction through the things they buy. We will also examine distinctions among four types of consumer discretionary spending, and how the consumer perceives each. The four types of discretionary spending we will study are: Utilitarian purchases. These cover discretionary purchases that people don't necessarily need, but which they perceive as making their lives better in meaningful, measurable ways. Usually, these purchases have a practical or functional component. Consumers will often leap from what
UNDERSTANDING THE DISCRETIONARY SPENDING EQUATION OR WHAT YOU WILL LEARN FROM READING THIS BOOK
Chapter 2: What We Need: More Than You Ever Imagined OVERVIEW America is one of the wealthiest countries in the world. A typical middle-class, even lower-class, American cannot even imagine what life is like for the typical citizen of Afghanistan, Zimbabwe, or Indonesia. Our standard of living far exceeds any other developed nation. What we take for granted as an essential part of our way of life—unlimited electricity, clean running water, refrigeration, and television—is far beyond the means of a significant portion of the world's population. Worldwide, the average per capita gross national product is currently about $7,200. The United States per capita of $36,200 is five times as large, as shown in Figure 2.1. With U.S. median household income hovering around $40,000 and median net worth of $71,600, the average American's wealth is unimaginable for most of the world's inhabitants. $36,200 and above United States, Luxembourg $25,000–$36,199 Austria, Belgium, Denmark, Hong Kong, Norway
Chapter 2: What We Need: More Than You Ever Imagined
WHAT AMERICANS NEED TO LIVEWhen talking about what we need, as opposed to what we want, it is important to account for our contemporary American standard of living. More than two-thirds of U.S. householders own their own home. They live in a median-sized home of about 1,700 square feet divided into five or six rooms. The typical home is on a one-third-acre lot, giving the typical American household some "breathing room." Almost every American home (99.4 percent) has some kind of heating source and almost every home (98.5 percent) has a complete bathroom, including toilet, sink, and bathtub. Moreover, not all of the 1.5 percent of households without a complete bathroom live this way out of necessity. Some religious groups, such as the Amish (who are my neighbors in Lancaster County, Pennsylvania), choose to live without indoor plumbing and other modern conveniences. The simple fact is the contemporary American lives so far above subsistence, we have lost touch with basic needs of life.
MAJOR APPLIANCES ARE NECESSITIES OF CONTEMPORARY AMERICAN LIFEBefore moving into an exploration of the things people buy that they do not "need," we will first examine a category that most Americans view as a necessity—major household appliances. A focus group participant explains the decision-making process that she and her husband went through to decide between buying a refrigerator or an entertainment center for the new home they are building: Our most recent purchase of something we didn't "need" was an entertainment center. We already have one, but we are building a brand-new house and we wanted something new for the house. Now that we are building, things are tight. We could have used the entertainment center we had, but we decided to buy a new one and move the old one into another room. There are other things we need for the home, like a refrigerator. The entertainment center could have been put on hold, but it was one of those things . . . we were in the right place at the righ
FASHION—TAKE THE ORDINARY AND MAKE IT EXTRAORDINARYThe nation's major-appliance companies tend to be run by male executives who rise from engineering, manufacturing, and other technical backgrounds. Intuitive fashion sense just does not spring naturally from the corridors of power in the major-appliance industry. With focus on product features, energy efficiency, time savings, and cost-effectiveness, the industry is left-brain dominated. Its approach to marketing: Put a chart outlining the features of the product on the front of the machine and, voila, the customer is sold. This just does not cut it with the target market for these products—women. Women are attuned to fashion as well as performance. They want products that look good while they do their job to perfection. They take superior performance for granted. They expect every frost-free refrigerator from the lowest to the highest priced to keep their food cold and safe. However, the refrigerator that performs its basic function i
AVOID MEDIOCRITY IN NEW PRODUCTS—IGNORE THE COMPETITION, GET CLOSE TO THE CUSTOMERIn many highly competitive industries today, corporations tend to expend considerable time, money, and human resources on competitive tracking, monitoring, and otherwise "keeping up with the Joneses." This is especially true in major appliances, where the top five manufacturers account for more than 95 percent of all core-appliance sales such as refrigerators, dishwashers, and washing machines. While these manufacturers have their eyes focused on the competition, they too frequently fall out of touch with their existing consumer markets, their potential markets, and the trends, changes, and factors that are influencing the future of the market. In too many industries, competitive analysis is the "poor-man's" substitute for market research. Companies dedicated to competitive research assume that their competitors are doing the timeconsuming, hard, and costly job of consumer research. They spend their time
IF YOU SELL TO WOMEN, THEN SELL TO WOMENRetailing of major appliances is totally at odds with the way people shop, especially women. Even worse, with few exceptions, the way major appliances are sold at retail has not changed since the early 1960s when I accompanied my parents to buy a new refrigerator. I know it has not changed since the first time I shopped for a major appliance for myself in the 1980s. It's no wonder that Circuit City has gotten out of the major-appliance business and American Appliance has gone under completely. The retailing of major appliances is long overdue for an overhaul. Recently, I was a customer for a major appliance. My dishwasher was leaking all over the kitchen floor and the repairman sent out from our local appliance store said it would cost just about as much to fix it as to buy a new one. With that suggestion, I went off to the store to buy a new dishwasher. When you enter a major-appliance store, everything is so logically arranged. Along this wall,
Chapter 3: If Consumer Spending is the Engine of the Economy, Then Discretionary Spending is the "GAS" OVERVIEW As we have seen, consumer spending drives the U.S. economy. Moreover, consumers' desire for things they want, but don't need, is the lure that draws them to the stores, the mall, and now the Internet. The strong emotional gratification that consumers gain from their discretionary purchases is the reward that reinforces continued purchases of things desired, but not needed. Like Pavlov's dogs, they seek that same level of gratification repeatedly. A focus group respondent explained her experience buying things she doesn't need: "Essentials are things you need, but you also need a little 'fluff,' not all substance. Just buying essentials is boring, so you need to buy things that are frivolous to make life less boring. It makes you feel better." What is the source of gratification? Is it achieved through the act of shopping for something not needed or gratification from the obje
Chapter 3: If Consumer Spending is the Engine of the Economy, Then Discretionary Spending is the "GAS"
CONSUMERS UNDER STRESS After the terrorist attack on September 11, 2001, the American consumer landscape changed, perhaps forever. Along with the loss of our illusion of safety from acts of war carried out on our soil, went consumer confidence and the feeling of well-being that consuming brought to Americans. Today, confronting an uncertain future, threatened by terrorist acts of horror at home, with our troops committed to military action overseas, American consumers face a crisis that our leaders warn us may extend over the next ten years. Consumers in crisis are consumers under stress. Men and women react differently to stress. While men may seek out buddies in bars and at athletic games, women may go shopping. As we have uncovered in our research, emotional needs, not physical ones, drive a substantial amount of U.S. household spending. In the face of crisis, women who do the bulk of American households' shopping may spend more money on discretionary purchases to relieve stress and
DISCRETIONARY PRODUCT MATRIX DESCRIBES WHAT PEOPLE BUY THAT THEY DON'T NEEDTwo lines or continuums can be used to define discretionary spending. The vertical continuum runs from necessities (e.g., food, clothing, and shelter) to the most extravagant purchases (i.e., things that you do not need). The horizontal continuum spans the range from physical, material comforts to emotional gratification resulting from buying something you don't need, but want. Within the matrix defined by these two continua reside the four different categories of discretionary purchases: utilitarian purchases, indulgences, lifestyle luxuries, and aspirational luxuries. Utilitarian purchases. These are products that consumers do not strictly need but that will make their lives better in some measurable, physical way. Examples include products that help you clean better, save time, or do something you are otherwise not able to do, such as blenders, rotisserie ovens, bread machines, food processors, microwave oven
VALUES GOVERN CONSUMER SPENDINGWhat one person calls a lifestyle luxury another might call a utilitarian purchase. What may be an indulgence for one is an aspirational luxury for someone else. Where a particular purchase fits in the discretionary product matrix is dependent upon many variables, not the least of which are income, life stage, age, gender, and where the consumer lives. Even more individualistic is the individual's value system, passion, and identity. An automobile purchase is highly dependent upon demographic factors. For example, if a person lives in a rural area, owning a car may be an absolute necessity, whereas for the city dweller well served by modern mass-transit systems, a car probably falls into the discretionary realm. Discretion also plays a role in what type of car to buy. Do you buy a new car or a used car? Do you buy a sedan, wagon, two-door, four-door, SUV, pickup truck, or four-wheel drive? Do you buy a Ford, Lincoln, Chevrolet, Cadillac, Honda, Lexus, Mer
UTILITARIAN PURCHASES ARE DISTINGUISHED BY USEFULNESS In the matrix, utilitarian purchases are high in physical gratification and low in extravagance. These extras in life offer some materially measurable benefit or improvement to the consumer. Functionality and practicality play an essential part, usually allowing the consumer to do something that could not be done before. Implicit in the definition of the discretionary utilitarian purchase is the concept of a trade-up from the necessary to the improved, more highly functioning utilitarian item. One respondent expressed it this way: "My latest discretionary purchase was a steam vacuum cleaner. I didn't strictly need it, but I wasn't spoiling myself in buying it. It cost a good amount of money, but I will use it. And it will save in the long run because I don't have to call someone to come into my house and clean the carpets." Consumers say they achieve a feeling of well-being from the purchase of these life-enhancing objects. Call it
INDULGENCES ARE LIFE'S LITTLE LUXURIES BOUGHT WITHOUT GUILTOffering high emotional gratification but being low on the extravagance scale, indulgences are described as "little" luxuries, something you can indulge in daily, without guilt or recrimination. One consumer, who collects, describes an indulgence this way: "Luxuries make me feel guilty. It's totally different to spend $25 to $50 on a 'Clark Gable' collector plate than to spend hundreds of dollars on a luxury. There is a difference in how much you spend." Another says: "An indulgence is something in excess of what you need, but not too much in excess." Unlike other discretionary purchases, which may demand more of a financial commitment, an indulgence is an everyday affair that involves spending only pocket change. An indulgence pampers the individual. While it provides some physical satisfactions (e.g., features and benefits), its primary satisfaction is emotional. What kinds of products constitute an indulgence? Here are some
CONSUMER MOTIVATION STUDYTo better understand why people buy things they don't need, Unity Marketing conducted a psychographic study of the typical American consumer. Using a battery of attitudinal statements centering on the emotional gratification of buying things they don't need, we asked respondents how much they agreed or disagreed with each statement. Using a cluster analysis program, five segments, or clusters, emerge when examining the attitudes and motivations that drive consumers to purchase these discretionary items, as shown in Figures 3.3 and 3.4. Figure 3.5 outlines how attitudes vary among the different segments. Figure 3.3: Discretionary Purchasers Segmentation Analysis Self-Expressives. These consumers use their consumption as a means of self-expression, reaffirming their personal identity to themselves and declaring it symbolically to others. Their purchases satisfy their desires and fantasies. They are highly involved in purchasing goods that enrich, enhance, or impr
WITH INDULGENCES, MORE IS BETTER! It is probably more than coincidence that the United States is both the world's wealthiest country and the fattest. This country is headed for a public health crisis of direst proportions with nearly 40 million Americans certifiably obese. The nation's obesity rate stood at 19.8 percent in 2000, up from a 12 percent rate in 1991. Obesity, defined as a body-mass index of 30 or more, is linked to diabetes. Further, obesity-related diseases are second only to smoking as the leading cause of premature deaths. Today more than one-half of Americans (56.4 percent) are overweight (body-mass index of at least 25), compared with 45 percent in 1991. That leaves a "slim" minority of Americans who have a healthy weight, eat a moderate diet, and get adequate exercise. In some consumer circles, immoderation in spending is linked to immoderation in eating. After all, the same emotional needs drive many consumers to both spend too much and eat too much. There is a reas
LIFESTYLE AND ASPIRATIONAL LUXURIES LET YOU LIVE THE LIFE OF THE RICH AND FAMOUSWe define the third and fourth sectors in the discretionary product matrix as lifestyle luxuries and aspirational luxuries. Lifestyle luxuries are those luxury goods that, while they are considered a luxury, also offer a practical usefulness or utility for the consumer. Luxury cars, watches, china, furniture, and designer clothes are all lifestyle luxuries that serve a practical purpose. By comparison, aspirational luxuries, rather than providing some practical use, give primarily emotional satisfaction. Aspirational luxuries include such purchases as original art, antiques and vintage collectibles, boats and yachts, and fine jewelry. But whether the consumer is purchasing a lifestyle or aspirational luxury product, the drives and motivations are the same: They are looking for the "ultimate" in the luxury product that they buy. So what does "luxury good" really mean? The New Oxford American Dictionary defin
Chapter 4: The 14 Justifiers that Give Consumers Permission to Buy OVERVIEW Consumers need a reason to buy things they don't need. For products deemed necessities, like milk, coffee, bread, and meat, the need itself provides permission. For things consumers don't need (i.e., discretionary purchases), they give themselves "permission" to buy by stacking various rationally based justifiers in favor of the purchase. It is the justifiers that give consumers the illusion that they are acting rationally in purchasing, but in reality, they remain driven by personal desires and emotions. The perceived extravagance of a particular purchase usually determines how many justifiers are needed and to what extent. For example, a homeowner who wants to replace a 15-year-old sofa that is musty smelling and stained needs fewer justifiers than does one who wants to replace a 2-year-old sofa. Justifiers are the tools that marketers use to overcome objections in the store, at the mall, at the point of sale
Chapter 4: The 14 Justifiers that Give Consumers Permission to Buy
UNDERLYING MOTIVATORSIn research conducted among consumers, Unity Marketing identified an array of 14 different justifiers that consumers perceive as the underlying motivators driving their purchase of products they don't need. Pleasure, education, emotional satisfaction, entertainment, relaxation, beautify home or self, replace an existing item, planned purchase, stress relief, hobby, gift for self, and status are among the reasons consumers use to justify discretionary purchases. However, you can sum up the most important justifier for all discretionary purchases in a single overriding concept: to enhance the quality of life. One respondent described her motivation in buying discretionary items as, "products that help me be more myself." As this definition implies, people buy these products to improve and enhance the quality of their lives in all realms and aspects of their being. For marketers of products consumers don't need, the marketing and branding challenge is to figure out ho
JUSTIFIER #1: QUALITY OF LIFEUnity Marketing conducted a quantitative telephone survey of a statistically representative sample of 1,000 U.S. households to better understand the role of justifiers in the consumer's purchase decision. Consumers were asked about their purchase behavior in 30 different categories of discretionary and luxury products—those products people buy that they don't need. We will look at the results of the survey of product purchases in the next chapter. Here we focus on the critical role that justifiers play in motivating consumers to buy. In the survey, we asked about the importance of 14 different justifiers for purchasing things that they don't need. Based upon their responses, the most important motivator driving the purchase of discretionary products was to improve the quality of life. Nearly 90 percent of those surveyed identified this as a "very important" or "somewhat important" motivator for their purchases in the 37 discretionary product categories. All
JUSTIFIER #2: PLEASURE Some consumers derive pleasure in anticipating, acquiring, and owning a discretionary purchase. The entire buying cycle contributes to the joy. Advertisements stimulate desire that arouses fantasies in the mind about how the product will satisfy the desire. One of our survey respondents said: "When I see commercials for beauty products, I get caught up in the fantasy. Sometimes I buy the products in those fantasy commercials, then I feel good for a while. I am satisfied for a while, then it becomes ordinary again, and I want to go out and shop for something special again." A central part of the consumer fantasy is the buildup of anticipation leading to the purchase. The anticipation makes the ultimate satisfaction that much greater. It also enhances the shopping experience. Let us face facts. We derive pleasure in shopping at one store as opposed to another, even if we do not buy anything. Shopping at Wal-Mart is considered basic, ordinary, mundane, but shopping
JUSTIFIER #3: BEAUTIFY THE HOMEMaking a beautiful home is a priority for the majority of consumers because it is central to a person's identity. As one survey respondent explained: "I am house proud. The house is the single biggest investment you will make in your lifetime and you want it to reflect the care and love you put into it." Another says: "You want the look of your home to reflect you." The importance of the home is magnified for women who do not work outside the home. "As a stay-at-home mom, you don't have a job that you get reassurance from, that you are worth something—that boost you get from your work. You get that feeling from your house and how it looks. You end up doing the same job over and over again. It gets tedious, but if your house doesn't look good, you aren't doing your job as a woman and mother." Another woman explains: "The house and how it looks is your responsibility. It all gets down to a reflection on yourself." For about 80 percent of those surveyed, bea
JUSTIFIER #4: EDUCATIONBeing better educated, that is, learning something new, gaining new insights, understanding, and skills, is an important motivator in discretionary purchases for over 80 percent of those surveyed. It is worth noting that the more education Americans get, the more education they crave. Today's American consumer is more educated than ever before. As recently as 1980, only 16.2 percent of the adult population aged 25 and older had completed four years or more of college. By 1999, that percentage had risen to 25.2 percent. Achieving more education will continue to be a primary driver for important discretionary product segments, especially books, magazines, newsletters, computers and related hardware, software, art, and even entertainment products. Researching a new purchase—getting educated about the product category, the available brands, and price points—comprises a part of the anticipation cycle that gives so much pleasure to consumers. One of our respondents exp
JUSTIFIER #5: RELAXATIONAchieving a state of relaxation is a key justifier for consumers in our hectic, overscheduled world. Just as with other justifiers that stimulate purchases, relaxation is not just inherent in the product bought but in the whole shopping experience. Stores that are sensitive to the need for relaxation invite consumers to spend more time in them. Moreover, as Paco Underhill, in his book Why We Buy: The Science of Shopping, says, the longer shoppers spend in the store, the more they spend. Marketing relaxation products in a relaxing setting is the ticket for success. Products that offer relaxation span a wide range including candles, home fragrance and aromatherapy products, nature and outdoor gardening, art, music, and bath lotions and potions. They tend to appeal to multiple senses just as candles illuminate, scent the room, and provide warmth. Shopping experiences that encourage relaxation also tend to be multisensory, offering an environment where scents, sound
JUSTIFIER #6: ENTERTAINMENTEntertainment, as a powerful motivator for consumers, reduces bore-dom, generates excitement, provides new concepts and new ideas, and brings people together. American consumers spent $256.2 billion for recreation and entertainment in 2000, according to the U.S. Bureau of Economic Analysis. Americans have an unquenchable thirst to be entertained, with consumer spending on entertainment up nearly 50 percent from 1995. As with so many other justifiers, entertainment is both what you buy and what you experience when you buy. "Shopping as entertainment" is a buzz phrase often heard in retailing circles. It has become so popular it has even spawned a new word: retail-tainment. The current trend in mall design includes combining traditional shops and anchor department stores with movie theaters, theme restaurants, museums, and other nonretail businesses. The Mall of America comes complete with an in-door amusement park featuring a full-sized Ferris wheel and roller
JUSTIFIER #7: PLANNED PURCHASEThree-fourths of consumers say making a planned purchase is an important motivator for discretionary purchases. As we have seen, consumers build the anticipation of making a purchase through the planning and research phases. Once this anticipatory phase is complete, the consumer has made the decision, stacked all the justifiers in favor of the purchase, and is now ready to make the purchase. Throughout what can be an extended planning period, excitement builds to the ultimate satisfaction of the purchase. "Anticipation is stress, healthy stress," a respondent explains: "You are excited, which is healthy, positive stress." Another explains, "The fun is in the looking." The opposite of planning a purchase is buying on impulse. Planning and anticipating a purchase tends to predominate in the consuming public because only 40 percent of consumers claim that impulse is an important motivator for buying discretionary items. Shoppers who build anticipation toward
JUSTIFIER #8: EMOTIONAL SATISFACTIONConsumers buy things they don't need to achieve emotional comfort. It is the feeling of satisfaction, the gratification of having bought something desired, the happiness of purchasing something that perfectly expresses one's identity. It is the enjoyment of a beautiful home that provides safety and comfort to one's family and the challenge of being exposed to new ideas or learning new things. It is the fun of seeing the latest movie, playing the hit parade's top-selling song, or having the latest and greatest computer gadgets. It is exercising one's consuming will to buy and possess. Consumers buy things they don't need to achieve emotional comfort. The art of branding is all about building an emotional connection with the consumer. While some categories are perceived as not demanding an emotional response from the consumer, no matter how mundane or low involvement the product category, consumers usually are emotionally invested and connected with th
JUSTIFIER #9: REPLACING AN EXISTING ITEMThe desire to replace an existing item in the home is often the justifier for the purchase of a discretionary item. In fact, this often becomes the catalyst for an extended spending spree. A worn-out chair, rug, or broken television is frequently the spur that moves buyers from their homes and into the stores. Over and over in focus groups, respondents explained how the purchase of one item led to a cascade of additional spending to buy new things to complement and match the original item that started the spending spree. "We had an old chair. It cleaned up well but still looked dingy, so I went out and bought a new chair. Then when I got it home, it made the sofa and love seat look dingy, so we just replaced that. Next, I need to get new drapes, because the new furniture makes them look really bad." Another participant explains about her latest home spending spree: "We just bought four reclining chairs, including a couch with a recliner. We like
JUSTIFIER #10: STRESS RELIEFFinding a way to relieve stress motivates three-fourths of survey respondents in their discretionary purchases. Stress relief results from the act of shopping—from the relief and satisfaction felt upon culminating an anticipated purchase and from the product itself. Stress relief is an important benefit in the marketing of aromatherapy, candles, bath products, whirlpools, hot tubs, and small personal-care appliances. In the post-9/11, terrorist-threatened world, consumers face an emotional crisis. Threats to personal security, when combined with economic uncertainty and rising global tension, create a feeling of stress for many Americans. When people are under stress, they fall back upon past behaviors that have proven successful in the past for relieving stress. In the aftermath of September 11, some consumers turned to comfort foods. Others turned to the gym and strenuous activity for stress release or returned to old vices such as cigarettes and alcohol.
JUSTIFIER #11: HOBBIESPassion for a hobby is an important purchase justifier for two-thirds of consumers. Hobbies such as collecting, crafts, home workshops, photography, sports, and gardening drive many discretionary purchases. Collecting, for example, is a passion for over 40 percent of U.S. households, or in roughly 43 million homes. As birds of a feather flock together, so do collectors, with an average of 1.7 collectors per collecting household. That makes about 73 million Americans passionately driven to collect. The most popular collectibles include: Coins, collected by an estimated 27 million Americans Figurines and sculpture, 20 million Trading cards, 18 million Memorabilia, 16 million Dolls, 16 million Christmas items, 15 million Plush/bean bag toys, 14 million Crystal figurines, 12 million Die-cast cars and models, 12 million Art prints and lithographs, 10 million Miniatures, 10 million The typical collecting household maintains more than three separate collections. Out of t
JUSTIFIER #12: GIFT FOR SELF How many of us go out shopping for a gift for someone else and come home with not one gift, but two—one for the person we went shopping for and one for ourselves? Usually the personal gift bought costs more than the gift for the other person. A consumer explained how personal gifting is pursued in the course of gift shopping for someone else: "One for you and two for me." The primary gift-giving occasions are Christmas and birthdays, followed in order by Valentine's Day, weddings and anniversaries, Mother's Day, Father's Day, Easter, and other occasions, such as showers, etc. Gift spending corresponds to the relative closeness or distance in the relationship, except in the case of formal gift-giving occasions such as weddings. Thus, people spend more money on presents for children and spouses than on neighbors or work associates. In the case of formal gift-giving occasions such as weddings, consumers are far more likely to buy with an eye on status. Consequ
JUSTIFIER #13: IMPULSE PURCHASEBuying on impulse is an important factor in discretionary purchases for about 40 percent of consumers. Based upon our survey, buying on impulse is about half as important as making a planned purchase. While the consumer who plans his or her purchase gains satisfaction from the emotional buildup and anticipation surrounding the upcoming purchase, the impulse shopper gains a sense of power and entitlement from making an impulse buy. One respondent explains: "I see something I like and I buy it. It's knowing that you are the one that got it. It gives me a feeling of power." Sales are a powerful motivator for impulse purchases. Finding a good price or a bargain is the ultimate justifier for purchase because it instantly takes away any guilt associated with making an unplanned, spontaneous purchase. "I like to save money," one consumer says. "If I can save money, I'll buy it, even if it is something I was just thinking of buying, but not necessarily at that ti
JUSTIFIER #14: STATUSStatus, finally, is the least recognized justifier for discretionary purchases. In this politically correct era, less than one-third of consumers are willing to own up to status as important in making discretionary purchase decisions. Harvard University's Juliet Schor views America's pre-occupation with shopping and buying as "competitive consumption." For her, buying things is all about status and class distinctions. I will not go that far, but our research clearly shows that the consumers surveyed understated status as a justifier in buying discretionary products. In focus groups, respondents describe status as feelings of envy that arise when someone else has something they desire. Consumers also express status through friends, family, neighbors, and associates whom they recognize as individuals who have "made it." Status plays a more important role as a justifier in purchasing products that are visible to others, such as clothes, watches, cars, coats, and patio
ACTION PLAN: PUTTING JUSTIFIERS TO WORK To move shoppers to action—that is, to buy something they don't need—consumer marketers must provide sufficient justifiers to overcome barriers to purchase and give people a reason to buy. To move shoppers to action—that is, to buy something they don't need—consumer marketers must provide sufficient justifiers to overcome barriers to purchase and give people a reason to buy. Because consumers buy products for many different reasons, marketers need to make sure all of those reasons are reflected back to the consumer at every point of contact, including advertising and point-of-purchase. Key for any marketer is to understand how a particular product improves the quality of the consumer's life. Marketers need to define the different dimensions on which the consumer derives satisfaction from their products. Then they must communicate the new quality-of-life value proposition clearly and effectively. The 14 justifiers examined in this chapter all play
Chapter 5: What Things People Buy that They Don't Need OVERVIEW Now that we have explored why people buy things they don't need, let us look more closely at exactly what categories of discretionary products they are buying. In 2000, 2001, and 2003, Unity Marketing conducted a nationwide survey of 1,000 U.S. households representing a statistical sample of the country's population, thus providing statistically reliable and projectable information. These surveys were also conducted at the same time in the year, during the third quarter, to provide reliable trend information. But what's really special about this survey data is it provides a snapshot of the consumer market in the last week of August 2001, just about a week before the 9/11 tragedy and resulting consumer turmoil. A period of two years spans the previous survey and the final survey conducted during the fall of 2003, a period of tremendous political and economic upheaval at home and abroad. These ensuing two years give us some
Chapter 5: What Things People Buy that They Don't Need
AFTER RISING IN 2001, CONSUMER PURCHASES RETREATED A NOTCH IN 2003Long before the Internet, omnibus telephone surveys, and mall intercepts, Benjamin Disraeli said, "There are three kinds of lies: lies, damn lies, and statistics." So let's just forget about the worst of the three, statistics, and talk a little about the limitations of consumer surveys. Consumers are notoriously fickle and what they remember buying one day may be different than what they remember buying the next. So when analyzing the results of this or any other consumer survey, we must recognize that the resulting data is only as good as the answers that go into it. In other words, no survey will ever give you the REAL answer, only an approximation of reality within the scope and limitations of the survey methodology and sample that is used. There are ways to gather really precise and accurate consumer purchase data that involves large panels of consumers willing to record their purchases daily or weekly in consumer di
SHOPPING: SO MANY STORES, SO LITTLE TIME Virtually everything about shopping has changed. From the early 1990s until the present, the number and range of our shopping choices have exploded. Just look around your town. Where there used to be a couple of shopping areas clumped together in defined shopping districts, today there are minimalls, strip centers, and freestanding stores on almost every corner. Shopping options are everywhere and continue to grow and expand. Even while stores and shopping centers are multiplying exponentially, our ability to shop from the comfort and convenience of home has also mushroomed. Just about any consumer good you can think of can be purchased over the telephone or via the Internet. A review of retail sales by type of store in 1992 and 2002 provides insight about the winners and losers in retail shopping. Total percentage change in retail over the period was 77 percent, from $1,275 billion in 1992 to $2,257 billion in 2002. An index based upon the aver
END OF COCOONING: NEW AGE OF CONNECTINGThe concept of cocooning, a trend identified by Faith Popcorn back in the 1980s and which has dominated our thinking about the consumer culture ever since, has finally come to an end. As a culture, Americans en masse have emerged from the cocoon that kept us inwardly focused and house-bound for the past 20 years. During that time, consumers spent their energy and resources filling up their emotional empty spaces with things. We collected and we consumed until every nook and cranny of our homes were chock-a-block full of stuff. Our homes were literally bursting at the seams, so we had to buy even bigger homes with more square footage to hold all our stuff. But today an entirely new sensibility is taking over. A new downscale, downsize, and anti-clutter approach is being reflected all throughout the culture. Martha Stewart who was so instrumental in helping us fully realize the cocooning lifestyle has taken a fall. Real Simple magazine, the magazine
WHAT IS TO COMEThe following chapters in Part II provide details about consumer purchases of 37 discretionary/luxury product categories. They are divided into three broad categories: entertainment, recreation, and hobby products; home and home decorating products; and personal luxuries, such as jewelry, apparel, and personal care. These sections are designed for readers' grazing and skimming, rather than for careful reading page after page. They provide basic reference material about the size and growth of the market segment, as well as a summary of consumer research into each of the 37 product categories. Yet while I advise skimming coming sections, it is important to recognize that competition for what people buy has suddenly gone horizontal rather than vertical. In business we are trained to think of our competitors within a narrow band of vertically defined categories, so a candle company competes with other candle companies, a traditional department store competes with other tradi
Chapter 6: What People Buy: Personal Luxuries OVERVIEW The business of looking good is a major contributor to the U.S. economy. The market for clothes, jewelry, and fashion accessories and fashion services, such as dry cleaning, totaled $405.5 billion in 2002, while consumer expenditure on personal care articles including cosmetics and spending on beauty parlors, barbershops, and health clubs reached $97.2 billion. While food, clothing, and shelter are thought to be basic necessities of life, the reality is most clothing purchases are driven by fashion (i.e., a luxury desire) not need. For most Americans today, our closets are full and we simply don't need to shop for clothes. Because we don't need any more new clothes, we tend to look for justifiers that give us permission to buy, such as needing a new outfit for a special occasion, or finding something really great on sale. Clothing is no longer part of the basic necessities of life. For most of us, clothes and fashion are luxuries t
Chapter 6: What People Buy: Personal Luxuries
REALITY TV RESCUES FASHION FLUBS WITH TLC'S WHAT NOT TO WEARThanks to 24/7 cable television, for every human failing there is a reality television show that is guaranteed to solve your problems, or at least offer suggestions and advice to the clueless. So too for the fashion-challenged. The BBC was first on the scene with its What Not to Wear show hosted by Susannah Constantine and Trinny Woodall. After doing stints in fashion reporting, the two got together for a Granada Television show about shopping and wrote the book Ready 2 Dress. The "fashion emergency" concept was snapped up by the BBC and thus an international phenomenon was born. TLC adapted the original concept for the U.S. market with two very American style gurus, Stacy London and Clinton Kelly, as cohosts. The premise of both the American and British shows is the same: fashion victims (i.e., those who only know what not to wear) are nominated by friends to get a complete fashion, hair, and makeup makeover. The subjects com
OVERVIEW: PERSONAL LUXURIES PURCHASE INCIDENCEMany of the product categories included in this year's survey of personal luxuries are new. All clothing and apparel was intentionally left out of previous years' surveys with the idea that clothing was a necessity and survey respondents would have a hard time distinguishing their necessity-based purchases from their emotional-based ones. This year, though, I threw caution to the wind and included apparel for many reasons, the most important of which is that women's apparel is the number one thing that I personally buy that I definitely don't need. Women's apparel is the most widely purchased personal luxury based upon this survey, with 65 percent of consumers reporting a discretionary, desire-based purchase in the category (see Figure 6.1). Personal care products that are more "special" or" exclusive" than everyday brands are second most widely bought, with 64 percent purchase incidence. Next follows fashion accessories, such as handbags,
WHAT PEOPLE BUY: FASHION ACCESSORIES, SUCH AS HANDBAGS, WALLETS, BELTS, SHOES, ETC.Nearly two-thirds of U.S. households purchased fashion accessories, such as handbags, wallets, belts, shoes, etc. A new category added to this year's survey, fashion accessories are an important discretionary purchase for many consumers. Industry Snapshot Personal consumption of fashion accessories totaled $53.2 billion, according to statistics compiled by the U.S. Bureau of Economic Analysis. Sales rose about 2.8 percent from 2000 to 2002, with strongest growth generated in the shoe category (see figure 6.2). Sales of luggage for men and women, which includes wallets, handbags, and other accessories, as well as travel luggage, declined as consumers cut back on travel in the post-9/11 landscape. 2000 2002 % CHG '00–'02 Total Personal Consumption in millions $51,703 $53,155 2.8 Shoes 47,026 49,096 4.4 Luggage for women 3,434 2,980 -13.2 Luggage for men 1,243 1,079 -13.2 Source: Bureau of Economic Analys
WHAT PEOPLE BUY: INFANT AND CHILDREN'S CLOTHING AND APPARELJust over one-third of households (36 percent) bought infant and children's wear in the past year. This is a category of purchase that is perceived more as a necessity than one that is discretionary. After all, babies grow fast and they need clothes, rather than fashion. Industry Snapshot Americans spent $11 billion on clothing for infants, about 4.1 percent more than they spent in 2000 (see Figure 6.3). With the industry's fortunes linked directly to birth rates, prospects are good for the category over the next ten years or so as the millennial generation, 71 million strong and almost as big as the baby boomers, marries and has children, thus starting another baby boomlet, this one being the grand-children of the baby boomers. 2000 2002 % CHG '00–'02 Total Personal Consumption in millions $10,617 $11,050 4.1 Source: Bureau of Economic Analysis Figure 6.3: Infant's Clothing Industry Snapshot New statistics about the age of f
WHAT PEOPLE BUY: JEWELRY AND WATCHESAfter advancing from 40 percent in 2000 to 48 percent in 2001, household purchase incidence of jewelry and watches remained about even in 2003. Some 46 percent of households bought jewelry and/or watches in the past year. Contributing to the growth in the jewelry market is the expanding availability of jewelry sold at discount prices. In 2002, Wal-Mart was the nation's largest jewelry retailer, with over $2 billion in jewelry sales. Zale Corporation, number two in the retail jewelry market—with their Zales, Gordon's, and Bailey Banks and Biddle brands among others—is getting into the discounting business in a serious way. They have a chain of 100 Zales outlet stores that sell jewelry 20 to 70 percent off traditional retail prices. Industry Snapshot Total sales of jewelry and watches were $51 billion in 2002, up 0.8 percent over 2000's sales of $50.6 billion, according to statistics collected by the Bureau of Economic Analysis (see Figure 6.5). The pa
WHAT PEOPLE BUY: MEN'S CLOTHING AND APPARELOver half of U.S. households (55 percent) purchased men's clothing out of desire, not strictly out of need, in the past year. While men's desire-based purchases of clothing are less than women's, which totaled 65 percent in 2003, it still represents a significant discretionary purchase category for the majority of households in America. Industry Snapshot Personal consumption of men's and boys' clothing totaled $93.7 billion in 2002, up about 1 percent over the 2000 total of $92.8 billion (see Figure 6.7). Brooks Brothers is both a leading manufacturer and retailer of men's apparel. The company's heritage stretches back nearly 200 years. Brooks Brothers is famous for the custom-made topcoat they provided Abraham Lincoln on his second inauguration. He is also said to have worn a Brooks Brothers suit that fateful night he attended a play at Ford's Theater. But they are not satisfied to rest on their laurels. Having been recently acquired by Retai
WHAT PEOPLE BUY: PERSONAL-CARE PRODUCTS THAT ARE MORE "SPECIAL" OR "EXCLUSIVE" THAN EVERYDAY BRANDSNearly two-thirds of Americans said they purchased personal-care products that are more "special" or "exclusive" than everyday brands in 2003, down slightly from the 71 percent that did the same in 2001. These "special" personal-care products include cosmetics, soaps, lotions, and hair care. This category ranked as the second most frequently purchased personal discretionary product, after only women's clothing and apparel. Purchase incidence in this category rose from 2000 when only half of households bought these products, suggesting that American consumers are looking for more highly specialized personal-care products and turning away from the everyday brands. Industry Snapshot According to the Bureau of Economic Analysis, the government agency that charts the U.S. economy for government policy making as well as calculates the gross national product, the total personal-care market, incl
WHAT PEOPLE BUY: TEEN AND TWEEN CLOTHING AND APPARELTeen (ages 13 to 17) and tween (ages 7 to 12) clothing is the lowest purchase incidence category included in the personal luxuries survey. Only about one-fourth of households, 24 percent, purchased teen and tween clothing in the past year. Industry Snapshot The niche teen and tween market is getting lots of attention in marketing circles as marketers come to realize that these young people exert a powerful influence on family purchasing across a whole range of product categories including clothing, electronics, travel, sports, food and drinks, and entertainment. While the government lumps statistics on teen and tween clothing purchases into the broad men's and women's clothing categories, the NPD Group, which tracks apparel purchases more closely, estimated the market for teen clothing to be $20.9 billion in 2002, while tweens spent about $10.1 billion on clothes. Retail Overview Traditional department stores (63 percent), discount de
WHAT PEOPLE BUY: WOMEN'S CLOTHING AND APPARELWomen's clothing and apparel comprise the number one most purchased category among the personal luxuries tracked. Nearly two-thirds (65 percent) of consumer households reported buying women's clothing and apparel that wasn't strictly needed, but bought out of desire. While women's clothing may be considered a necessity, women's fashion is strictly a luxury business and one that most women, young and old, rich or poor, reed thin or those with generous proportions, indulge in at one time or another. Industry Snapshot With sales of women's and girls' clothing topping $146.6 billion, women spend one-and-a-half times more money on apparel than men and boys do. Overall sales of women's clothing increased a modest 2.8 percent from 2000 to 2002 (see Figure 6.10). This is an intensely competitive industry with apparel and designer brands competing at retail against their peers, as well as with the private label fashions increasingly offered by tradit
Chapter 7: What People Buy: Entertainment, Recreation, and Hobbies OVERVIEW Americans spend a prodigious amount of money on entertainment, recreation, and hobbies. In terms of the national economy, consumer spending on recreational and entertainment products and services in total was $633.9 billion in 2002, or 8.6 percent of the nation's $7.385 trillion consumer economy. That includes $35.3 billion spent on admissions to sports, movies, entertainment, and other amusements, as well as consumer product purchases, which are the focus of this book and include everything from books, magazines, and newspapers to sporting equipment, toys, video, audio, DVD hardware and software, and craft supplies among others. Americans spend more on recreation and entertainment than clothing, accessories, and jewelry, which totaled $405.5 billion in 2002. And spending on recreation is 85 percent of what we spend on household operations, which amounted to $748.3 billion in 2002 and includes such essentials a
Chapter 7: What People Buy: Entertainment, Recreation, and Hobbies
NEW LEISURE ERA PREDICTEDWith expenditures on entertainment so vast, it is easy to see why futurist Graham T.T. Molitor believes that a new era of leisure is dawning when the leisure industry will become the largest provider of employment in the country and will account for the biggest share of gross domestic product. Trends in the culture today, notably shorter workweeks, more holidays, longer vacations, earlier retirement, longer life spans, faster transportation, smaller families, and more labor-saving devices, are converging that will allow people to spend as much as 50 percent of their lifetimes on entertainment, sports, travel, and other leisure activities. Molitor, president of Public Policy Forecasting, Inc., vice president of the World Future Society, and editor of Encyclopedia of the Future, says our current economic era of knowledge and information is passing and that a new leisure time era will emerge shortly. "The current Information Age has relatively few remaining years
ENTERTAINMENT SPENDING REFLECTS DRIVE FOR SELF-ACTUALIZATIONAmericans are confused about leisure time, what it is, how to use it, and whether they really deserve it. While Europeans without guilt enjoy their annual August vacation season when virtually everyone takes holiday, it is unthinkable that Americans could ever free themselves for such an extravagant month-long vacation. Perhaps owing to the founding fathers' "Puritan work ethic," Americans find it hard to simply relax, enjoy, and recreate. We want to accomplish "something" that is measurable and meaningful when we recreate. Bringing a uniquely American achievement orientation to our leisure time, we want to accomplish "something" that is measurable and meaningful when we recreate. Futurists Watts Wacker and Jim Taylor call this the "paradox of leisure," which is the blurring between work and play. For example, if you play golf with a customer, is it work or leisure and how can you tell the difference? Today with so much of bus
OVERVIEW: ENTERTAINMENT, RECREATION, AND HOBBIES PRODUCT PURCHASE INCIDENCE Consumer purchases of entertainment products are highly dependent upon what properties are hot at the moment. Because they are far more faddish than other categories of products, like food and other consumables, we would expect to find significant ups and downs in purchase incidence of specific products from year to year—and we do! For example, our 2003 purchase incidence survey was conducted while the latest Harry Potter book was on the best-seller list. As a result, books, magazines, and newsletters took over the top slot from prerecorded videos as the most purchased entertainment product category. On the other hand, in 2001, the last time the survey was conducted, prerecorded videos, music, and CDs were ranked number one. In 2003, purchase incidence of prerecorded media dropped sharply, from 79 percent in 2001 to 66 percent in 2003. This decline is an important issue for the record companies who claim that p
WHAT PEOPLE BUY: AUDIO EQUIPMENT AND STEREO SYSTEMS About one-fourth (26 percent) of consumer households purchased audio equipment or stereo systems in 2003, as compared with just about one-third in the previous study years of 2001 and 2000 (see Figure 7.2). This represents a slight downward shift in purchase incidence in the audio equipment category. 2000 2002 % CHG '00–'02 Total Personal Consumption in millions $24,037 $25,898 7.7 Source: Bureau of Economic Analysis Figure 7.2: Audio Equipment Industry Snapshot Industry Snapshot Consumers continue to invest some of their discretionary budgets to update their home entertainment systems, including the audio equipment that enhances their music listening experience. Since 2000, personal consumption of audio equipment rose 7.7 percent to reach $25.9 billion in 2002. This product category appeals both to the youth market, especially young men who buy audio equipment not just for their home but also portable equipment to carry their favor
WHAT PEOPLE BUY: BOOKS, MAGAZINES, AND NEWSLETTERSIn 2003, the category of books, magazines, and newsletters took over the number one position from prerecorded media as the most purchased entertainment and recreation product. About three-fourths of adult consumers purchased books, magazines, or newsletters in the past year, dropping from 78 percent in 2001. Industry Snapshot Personal consumption of books and maps totaled $35.8 billion in 2002, up 6.3 percent over sales of $33.7 billion in 2000, according to the Bureau of Economic Analysis (see Figure 7.4). Consumer sales of magazines, newspapers, and sheet music declined in the same period, down from $35 billion in 2000 to $34.2 billion in 2002. While the rising educational level among the population provides a favorable environment for reading material, the sales of magazines and newspapers, in particular, are seeing an erosion of their subscriber base as more consumers turn to the convenience of the Internet for research, current eve
WHAT PEOPLE BUY: BOOKS, MAGAZINES, AND NEWSLETTERS
WHAT PEOPLE BUY: COMPUTERS AND SOFTWARE FOR HOME USEThe purchase of computers, hardware, and software for household use, rather than for use in a home office, rose from 40 percent in 2000 to 47 percent in 2003. Today consumers generally are upgrading their older home computer models with the latest technology as the price for computers has fallen below $1,000 for a fully equipped model. House-holders also are adding new software and hardware accessories to handle photograph files, music recordings, and household records. Seemingly, the appetite for the latest computer technology is unquenchable. Industry Snapshot Personal consumption of computers, peripherals, and software peaked in 2000 when sales reached $43.8 billion, according to statistics compiled by the Bureau of Economic Analysis (see Figure 7.6). After dipping in 2001 to $42 billion, personal consumption of home computers, related equipment, and software rose back in 2002 to $44.2 billion, up slightly from results in 2000. Now
WHAT PEOPLE BUY: CRAFTS, SEWING, KNITTING, OR NEEDLEWORK SUPPLIESCraft supplies were purchased by 29 percent of households in 2003, down some 10 percentage points from reported purchase incidence in 2001 of 39 percent of households. A hobby for some, cheap "therapy" for others, crafting is enjoyed by over half of U.S. households, according to research conducted by the Hobby Industry Association. Susan Brandt, director of communications at the Hobby Industry Association, explains that interest in crafts rose in the aftermath of September 11: "We are an industry people go to in times of trouble. They take solace in staying busy and doing things with their hands." Industry Snapshot Do-it-yourself has taken on a whole new meaning today. As the cost of basic necessities, such as food, clothing, and shelter, fall, saving money through crafting is no longer the prime motivator for consumers to craft. Rather consumers turn to crafting today to express creativity and find personal fulfillment i
WHAT PEOPLE BUY: MUSICAL INSTRUMENTSWhile only 10 percent of households purchased a musical instrument, this category enjoys the most rapid sales growth of any of the other product categories in the entertainment and recreational products marketplace. So while this is a narrow niche market, it offers significant growth prospects in the future, both for the purchase of new instruments and add-on purchases, such as accessories and sheet music. Industry Snapshot More Americans than ever are making music, according to a new poll by the Gallup Organization. In the majority of American households (54 percent), at least one member plays a musical instrument. Because birds of a feather flock together, households with one musician are twice as likely to have other members who also play an instrument. Pianos, played by 34 percent of musicians, and guitars (22 percent) lead the list of favored instruments, with drums (6 percent), flutes (5 percent), clarinets (4 percent), saxophones (4 percent),
WHAT PEOPLE BUY: PET ACCESSORIESConsumers are buying more for their pets, with the purchase incidence of pet accessories rising to 41 percent of U.S. households in 2003 from 35 percent in 2000. In the most recent study done of pet ownership by the American Veterinary Medical Association, nearly 60 percent of U.S. households (58.9 million) owned one or more companion animals, as they are called in the study. American households keep 59 million cats and nearly 53 million dogs. Consumers are more likely to have multiple cats than dogs, so there are 4.2 million more households that own dogs. Industry Snapshot Between the beginning of the twentieth century and this century, a paradigm shift occurred in how Americans relate to their cats, dogs, and other pets. Back in 1900 when America was a far more agrarian country, people were in many ways dependent on animals to maintain their standard of living. At that time, animals "paid their way" in services rendered to the turn-of-the-century house
WHAT PEOPLE BUY: PHOTOGRAPHY EQUIPMENT AND SUPPLIESPurchase incidence of photography equipment and supplies has experienced a rise and fall since 2000. In that year, some 38 percent of households bought photography equipment or supplies. Purchase incidence rose to 51 percent in 2001, only to drop down to some 43 percent of households in 2003. This up-and-down trajectory may in part be explained by the pace at which consumers adopt new technology. Since 2000, the photography market has been impacted by new technology and the ready availability of affordable digital cameras, which offer a significant improvement to film-based photographs. Through digital cameras consumers have the ability to store and arrange picture images on computer disks. This is an attractive and lasting alternative for recording a family's heritage, rather than flimsy paper images stuffed in books, drawers, and scrapbooks. Presumably, the peak year for households to adopt the new technology occurred in and around 2
WHAT PEOPLE BUY: PRERECORDED VIDEOS, MUSIC, DVDS, ETC.In the 2003 survey, the category of prerecorded videos, music, DVDs, etc. dropped out of first place as the most widely purchased entertainment product to second place after books, magazines, and newsletters. In the most recent year, prerecorded entertainment media were purchased by 62 percent of households, down from 79 percent in 2001. This category has been negatively impacted by Internet-based services that allow consumers to download their favorite music, giving consumers the new ability to program their own musical entertainment experiences without having to buy prerecorded media. The ability to select and custom program one's own entertainment is a strong draw to many consumers. Industry Snapshot Total retail sales of prerecorded videos and music reached $32.9 billion in 2002, up 11.7 percent from 2000's level of $29.5 billion (see Figure 7.13). Technological changes account for the ups and downs of sales in this product cate
WHAT PEOPLE BUY: SPORTING GOODS AND EXERCISE EQUIPMENT Since 2000, consumer purchase incidence of sporting goods and exercise equipment has been on the rise. In 2003, nearly half of U.S. households (48 percent) reported buying either sporting goods or exercise equipment and supplies, compared to 43 percent in 2001 and 36 percent in 2000. This finding signals that consumers are getting concerned about health and fitness, as does research from the National Sporting Goods Association about the sports in which consumers choose to participate. For example, exercise walking was the number one most widely enjoyed sport during 2002. More than 82.2 million Americans age 7 or older walked for exercise at least once. Other popular sports in order of participation were camping overnight (55.4 million), swimming (54.7 million), exercising with equipment (50.2 million), and fishing (44.2 million). New concern with health and fitness is evidenced by the fact that exercising with weights is among the
WHAT PEOPLE BUY: TOYS, DOLLS, AND GAMES The purchase incidence of toys, games, and dolls has been up and down since 2000, ranging from 45 percent in 2000 to 54 percent in 2001 and 50 percent in 2003. While children represent the core user market for toys, more adults are buying toys, not just for kids, but for their own playtime. Toys are popular adult collectibles, and more toy companies are recognizing that adults, just like their kids, want to play with toys. Industry Snapshot American consumers spent more than $43.8 billion on toys in 2002, according to statistics compiled by the U.S. Bureau of Economic Analysis (see Figure 7.17). There is an expanding market for toys, as evidenced by growth of 5.6 percent since 2000 when personal consumption was $41.5 billion. Notoriously given to boom-and-bust cycles, the toy industry's biggest categories in 2002 according to classifications used by the Toy Industry Association, were video games, with sales of $14.8 billion; infant and preschool
WHAT PEOPLE BUY: TELEVISIONS, RADIOS, VCRS, DVD PLAYERS, ETC.Most television, radio, VCR, and DVD player purchases are made today to replace or upgrade existing equipment. New flat screen and plasma TVs and DVD players represent the latest technological innovations drawing shoppers into the stores for new entertainment equipment. Nearly all (99 percent) of U.S. households own a color television, while 71 percent own two or more TVs. VCR and DVD player ownership is almost as high, with about 90 percent of households having a VCR or DVD player. Today the digital DVD is being used more as a video recording medium, thus encouraging consumers to upgrade their older VCR player for the latest and greatest digital DVD player. With a purchase incidence of 38 percent in 2000, purchase incidence of TVs, radios, VCRs, and DVD players rose in 2001 to 46 percent of households only to drop back down to 38 percent of households in 2003. Industry Snapshot With consumer purchases of $26.5 billion in 200
Chapter 8: What People Buy: Home Furnishings and Home Décor OVERVIEW About a quarter of American's $7.385 trillion in personal consumption expenditures is spent on their homes. Spending on the four walls that shelter us topped $1.145 trillion in 2002, and spending on household operations, which includes all home furnishings, cleaning products, stationery and writing supplies, utility expenditures, and domestic services was $748.3 billion. Housing expenditures are rising faster than spending on household operations, as rock-bottom mortgage rates have encouraged more Americans to either buy into the housing market for the first time or trade up to larger, more expensive homes. Consumers' expectations are rising and they want an enhanced cleaning experience. An intriguing factoid out of the government's latest numbers on household spending is that after the cost of electricity, which we all know is going through the roof, the fastest-growing household expenditure category in 2002 was clea
Chapter 8: What People Buy: Home Furnishings and Home Décor
END OF COCOONING DOESN'T MEAN END OF SPENDING ON THE HOMEFor the past 20 years or so, home marketers have enjoyed a time of remarkable growth as the nation's consumers devoted their time, attention, and budgets, to home-related purchasing. Cocooning and nesting and all that these concepts imply were the dominant cultural trend. Because all ships rise with a rising tide, many home marketers and retailers enjoyed an extended period of strong and predictable growth. With the dawn of a new century, some major home players began to sputter, but corporate inefficiencies and management misdirection could be blamed for these problems. As other, better-managed companies began to feel the pinch of reduced consumer spending, a slowing economy and negative impact from September 11 were credited. But something more fundamental was changing in the marketplace, and that is that consumers today are emerging from their cocoons and looking to reconnect with the external world. Like all things, the cocoo
OVERVIEW: HOME FURNISHING AND HOME DÉCOR PURCHASE INCIDENCE In 2003, greeting cards and stationery were the most widely purchased category of home goods, bought by 83 percent of households (see Figure 8.1). Candles were next, with a purchase incidence of 62 percent. Christmas and seasonal decorations were the third most popular home category, bought by 61 percent of U.S. households in the previous year. 2000 2001 2003 Greeting cards and stationery 79% 72% 83% Candles 54 65 62 Christmas and seasonal décor 50 55 61 Flowers, seeds, and shrubs 50 59 56 Kitchenware 46 58 56 Home textiles 51 60 52 Aromatherapy and scents 39 42 49 Picture frames 40 52 48 Baskets, boxes, and vases[*] 42 Vases, urns, and pots 30 Garden equipment and décor 41 47 42 Art, prints, and pictures 21 27 42 Furniture and occasional furniture 35 41 41 Florals, indoor 38 43 41 Wall décor 22 25 38 Window coverings 37 Collectibles 31 34 36 Lamps and lighting 24 33 30 Figurines and sculptures 19 20 22 Tabletop ch
WHAT PEOPLE BUY: AROMATHERAPY AND SCENTED HOUSEHOLD PRODUCTSPurchase incidence of aromatherapy and scented household products rose sharply in 2003 to reach 49 percent, up from 42 percent of U.S. households in 2001. Consumers are turning away from candles as the primary delivery option for household scent toward other alternatives, such as potpourri, steamers, and sprays. By lighting fewer candles, they are expressing a desire for safer, more healthful alternatives for home fragrance. Concerns about indoor air pollution, open flames, burning petroleum-based waxes, and possible leaded wicks are becoming an important issue for consumers. Because scents are so intimately tied to emotions, aromatherapy and other scented products enhance the atmosphere of the home with pleasant, emotionally evocative scents. Industry Snapshot The home-fragrance market, excluding candles, reached nearly $2 billion in retail sales in 2002, with over half of industry sales, or $1.1 billion, attributed to the ca
WHAT PEOPLE BUY: ART, PRINTS, LITHOGRAPHS Just over 40 percent of households (42 percent) bought some kind of art in 2003, up significantly from the purchase incidence in 2001. With consumers turning their attention to the walls for decorating, they are responding to new availability of ready-to-hang art at retail outlets ranging from mass merchants and discounters to home specialty stores. No longer are consumers required to seek decorative art in out-of-the-way galleries and art dealers, or pay exorbitant prices to custom frame a print. Already-framed art, as well as the explosion of specialty framing boutiques that offer affordable and quick custom frames, have opened the art market to the masses. Industry Snapshot The consumer market for art reached $27.6 billion in 2002, up 8.4 percent over sales in 2000. The fastest growing category in art is already-framed art, which grew nearly 30 percent in the past two years (see Figure 8.3). While already-framed art is up, the sales of unfra
WHAT PEOPLE BUY: BASKETS, BOXES, VASES, POTS, AND DECORATIVE HOLDERSJust over 40 percent of consumers (42 percent) in 2003 purchased baskets, boxes, vases, pots, and other decorative holders. With the definition of this category expanded from the last survey, the whole range of functional storage accessories are becoming more important in home décor, offering both decorative values as well as the functional benefit of holding flowers, plants, or other items. Industry Snapshot Baskets, boxes, vases, and pots are part of the $16.2 billion home decorative segment of the giftware market. Total sales of decorative boxes and tins were $1.1 billion in 2002, up 26 percent over retail sales in 2000 (see Figure 8.5). Vases, urns, and pots represent about $650 million in retail sales, while the retail sales of decorative baskets are in the range of $2.3 billion. Total retail sales of the category reached $4 billion in 2002. 2000 2002 % CHG '00-'02 Total Personal Consumption in millions $1,834.3
WHAT PEOPLE BUY: CANDLES AND CANDLE ACCESSORIESSixty-two percent of U.S. households purchased candles in 2003, down slightly from the 65 percent who purchased in 2001. That makes candles the second most widely purchased home product category, after stationery and greeting cards. With nearly two-thirds of American households buying candles in 2003, there is little new growth available in the market-place. The simple fact is the candle market has reached a plateau and further growth will be hard for marketers and retailers to come by easily. Industry Snapshot Since 2000, retail sales of candles have dropped 12.2 percent, while sales of candle accessory items, such as displays, candlesticks, decorative jar lids, and lighting and extinguishing accessories, have grown 44 percent (see Figure 8.6). Overall the sales of candles and candle accessories were about even in 2002 with sales in 2000. 2000 2002 % CHG '00-'02 Total Personal Consumption in millions $2,836.0 $2,783.0 -1.9 Candles 2,313
WHAT PEOPLE BUY: CHRISTMAS AND OTHER SEASONAL DECORATIONSChristmas is the pinnacle of all holiday decorating, but thanks to Martha Stewart and other home-decorating mavens' tutoring, Americans have expanded the number of holidays for which they go "all out" and decorate their homes. Over 60 percent of American households (61 percent) purchased Christmas decorations or other seasonal decorations in 2003, up from 55 percent purchase incidence in 2001. While no statistics are available about the exact number of homes that decorate for each major holiday, the holidays that are key for home decorating are Valentine's Day, Easter, Fourth of July, Halloween, Thanksgiving, and, of course, Christmas. This is the third most widely purchased home product category. Industry Overview Retail sales of seasonal decorations totaled $4.7 billion in 2002, up about 4 percent over retail sales in 2000. The Christmas holiday accounts for the biggest share of decoration sales, or 62 percent of the total (see
WHAT PEOPLE BUY: COLLECTIBLESIn 2003, about one-third of households reported buying collectibles in the past year. This percentage has been about flat since 2001, when 34 percent bought the same. Merriam-Webster's dictionary defines a collectible as: An object that is collected by fanciers; especially: one other than such traditionally collectible items as art, stamps, coins, and antiques. With little guidance provided by the type of object that is considered collectible, the key to the definition of the term is that it is something—anything—that a fancier brings together into one grouping or place. The focus then is on the verb or act of collecting, and not that which is collected (i.e., the noun or the thing). Even the most disenfranchised members of our society, homeless people, carry "collections" of objects around with them. In some strange way, these objects, whether they are tin cans or just cast-offs from others, connect the street person with the life they led before. It repre
WHAT PEOPLE BUY: FIGURINES AND SCULPTURESAbout one-fifth of households reported buying a figurine or sculpture in 2003, about the same as in 2001. A popular gift item for collectors, figurines often carry a greeting or social expression that makes them perfectly suited to gifting or as a remembrance. Figurines have been popular collectibles in the past, with lines such as Precious Moments and Hummel passed from generation to generation. But today, figurine collectibles are looked upon with disdain by many as something that one's grandmother liked, but not something for me. Industry Snapshot Figurines were at once the largest category within the contemporary or manufactured collectibles market, yet their sales are falling the fastest. In 2000, figurine sales at retail were $2.4 billion, but they dropped 35 percent to $1.6 billion in 2002. Traditionally, figurines have been made from porcelain or china and fired in ovens, thus making them a craft of skilled artisans and expensive to prod
WHAT PEOPLE BUY: FLORALS AND GREENERY FOR INDOOR USE Forty-one percent of households purchased florals and plants for indoor use during 2003, down slightly from 44 percent in 2001. Cut flowers are a popular gift item, especially for Valentine's Day. Industry Snapshot The retail market for cut flowers and florist items is said to be $15 billion by Chain Store Age magazine. In total, sales of flowers, seeds, and potted plants (including both indoor and outdoor plants) was $18.2 billion in 2002, according to personal consumption data from the U.S. Bureau of Economic Analysis. This represents a 1.4 percent increase over sales of $17.9 billion in 2000. Retail Overview There are about 24,000 florists in the United States, according to statistics compiled by the Department of Census, but no national store-based retailer of note. Consumer brands FTD and Teleflora are actually wholesalers that distribute through the existing independent retail network. But more and more flowers are available to
WHAT PEOPLE BUY: FLOWERS, SEEDS, SHRUBS, AND TREES FOR OUTDOOR LANDSCAPINGMore than half of American households (56 percent) bought flowers, seeds, shrubs, and trees for outdoor landscaping in 2003, down just slightly from 59 percent in 2002. Outdoor gardening is a passion for many, and a necessity for others. The American Gardening Association reports that 80 percent of U.S. households participate in some garden-related activity that usually results in the expenditure of money for tools, equipment, greenery, and supplies. With home ownership at two-thirds of the population, few have the luxury of escaping some gardening expenditure. After all, if you leave your home empty for a few weeks, it will only get dusty. But leave your lawn or garden alone for the same amount of time and you've got a major project to contend with when you get home. The lawn and garden are always in the state of "becoming," transforming themselves from the manicured and orderly look the gardener desires to the
WHAT PEOPLE BUY: FURNITURE AND OCCASIONAL FURNITUREPurchase incidence of furniture was the same in 2003 (41 percent) as in 2001. The purchase of furniture can range from inexpensive occasional tables and ready-to-assemble and unfinished furniture to major furniture acquisitions that are often bought on credit and paid for over time. Industry Snapshot Personal consumption of furniture, including mattresses and box springs, reached $69.8 billion in 2002, up 3.2 percent over 2000 levels of $67.6 billion (see Figure 8.11). The key growth categories in furniture were kitchen and dinning room furniture and outdoor furniture. Infant furniture, wall units and cabinets, and occasional furniture also were growth categories in 2002. During that year, sales were off for major furniture pieces, as consumer demand for occasional and smaller investment pieces was up. 2000 2002 % CHG '00-'02 Total Personal Consumption in millions $67,596.0 $69,777.0 3.23 Mattresses and box springs 9,152.3 9,200.3 0.
WHAT PEOPLE BUY: GARDEN EQUIPMENT AND DECORATIVE ITEMS FOR THE GARDEN AND PATIOWith consumers spending more money on landscaping and their lawns, it is not surprising the purchase incidence of garden equipment, furniture, and décor is strong as well. Purchase incidence of garden equipment, furniture, and decorative items for the garden (i.e., garden hardware) was 42 percent in 2003, down slightly from results of 47 percent in 2001. Industry Snapshot As discussed previously, The National Gardening Association estimates that Americans spent in total $39.6 billion on their lawns and gardens in 2002, a 17 percent increase over spending of $33.5 billion in 2000 (see Figure 8.13). If we subtract spending on plant material from the total, we find that consumer spending on gardening hardware—products, tools, fertilizer, equipment, decorative accents, and other nonliving materials that enhance the gardening experience or gardening environment—is $21.4 billion, up 38.1 percent over 2000 sales. T
WHAT PEOPLE BUY: GREETING CARDS AND PERSONAL STATIONERYGreeting cards and personal stationery are the most widely purchased home products. More than 80 percent (83 percent) of American households purchased greeting cards and personal stationery in 2003. This represents a significant increase over the 72 percent purchase incidence found in 2001. Today paper products are really hot with dynamic growth in the purchase of specialty luxury papers for writing and crafts. The burgeoning scrapbooking hobby is also drawing more people to a passion for paper. The new connecting trend is the primary driver in growth in the stationery market. Connecting relates to consumers' need to establish connections with others through all forms and methods of personal communications. The stationery and greeting cards market is benefiting, as consumers embrace the handwritten note as the ultimate in luxury communications. Industry Snapshot Total industry sales of greeting cards and stationery were $14.2 billi
WHAT PEOPLE BUY: HOME TEXTILESPurchase incidence of home textiles, which includes rugs, throws, pillows, and table and bed linens, dropped sharply in 2003. While purchase incidence peaked in 2001 at 60 percent, only 52 percent of households bought this class of goods in 2003. Once one of the prime categories associated with nesting and cocooning, consumers' new anti-clutter approach to home décor is turning them off this once-vibrant category. Industry Snapshot In 2002, total household spending on home textiles and rugs and floor coverings was $53.9 billion, distributed as shown in Figure 8.15. This represents a modest 1.8 percent increase over 2000 industry sales of $53 billion. 2000 2002 % CHG '00-'02 Total Personal Consumption in millions $52,948 $53,875 1.8 Total home textiles 36,465 37,399 2.56 Bathroom linens 4,596 5,270 14.68 Bedroom linens 15,421 16,512 7.07 Kitchen and dining room linens 1,058 1,234 16.66 Curtains and draperies 9,480 7,526 -20.61 Slipcovers and decorative pi
WHAT PEOPLE BUY: KITCHENWARE AND ACCESSORIESSome 56 percent of U.S. households bought kitchenware and housewares in 2003, about even with the 58 percent that did the same in 2001. A category that is often perceived as a household necessity, consumers are encouraged to buy when retailers and marketers give them a reason to replace existing kitchen accessories with the latest models that give new functionality or ease of use. For example, OXO, a division of World Kitchen, is a model of a housewares company that gives consumers a good reason to buy. They have designed and developed a line of can openers, slicers, dicers, peelers, and other manual utensils that provide a measurably better consumer experience in the kitchen. Their ergonomic designs simply fit the human hand better than anything else out there. That gives consumers a well-justified reason to throw out all the old stuff cluttering the kitchen utensil drawer and replace them with new OXO products that, as its Web site says, "f
WHAT PEOPLE BUY: LAMPS AND LIGHTING ACCESSORIESJust under one-third of households (30 percent) bought lamps and lighting accessories in 2003, about equal to the purchase incidence in 2001. While lighting is an essential component of everyday life, it also serves a decorative function, with lamps being a key decorative accessory. The effects of lighting are a key element for creating a mood of peacefulness and harmony in the home. People buy lamps and lighting as much for need as desire, making them essential yet discretionary. Industry Snapshot The lamps category is tracked along with the personal consumption of clocks and other durable furnishings by the Bureau of Economic Analysis (see Figure 8.18). In 2002, the sales of lamps and lighting accessories, along with other durables, totaled $32.6 billion, an increase of 3.6 percent over sales of $31.5 billion in 2000. 2000 2002 % CHG '00-'02 Total Personal Consumption in millions $31,493 $32,616 3.6 Source: Bureau of Economic Analysis
WHAT PEOPLE BUY: PICTURE FRAMESIn 2003, just under half of U.S. households (48 percent) bought picture frames, a slight decline from the 52 percent found in 2001. With more people buying digital cameras and thus having new pictures to display in their homes and offices, the picture frame industry has responded by offering new designs in frames that add visual interest and contribute to the overall presentation. Appreciative consumers are spending more on picture frames as a result. Industry Snapshot Gift picture frames, intended to frame snapshots and smaller pictures and sold mainly in gift shops and gift departments of department stores and mass merchants, represented over a $1.3 billion market in 2002. Sales of gift picture frames have remained steady since 2000, according to Unity Marketing's Gifts and Decorative Accents Report, 2003 (see Figure 8.19). 2000 2002 % CHG '00-'02 Retail Sales in millions $1,339 $1,297 -3.1 Source: Unity Marketing, Gifts and Decorative Accents Report,
WHAT PEOPLE BUY: TABLETOP CHINA, CRYSTAL, SILVER, STERLING FLATWARE, AND OTHER DINNERWAREPurchase incidence of tabletop products was 16 percent in 2003, about even with results of the 2000 survey, after jumping sharply in 2001 to 26 percent. With purchase incidence going up and down, it is likely to be driven by home entertaining and other special occasion needs, including wedding occasions where tabletop is popular. For example, more specialty retailers are merchandising their dinnerware departments with specially themed groupings that are offered as a more prestigious option than paper plates for entertaining or other special occasions. The patterns are clearly not intended for permanent, long-term use. A recent trip to Pier 1 found a whole range of very attractively priced, color-coordinated tabletop items for spring, including dinnerware, chargers, stemware, napkin rings, and table linens, perfectly suited to setting a spring-fling table, but clearly not appropriate for year-round
WHAT PEOPLE BUY: WALL DÉCORConsumers have two main choices when it comes to decorating their walls: either they display art or they use other types of wall décor, including sconces, mirrors, and tapestries. Purchase incidence of wall décor shot up in 2003, from one-fourth of American households purchasing wall décor in 2001 to 38 percent in 2003. As a new anti-clutter approach to home decorating is sweeping the country, consumers are turning their decorating attention away from the tabletops, mantles, and bookshelves toward the walls. With purchase incidence of both art and wall décor rising in 2003, the home's walls can be adorned without appearing too cluttered. Industry Snapshot The retail sales of wall décor, including sconces, mirrors, and mirror and picture frames, reached $6.2 billion, up 13.1 percent over sales of $5.5 billion in 2000 (see Figure 8.21). This vibrant category is enjoying growth as national specialty home furnishings chains, such as Pottery Barn, Restoration Hard
WHAT PEOPLE BUY: WINDOW COVERINGSAs a new category added to the 2003 consumer survey, window coverings, blinds, curtains, and other window treatments are an essential part of most home remodeling projects, big or small. Some 37 percent of households made a purchase of window coverings in the past year. With consumers avidly tuning into such do-it-yourself decorating shows as The Learning Channel's Trading Spaces and While You Were Out, they are learning all about the easy, quick, and cost-effective decorating possibilities available through window treatments. Industry Overview With retail sales of fabric window treatments tracked in the textiles category, the sales of durable window coverings, including blinds, rods, and other window hardware, totaled $5.6 billion in 2002, up 2.6 percent over sales in 2000, according to statistics compiled by the U.S. Bureau of Economic Analysis. Netherlands-based Hunter Douglas is a worldwide leader in the window covering business. With a wide selecti
Chapter 9: Trends that Impact Why People Buy Things They Don't Need What does the future hold for companies in the business of manufacturing, marketing, and selling discretionary products--those things that people desire but don't need? How can these new insights about why people buy things they don't need help the companies selling the product categories analyzed in Chapters 6, 7, and 8 sell more of their products? How can companies divine the future for the sales of discretionary products and develop plans for action that will increase sales and build market share? The following sections will help to answer these questions. KEY TRENDS SHAPING THE FUTURE OF THE CONSUMER MARKET Tracking trends is one method many businesses use to foresee the future. Futurists—people who predict trends for businesses—make good copy sources in the media or as guests on television shows as they weave tales of what the future will look like. Who isn't fascinated when Faith Popcorn presents her vision of th
Chapter 9: Trends that Impact Why People Buy Things They Don't Need
FUTURE TRENDS While the baby boomers age, the babies of the baby boomers, called the millennial generation, which numbers about 71 million people born between 1977 and about 1994, will begin to advance into adulthood. This demographic shift will result in two huge generational waves—baby boomers in the upper end and millennials at the lower end—bracketing the trough represented by the 41 million strong GenerationX in the middle. The result: The overall consumer economy will polarize, with significant growth at the luxury end targeting the affluent, empty-nesting baby boomers and strong demand for economy priced goods for the millennials who will be setting up homes, having families, and facing the challenge of stretching a small paycheck across the demands of a growing family. This polarized consumer economy will be a totally new experience for marketers and retailers, because the consumer story for the past century has been all about the great big growing middle class. Now the consume
CONSUMER TRENDSHaving explored the cultural shifts that are giving rise to the trends, here are the major trends on the horizon that will have the strongest im-pact on discretionary product manufacturers. Shift From Buying Things to Buying Experiences Part of our popular cultural mythology says that when people reach middle age they undergo a personal identity crisis, the "midlife crisis," that often is played out in the consumer marketplace. Stereotypically, a man may address his midlife crisis by buying a little red sports car or, more sinisterly, by trading in his middle-aged wife for a new, younger model. A woman may get a facelift, dye her hair, find a younger man, or, empowered by "menopausal zest," find new energy to pursue a career or hobby. When grandchildren come along, the new grandparents may shower presents and gifts on their grand-children to make up for some of the inadequacies that their children may have faced when they were growing up because money was tighter. This i
WHAT CAN RETAILERS DO TO SURVIVE THE COMING SHAKEOUT?The lessons of this book--understanding the reasons why people buy—apply equally to manufacturers and retail businesses in anticipating consumer behavior now and in the future. Retailers need to explore with their shoppers why people shop in their stores. What features, products, attributes, benefits, needs, and consumer desires does the store meet? In what areas does it fail to satisfy? Retailers need to dig deeper than simply "customer service" and "quality." Too many retailers imagine their point of difference is customer service or quality products, but if you sit in a room for five minutes with consumers, you discover that these terms are meaningless. Retailers have to understand the heart, mind, and emotions of their customers. They need to figure out what experiences consumers expect and desire to have while shopping in the store and then develop strategies to give them more of those experiences. Retailers have to understand t
Chapter 10: Pulling it all Together:How to Sell More OVERVIEW Now that we have explored the many facets of why people buy things they don't need and learned how that why drives and directs consumer behavior, we have a final task. We need to look at the strategies that evolve from this investigation. We need to learn how to get people to buy more of the things they don't need. Marketing guru Sergio Zyman says the chief aim of marketing is to sell more things to more people more often for more money. We need to learn how to harness the power of why in our marketing and brand-building strategies. Marketers that use "why people buy" strategies in their marketing go beyond the purely tactical realm (i.e., price, distribution, advertising, media placement, and so forth) and into a future-oriented, long-term view of the business, the brand, and the marketplace. This future-oriented, strategic realm is where loyal consumer relationships form. Today's marketing watch-words, emotional branding a
Chapter 10: Pulling it all Together:How to Sell More
TOUCH THE EMOTIONS OF YOUR CUSTOMERSConsumers make decisions to purchase discretionary products largely based on emotion because there is no strictly rational reason for buying something you don't need. However, even in the purchase of necessary products, consumers' emotions are engaged. After hundreds of hours spent talking to and interacting with consumers in a research setting, I know that emotion is at the foundation of people buying things they don't need. Reason is always secondary in the purchase decision. A word of caution to marketers: If you do not think this is true, then you have been listening to the words consumers say, not the way they say them. In focus groups, I have seen men, in particular, trying to act so rational in explaining their purchasing behavior, yet when they are given an exercise designed to reveal the underlying emotions, their eyes light up and they get excited. In these settings, I have seen grown men turn into little boys before me. Their emotions take
GIVE CUSTOMERS RATIONAL JUSTIFIERS SO THEY WILL HAVE PERMISSION TO BUY Emotions may lead, but justifiers close the deal in the subtle commercial seduction between a product and a consumer. Emotions may lead, but justifiers close the deal in the subtle commercial seduction between a product and a consumer. Some products need few justifiers to get the consumer to buy. Products that give immediate emotional gratification and do not require the consumer to make any kind of sacrifice are indulgences that demand few justifiers. On the other hand, a purchase that is more costly, more utilitarian, or more luxurious and extravagant, requires elaborate justifiers to encourage the consumer to complete the sale. Marketers need to do the hard work of creating the justifiers for the customer. Far more than just presenting product benefits and features, marketers need to understand why people buy to provide meaningful, wide-ranging justifiers that support consumers in their purchase decisions. Market
APPEAL TO CUSTOMERS WHO ARE IN MOTIONA closely guarded secret that direct marketers have known for years is that the most recent purchasers and the most frequent purchasers are the best prospects for buying again. Like eating potato chips, shoppers rarely stop after buying just one thing. One purchase leads to another and another, often with the first purchase justifying a continued spending spree. The emotionally driven consumer often behaves gluttonously, seeking more consuming satisfaction from buying more things. Consumers want desperately to be romanced when they shop. Every shopper who wanders into a store, stands before a display window, reads an advertisement, or watches an ad is a prospect. They must be romanced into buying something, to come into the store, or to seek out more information about the store or the product advertised. Romance is not played out rationally like a chess game; it is conducted emotionally. Moreover, I will share another secret: Consumers want desperat
MAKE CUSTOMERS FEEL LIKE WINNERS EVERY TIMECustomers shop to satisfy emotional needs and longings, and they want their shopping experience to provide emotional satisfaction as well. When they shop, they want to feel like winners, as if they did something good, fun, and beneficial for themselves and their families, including saving money. It is more than just finding a great bargain, but when shoppers do find a super deal, it makes them feel like winners. When consumers feel they have done something outstanding, found something extraordinary, achieved some great height, or become unique, more special, more lovable, better, they feel like winners. When customers leave the store with your company's products in their shopping bags, you want them to be happy and satisfied. It is so much more than price, but few marketers go the extra step to discover new, creative ways to make customers feel like winners. Few marketers go the extra step to discover new, creative ways to make customers feel
HELP YOUR CUSTOMERS FULFILL THEIR FANTASIESAdvertising agencies have created consuming fantasies for years. They carefully select models, images, settings, scenes, and story lines to evoke an image, a feeling, and a fantasy of how one's life would be transformed through owning a product. I want to live in the world of laundry detergent commercials. In those ads, the day is always sunny and the trees are always green. There is beautiful music playing in the background and the curtains are gently swaying in a mild breeze. It is never too cold or hot in laundry-detergent world and it always smells fresh and clean. Perhaps the craft of advertising taught consumers how to create consuming fantasies, but however it started, consumers invent often-elaborate fantasies that they desire to act out through the things they buy and own. When consumers talk about why they buy, they often explain it in terms of fantasy fulfillment. Through their consuming fantasies, they imagine how they will enhance
ENTERTAIN, ENTERTAIN, ENTERTAIN Consumers invent often-elaborate fantasies that they desire to act out through the things they buy and own. Consumers crave entertainment as a means to escape their mundane, ordinary, humdrum lives. Entertainment offers a respite from melancholy and feelings of hopelessness. Being entertained is more than just watching a movie or a television show; it is about engaging the mind in a fantasy that offers escape from the boring facets of daily life. Entertainment is about reaching out and connecting with other people, other realities, and another consciousness. It is pondering a painting, walking in the woods, climbing a mountain, attending a party, going to the mall, walking the streets of New York, or visiting an historic home. Our longing for experiences is all about being entertained. Consumers crave entertainment as a means to escape their mundane, ordinary, humdrum lives. An educated mind is an active mind, and an active mind needs mental stimulation.
TRANSLATE THE BRAND INTO THE "WHY"In a recent discussion with a client about why people buy his company's product and the implications for the brand, he had a "eureka" moment. He became animated and blurted out: "The 'why' is the brand!" All I could say was "exactly," as he so succinctly and eloquently expressed what I had been saying. The promise implicit in the relationship between the brand and the consumer is why people buy. The promise includes the fantasies they have about the brand, the wishes they want fulfilled, and the way the brand enhances their quality of life. The brand must satisfy the promise, and if you as a brand manager and marketer do not really understand the promise encompassed in why people buy, then you are destined to fall short of their desires. The why is the contract with the consumer—the agreement that binds the brand with the consumer. If you do not in-timately understand why people buy your brand, then it is only hit or miss that the brand will connect wi
GAIN BIG VISION BY FOCUSING ON WHY PEOPLE BUYIn my work as a marketing consultant, I run into two types of clients: little-vision companies and big-vision companies. Little-vision companies want market research and advice that is tactically oriented. They have immediate marketing problems and need information to help them make tactical decisions related to product, pricing, advertising, distribution, and sales. Their focus is on the next quarter, or the next six months, or the next year. While they are caught in the day-to-day struggles of running a business, they will achieve only incremental improvements taking a little-vision approach. There is nothing wrong with incremental improvements. Every company can use incremental gains, but the marketing problems and challenges faced today are insignificant when compared with the challenges companies will confront in the future, especially if they maintain a little-vision approach to marketing. Ultimately, little-vision companies end up cha
Chapter 1: Why do People Buy Things They Don't Need?
Chapter 2: What We Need: More Than You Ever Imagined
Chapter 3: If Consumer Spending is the Engine of the Economy, Then Discretionary Spending is the "GAS"
Chapter 4: The 14 Justifiers that Give Consumers Permission to Buy
Chapter 5: What Things People Buy that They Don't Need
Chapter 6: What People Buy: Personal Luxuries
Chapter 7: What People Buy: Entertainment, Recreation, and Hobbies
Chapter 8: What People Buy: Home Furnishings and Home Décor
Chapter 9: Trends that Impact Why People Buy Things They Don't Need
Chapter 10: Pulling it all Together:How to Sell More
Chapter 2: What We Need: More Than You Ever Imagined
Chapter 3: If Consumer Spending is the Engine of the Economy, Then Discretionary Spending is the "GAS"
Chapter 4: The 14 Justifiers that Give Consumers Permission to Buy
Chapter 5: What Things People Buy that They Don't Need
Chapter 9: Trends that Impact Why People Buy Things They Don't Need
← Prev
Back
Next →
← Prev
Back
Next →