Wednesday, May 15, 2013 | Edited by Daniel Moores
||Asian Automakers Beating Detroit in Key U.S. Market: Hispanics
For any automaker selling cars in America, Latinos represent a big part of the future. They're the fastest growing ethnic group and, already, they buy one of every four cars sold here.
But, for now, this market is dominated by the Japanese.
Toyota holds the top spot with almost 18% of the Hispanic car market. Honda and Nissan rank second and third, according to data from the auto market research firm Polk. Meanwhile, the domestics are getting trounced. The top-ranked domestic brand, General Motors' Chevrolet, ranks fourth with about half the market share of Toyota.
Toyota credits a long history of marketing directly to Hispanic consumers for its success.
"I think the Hispanic consumer has been a longtime loyal consumer because we have been a longtime loyal listener," said Toyota Spokesman Luis Rosero. Toyota has long marketed to Hispanic Americans in both English and Spanish and has, for over 20 years, made a point of donating money to non-profit groups that work with Hispanics and African Americans, Rosero said.
The problem for Chevy, according to Rich Martinek who heads advertising for Chevrolet, has been less its ads than its cars.
Small cars, in particular, do well among Hispanic consumers. Asian automakers like Toyota, Honda and Nissan, have long been known for making good, inexpensive small cars. In fact, the two top-selling cars among Hispanics are the Toyota Corolla and Honda Civic, according to Polk.
Up until recently, Chevrolet dealers had been selling cars that just couldn't compete, like Cobalts and Aveos, Martinek said.
Those cars have now been replaced by the Chevrolet Cruze and Sonic. "These are really strong, competitive products," Martinek said of Chevy's new models.
Unlike the previous options, they have earned recommendations from Consumer Reports, which is generally regarded as the most influential magazine among car shoppers.
On another hopeful note, Hispanics actually like Chevrolet more than most Americans, said Martinek. While about 29% of Americans overall think of Chevrolet cars as "excellent," more than 39% of Hispanics do, according to Chevrolet's own market research.
Still, Chevrolet's market share among Hispanics has not made much headway in recent years, according to Polk data.
Chevrolet says it's working hard to attract more Hispanic buyers.
But targeting a specific demographic can be a tightrope walk. While automakers strive to create culturally appropriate ads in English and Spanish for the Hispanic market, they have to make sure the ads still carry a consistent brand promise. Car buyers shouldn't see Chevrolet as standing for one thing in Spanish and another in English.
"Your brand is your brand," said Chiqui Cartagena, vice president of corporate marketing for the Spanish language TV network Univision and author of the book Latino Boom II.
Still, the brand should be culturally relevant, she said. The Hispanic market is different in ways that go beyond language, said Cartagena. Passions and emotional touch points are different and marketing has to reflect that.
Hispanics view the car shopping process differently, said Cartagena. First of all, it's viewed as something enjoyable, not as a dreaded but unavoidable descent into a world of contentiousness and deceit.
Second, it's not seen as an experience to be enjoyed by one person alone, she said.
"These auto buying experiences are more of a family experience," agreed Marc Bland, head of diversity and inclusion at Polk.
When it comes time for the new car to be delivered to the customer, often a whole family, including multiple generations, will be on hand at the dealership to see the keys getting handed over, he said.
Martinek is confident that Chevrolet will do better in the Hispanic market.
For one thing, the Chevrolet Silverado pickup, already the brand's top-selling product with Latinos, is about soon to be released in an all-new redesigned version.
"Between the small cars and the Silverado," he said, "we definitely have to grow."
Toyota isn't about to loosen its grip, though, said Rosero. This market has become too important to Toyota.
"It's had a measurable impact," he said, "and there's a bigger one down the road."
(Source: CNNMoney.com, 05/07/13)
||Baby Boomers: A Burgeoning Customer Market
Aging Americans are leading increasingly active lifestyles, whether seeking out exercise for health improvement or social activities for pure enjoyment. This group is dominated by the baby-boomer generation, which is made up of Americans born from 1946 to 1964.
Many Americans have been delaying their retirement, and this trend is expected to prevail in the next two decades. With many baby boomers striving for the fountain of youth, this active generation will demand a specific type of retirement, different from that of older generations.
Due to the generation's size and wide variety of interests, baby boomers' desires to offset the aging process has created opportunities for lenders, investors, entrepreneurs and others in a wide variety of industries, from online dating to motorcycle manufacturing.
Back in the dating game
According to US Census data, 31.3% of adults aged 50 to 64 are widowed, divorced or never married, making active baby boomers a prime market for the Dating Services industry. In fact, baby boomers comprise one of the fastest-growing demographics in the $2.1-billion dollar industry.
Additionally, with a growing number of baby boomers surfing the net, inspiring the nickname "silver surfers," online dating has become more accepted among this age group. For example, sites like OurTime -- the largest dating site specifically targeting baby boomers -- 55 Alive, Senior Friend Finder, Silver Singles and Executive Senior Dating are all catering to single baby boomers who are increasingly logging online.
Industry demand is forecast to continue expanding as a rising number of singles in this age group embrace the Internet, particularly as a method for forming relationships. To capitalize on this market, online dating service companies will continue to create niche dating networks and services catered to single baby boomers. As a result, the Dating Services industry is expected to grow at an average annual rate of 3.5% to $2.7 billion in the five years to 2018.
Hitting the gym
Also drawing attention from baby boomers is the Gym, Health and Fitness Clubs industry. According to the International Health, Racquet and Sportsclub Association, the number of older adults hitting the gym and health clubs has been growing at a record rate. People aged 55 and older now represent nearly 25.0% of all health club members.
Over the next five years and beyond, population growth and demographic changes will significantly influence industry revenue, especially as people aged 55 and older increasingly pursue more active lifestyles and focus on physical appearance and weight.
By 2014 in particular, the retiring baby-boomer generation will likely create strong opportunities for gyms and health and fitness clubs that focus on this massive potential market segment. With more service offerings geared toward this age group, such as water aerobics and exercise classes, a greater number of baby boomers will flock toward the industry.
Also, as baby boomers age beyond their 50s, healthcare costs will rise, creating incentives for insurers to promote preventative practices like fitness participation. As such, the next five years will mark a shift from disease treatment to disease prevention and health promotion by encouraging people to monitor their health, exercise and eat healthy. The active baby-boomer market will help contribute to the Gym, Health and Fitness Clubs industry's average annual revenue increase of 2.9% to $29.9 billion in the five years to 2018.
On the road again
In pursuit of their social and active lifestyles, an increasing number of baby boomers have bought RVs. In fact, retired baby boomers make up a dominant share of RV owners, keeping demand strong for the Truck, Trailer and Motor Home Manufacturing industry and the Recreational Vehicle Dealers industry. Thanks to the support from baby boomers, these industries are expected to grow at average annual rates of 5.3% and 2.6%, respectively, in the five years to 2018.
Retirees frequently sell their homes to travel domestically, and RVs allow them to travel in comfort at their own pace and leisure. The baby-boomer generation is generally wealthier and lives longer than any prior generation, making its members prime targets for an RV lifestyle. One-tenth of vehicle owners in this age group also own an RV, according to the Recreational Vehicle Industry Association. In line with a rising number of RVs and motor homes on the road, demand at properties in the Campgrounds and RV Parks is expected to rise as well. As such, IBISWorld projects industry revenue to grow at an average annual rate of 1.9% over the five years to 2018.
Because baby boomers have high levels of disposable income and leisure time, they also represent an attractive customer market for motorcycles and boats. These purchases may be lifelong goals, and retiring baby boomers now have the time and money for motorcycles and boats. The freedom and social aspects of riding a motorcycle or going boating have encouraged many baby boomers to join motorcycle clubs and yacht clubs. Due in part to strong demand from the mature market, revenue for the Motorcycle, Bike and Parts Manufacturing industry is expected to grow at an average annual rate of 0.9% in the next five years. Similarly, the Boat Building (33661b) and the Boat Dealership and Repair industry are expected to grow at annualized rates of 6.7% and 3.0%, respectively.
Restless in residence
In the coming years, active baby boomers will command a new kind of retirement living, one that is vastly different from that of their parents. For many seniors, retirement and assisted-living communities are considered a refuge of last resort. So in an effort to counteract this perception, operators in the Retirement Communities industry are offering more modern and feature-full residences with new architectural designs and technological advancements.
Operators will implement more home-like designs into their facilities that will implement better and more creative use of light, sound, water and greenery to enhance socialization areas. And more living spaces will have instant voice and visual access to family and friends, and facilities will feature access to a wider variety of medical sources, ranging from physicians to nutritionists.
These new retirement communities provide active, engaging, vibrant and intellectually stimulating environments to better appeal to increasingly social and active seniors, a group that often continues working, volunteering and participating in a variety of educational and health and wellness programs. Among other amenities, retirement community residents can enjoy swimming, playing tennis, jogging, biking and boating. Communities may also have fitness centers, hair salons and markets. In the five years to 2018, the Retirement Communities industry's revenue is forecast to increase at an average annual rate of 5.4% to $69.8 billion.
Honing their craftsmanship
Increased leisure time as baby boomers enter retirement makes home-improvement and do-it-yourself (DIY) projects popular endeavors among this group, especially those who want to downsize. As these long-time homeowners move into new homes or update existing homes, they will increasingly participate in home-improvement and DIY activities.
Despite the housing bubble burst, annual home improvement expenditures have increased on average since 2008, with related expenditures by baby boomers growing at a faster rate than those of younger homeowners. In fact, while spending on home improvement projects by people younger than 55 has increased moderately over the past decade, spending by those aged 55 and older has nearly doubled, according to the American Housing Surveys.
Given their greater longevity and higher incomes, the baby-boomer generation will seek to improve their homes for comfortable and safe aging, helping bolster demand for the Home Improvement Stores industry. IBISWorld projects industry revenue will grow at an annualized rate of 3.1% to $191.5 billion over the five years to 2018.
In addition to being handy around the house, baby boomers often engage in a variety of hobbies and crafts, such as gardening, canning and sewing. In the Fabric, Craft & Sewing Supplies industry in particular, women aged 45 and older make up about 52.0% of the customer base. This share is attributed to the large population of baby boomers who participate in sewing and crafting activities in their leisure time; finished goods are often given as gifts or used as home decorations.
The 78 million-person strong baby-boomer generation is working hard to counteract the aging process by remaining vigorous and engaged in various social and physical activities. They are living longer and have more accumulated wealth than any previous generation, characteristics that are helping them redefine retirement living in ways that are very different from their parents.
(Source: IBISWorld, 04/08/13)
||On the Rise
A Lost Generation? No Way! The Millennials Are Finally Poised to Start Spending.
The kids are alright. More than alright, in fact. Widely dismissed as a lost generation with few job prospects, towering student loans, and a bleak future, the so-called Millennials, most of whom have reached adulthood since 2000, could surprise America and the world in coming years with their economic might and spending power.
Industries from housing and autos to retailing and financial services could be transformed by their collective demands and desires, while their growing wealth, coupled with their doubts about the future of government entitlement programs, could usher in a new era of saving and a bull market for stocks.
Things haven't been easy for the members of this generation almost since the day musician Kurt Cobain, one of their patron saints, died in 1994. They've known two U.S. wars, mass shootings, terrorist attacks, the financial crisis, and the lean years since, which coincided for many with their graduation from college and frustrating attempts to launch themselves into adulthood and careers.
Yet the Millennials are far from the slackers the media and popular culture portray -- a generation of adult children living at home with Mom and Dad, texting away and refusing to grow up. The evidence suggests that their march up the career ladder hasn't been aborted so much as delayed by economic circumstances and personal choice. Once they get going, however, and marrying, starting families, and moving into their high-earning years, their influence could approach that of their baby-boom parents.
For one thing, the Millennials -- sometimes called Generation Y, and defined by many demographers as ranging from ages 18 to 37 -- make up the largest population cohort the U.S. has ever seen. Eighty-six million strong, it is 7% larger than the baby-boom generation, which came of age in the 1970s and '80s. And the Millennial population could keep growing to 88.5 million people by 2020, owing to immigration, says demographer Peter Francese, an analyst at the MetLife Mature Market Institute.
This echo-boom generation totals 27% of the U.S. population, less than the 35% the boomers represented at their peak in 1980. When the baby-boom generation drove the economy in the 1990s, growth in gross domestic product averaged 3.4% a year. As the Millennials hit their stride, they could help lift GDP growth to 3% or more, at least a percentage point higher than current levels.
The Millennials already account for an annual $1.3 trillion of consumer spending, or 21% of the total, says Christine Barton, a partner at the Boston Consulting Group, which defines this cohort as ages 18 to 34. As the economy pulls out of an extended period of sluggish growth, helped in part by this rising generation, annual growth in consumer spending is likely to revert to its long-term average of 3.5% to 4% from about 2% now. Likewise, consumer spending on durable goods could rise sharply.
The Millennial generation has already made a big mark on one industry: education. The number of students enrolled in college in the U.S. climbed by 30% from 2000 to 2011, helping to fuel a building boom on campuses across the country. But that's something many schools could regret in coming years, given the past decade's sharply declining birth rate.
Owing in part to the Millennials' surge, apartment demand is strong around the country. Housing could be the next major industry to benefit from their size and maturation, but Wall Street could reap the biggest rewards. The MY ratio, which compares the size of the middle-aged population of 35-to-49-year-olds with that of the young-adult population, ages 20 to 34, explains why.
Middle-aged folks have higher incomes than younger people, and a greater urgency to save for retirement. They invest their savings, which drives up stock prices. When the MY ratio is rising, meaning the older cohort outnumbers the younger, the stock market typically does well. The ratio has been falling since 2000, which has exerted a drag on stock prices.
Alejandra Grindal, a senior international economist at Ned Davis Research, notes the MY ratio will bottom in 2015 and then rise through 2029. It is one of several reasons the firm is bullish on stocks. According to financial-services providers, the Millennials already have started saving, spurred in part by fears that dwindling Social Security payments could make their retirements largely self-funded.
The Baby Boomers Fought in Vietnam and fought against the war there. They gave us flower power, rock 'n' roll, civil rights, The Feminine Mystique, and Bill Clinton. Having transformed the culture, they are now reinventing retirement -- as a second adolescence, but with worse knees.
Their children, who are also entering adulthood in fraught economic times, are highly educated, ethnically diverse, and team-oriented, says Neil Howe, an economist, historian, and author of several books on demographic and generational trends. They trust government, and voted for Democrats in the past three elections, sending President Obama to the White House twice.
They grew up in an era when children were rediscovered -- often in soccer uniforms in the back of a minivan. Child safety was a parental priority, and helicopter parenting became the norm in many families, facilitated by the ubiquity of cellphones, which encouraged constant communication. That alone separates the new generation from Generation X, which grew up as divorce rates soared. Gen Y, on the other hand, "is sheltered and expects to be sheltered," says Howe.
Millennial women could be a particularly powerful force in coming years, says Francese, and one that marketers ignore at their peril. They have more education than the men of their generation, and in about a third of marriages, they have higher incomes.
Above all, the Millennials are connected -- to the Internet and each other. They brought us Facebook and popularized YouTube, Twitter, and phrases like 24/7, which describes how much time they spend on the 'Net and personal electronic devices. Nielsen estimates that 74% of young adults between the ages of 24 and 34 own smartphones, up from 59% in mid-2011. According to Advertising Age, consumers in their 20s switch between communications platforms and devices 27 times per nonworking hour.
There is nothing new about worrying about future generations. Chances are, even the cave parents did it. To be sure, many Millennials got a bum deal by coming of age during the great recession, but a multitude of statistics suggest their prospects are improving.
Take unemployment, which remains high for young adults between the ages of 20 and 24. March's 13.3% unemployment rate for this population was down, however, from January's recent peak of 14.2%.
As for those ages 25 to 34, the unemployment rate was 7.4% in March, below the national average of 7.6%, and well below 8.9% in January 2012. Dick Hokenson, an economist who heads ISI Group's Global Demographics Research team, says 25-to-34-year-olds have recovered almost 75% of the jobs they lost to the recession. "They're finding jobs; they're moving out and doing normal things," he says.
Again, the numbers tell a cautiously hopeful story. Nineteen percent of U.S. men ages 25 to 34 live with their parents, says Mark Mather, a demographer with the nonprofit Population Reference Bureau. But that is up only five percentage points from 2007. The percentage of 25-to-34-year-old women still living at home is 9.7, up from 9% in 2007.
There is almost $1 trillion of student debt outstanding in the U.S. today, which could limit the purchasing power of Millennials. "These people have a mortgage and no house," Francese says.
But here, too, total figures are misleading. The average student loan among Gen Y-ers is $25,000, and the median loan is nearly $14,000, according to the Federal Reserve Bank of Kansas City. Less than 1% of student loans are larger than $100,000.
As the Millennials' employment situation improves, more young adults living at home will pack their bags and move out. That could spur an increase in U.S. household formation, which turned negative in 2007-08. Since then, the number of newly created households has recovered to about a million a year, still well below an annual average of 1.5 million since the 1970s, according to Census Bureau data.
Greater financial security could mean an increase in the birth rate, which typically slumps during economic downturns. Francese sees the average birth rate for U.S. women rising to 2.1-2.2 in coming years from a depressed 1.9 recently. "A lot of Millennials put off having babies, and now they will get to work," he says.
That suggests they will also start buying homes. Pat Tschosik, a consumer strategist at Ned Davis Research, figures there will be more home buyers than sellers in the 12 years ending with 2019, giving the housing market a boost.
Robert Turner of Turner Investments agrees. "We're big believers in this housing recovery," he says, noting his firm has invested in Home Depot, the home builders Lennar and Toll Brothers, and mortgage companies. "The leverage in these companies is underappreciated," he says.
The National Association of Home Builders market index has risen 163% in the past two years, an indication that the industry's sunny prospects haven't been ignored. Dennis McGill, director of research at Zelman & Associates, sees more gains ahead, and is bullish on Pulte, Toll, and Lennar. The firm also likes Home Depot and Lowe’s, as well as Sherwin-Williams, Fortune Brands Home & Security, American Woodmark, and carpet maker Mohawk Industries.
Millennials also could have a big impact on Detroit, which saw annual vehicle sales plummet to 10.4 million in 2009 from an average of 17 million a year in the early to mid-2000s. This year sales are likely to recover to 15.3 million, before rising gradually to 17 million in 2017, says Jeff Schuster, senior vice president of forecasting at LMC Automotive, formerly a division of J.D. Power & Associates.
Whether higher sales volumes translate into fatter profits for car makers is another matter. When the Millennials become parents, Ford Motor expects that they will be looking for low-cost, fuel-efficient utility vehicles, says Erich Merkle, U.S. sales analyst at the auto maker. Ford's response, at least for the 2014 model year, is the huge and boxy Transit Connect Wagon. Retail prices for the Transit Connect are expected to start at $22,000, a few thousand dollars below starting prices for minivans such as the Toyota Sienna, a mammoth people mover favored by boomer parents.
As the generations shift, new retailers could have the wind at their backs. These include merchants specializing in children's apparel and furniture, and companies that offer value, such as Family Dollar Stores. But other concerns, with more appeal to teens and mature, high-income adults, could encounter head winds. Among them: Abercrombie & Fitch and American Eagle Outfitters, as well as Tiffany, Nordstrom, and Coach.
Macy's defines the Millennials as 13 to 30 in age, and estimates that they control $65 billion in spending. Last year, the department-store retailer outlined plans to use more technology in stores and online to create a "fun" and convenient shopping experience that it hopes will attract and retain Gen Y customers. Among other things, the company will step up its use of QR codes and tap-and-go transactions.
The good news for Wall Street is that Millennials know they need to save, and they're not afraid of stocks, which account for more than 70% of their portfolios, according to Vanguard. They are also poised, along with their Gen X predecessors, to come into some serious money as the boomers age and die. The two younger generations combined could see their wealth grow to $28 trillion in the next five years from $2 trillion now, as they earn more and claim their inheritance, says Christopher Tsai, head of Tsai Capital in New York.
Banks and money managers aiming to woo this generation must embrace technology, as Citigroup is doing by opening branches with media walls that display news, local weather, and event listings. Financial advisors pursuing the Millennials need to brush up on blogging and Webcasts.
As the Millennials become parents, expect them to focus on grown-up financial products such as life insurance and college-savings accounts. In other words, it is only a matter of time before this slow-to-launch generation resembles -- you guessed it -- Mom and Dad.
(Source: Barron's, 05/01/13)
Daily Sales Tip: Determinants of Campaign Success
When it comes down to it, three primary variables determine the effectiveness of a media campaign:
* The appropriateness of the station or programs
* The schedule (impact, domination and frequency)
* The message (compelling copy/presentation that sells)
If the station or program does not reach a desired potential clientele, chances are the schedule or message will not matter. If the schedule is not designed for impact, domination and frequency, the message will not be heard enough to make a meaningful difference.
And finally, if the commercial message does not influence buying behavior, the campaign will not succeed.
Source: Michael Guld, President of The Guld Resource Group