Rising Female Consumer Power Is Changing The Way Companies Design, Make, And Market Products
Rising Female Consumer Power Is Changing The Way Companies Design, Make, And Market Products -- And It'sAbout More Than Adding Pastels?
Who's the apple of marketers' eye? It's not free-spending teens or men 25-50. It's women, thanks to their one-two punch of purchasing power and decision-making authority. Working women ages of 24-54 -- of whom the U.S. has some 55 million -- have emerged as a potent force in the marketplace, changing the way companies design, position, and sell their products.
Women earn less money than their counterparts -- 78 cents for every dollar a man gets. But they make more than 80% of buying decisions in all homes. And women shop differently from the way men do: Female consumers research more extensively and are less likely to be influenced by ads. "Today's woman is the chief purchasing agent of the family and marketers have to recognize that," says Michael Silverstein, principal at Boston Consulting Group and author of Trading Up: The New American Luxury.
Smart companies already have. Product manufacturers are paying more attention to style and form, and marketers are shifting away from TV ads in favor of promotional efforts in venues women trust: reviews in women's magazines and spots on TV shows like Oprah and Extreme Makeover: Home Edition. "Pinched for time and skeptical, these women are forcing marketers to look at more ways than ever when pitching a product," says Kelley Skoloda, director of global brand marketing practice at Ketchum, a communications firm that assists companies on marketing strategies.
Women's decision-making authority has grown in part because more households are headed by women -- 27% at last count, a fourfold increase since 1950. Their buying power has grown, too. In the past three decades, men's median income has barely budged -- up just 0.6% -- while women's has soared 63%. Some 30% of working women out earn their husbands, notes Martha Barletta, author of Marketing to Women: How to Understand, Reach and Increase Your Share of the World's Largest Market Segment. And 75% of women with the title of vice-president or higher at Fortune 500 companies out earn their husbands, bringing home on average 68% of household income, according to Barletta.
Little surprise that companies -- including businesses that largely overlooked women in the past -- are trying to woo this key consumer. Not long ago, Home Depot (HD) marketed its power tools and drywall to men, but it's now aggressively pursuing women with classes that teach them how to do home improvement. It's also pursuing entertainment partnerships with home improvement shows like Trading Spaces, which are widely watched by women.
NEW LUXURY SECTOR
Banks and financial-service companies, including Citibank (C), Merrill Lynch (MER), and Charles Schwab (SCH), have created entire departments that market investment products exclusively to women. Indeed, it would be a mistake to ignore this fast-growing segment of wealthy individuals. The Employment Policy Foundation says the number of women earning $100,000 or more has tripled in the last 10 years.
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This deeper-pocketed female consumer's aspirations and taste have given rise to the new "mass luxury movement," where the mainstream public has become aware and acquisitive of designer and brand names previously solely in the domain of the affluent. Karl Lagerfeld, the doyen of haute couture, designed pieces for mass retailer H&M that sold out in hours, and discounter Target (TGT) has such names as Isaac Mizrahi, Cynthia Rowley, and Liz Lange in its stable of designers. Brands like Coach (COH) are making handbags and key chains at lower price points, and Mercedes (DCX) and BMW (BMW) are putting out cars that middle-class consumers can afford.
Not that reaching this type of shopper is without challenges. The female consumer is very busy and has a complex web of duties that makes her less than readily available. Take Shubha Varma, a 39-year-old vascular surgeon and mother of two children, ages 5 and 1. On a typical day, she gets up at 6 a.m. After a short exercise routine, she wakes up her older child and makes sure he brushes his teeth and eats breakfast, then drives him to preschool after handing the baby to the sitter.
Through it all, Varma is mentally ticking off the things she has to do that day: remembering to pick up milk that ran out, schedule an appointment with her kid's music teacher, and decide what she will put on the dinner table that night for the family. Forget multitasking -- women like Varma are "multi-minding," a newly coined buzz phrase that describes the process of simultaneously thinking about various things.
Marketers have found it hard to grab such women's attention with TV ads. "Today's woman has less time and is such a tough consumer she has single-handedly pushed marketers to actually go to PR budgets," says Silverstein. "She reads magazines and wants to know the detail around products." That's one reason marketers are increasingly emphasizing product placement, sponsorships, and shaping editorial content over TV ads.
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That's why it was good news for Dell (DELL) when Oprah's Favorite Things 2004 Shopping List included two of its products, the $199 Dell Pocket DJ and $2,199 30-inch LCD TV. In the two weeks after the episode featuring Oprah's List aired, sales of Dell's plasma TVs spiked, accounting for 70% of its units sold during the holidays.
Retailers have had to change their approach to the women's market as well. "Women do a lot of homework beforehand and aren't willing to be dazzled by the salesperson who doesn't bring any practical information," says Wendy Liebmann, president of WSL Strategic Retail and author of How America Shops. To give female shoppers the kind of information they're looking for, Best Buy (BBY) is retraining its floor sales staff to talk to women in practical terms, not in jargon or geek speak.
The increased spotlight on the female shopper is even starting before the marketing and selling phase in some cases. Computer maker X2 is coming out with lighter laptops in nontraditional colors. In 2003, contractor Barbara Kavovit, CEO of Barbara K Enterprises, launched a line of tools ergonomically designed to suit a woman's smaller hand. (And they come in blue, not pink.) "Women are defining the new value equation -- combine the practical with the esthetic," says Liebmann.
This empowered woman hasn't escaped the notice of Harley-Davidson (HDI). In November, it added a section on its Web site for female bikers, with tips on appropriate gear and how to ride safely. Harley says it was responding to the growing popularity of motorbikes among women: Sales to women grew to 10%, or 23,000, of all bikes sold in 2003 vs. just 2% in 1985.
By Pallavi Gogoi in New York
Edited by Patricia O'Connell
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