TARGETING LOW & HIGH INCOME CONSUMERS AT RETAIL

Transcription

1 TARGETING LOW & HIGH INCOME CONSUMERS AT RETAIL

2 THERE ARE MANY WAYS FOR MARKETERS TO SEGMENT THEIR AUDIENCE: Age, gender, interest and location being quite common. That said, consumer behavior weighs heavily on income level. Approximately 40% of the American population over the age of 15 are in the lowest income social status, with gross income less than 50% of average. On the other hand, 12% of American households are affluent, earning between $250K - $1M, and holding 26% of total wealth. So where does this leave marketers? Well, while high earning demographics are distinguished in their access to devices and media types, lower income demographics stand out in their media consumption rates. Brands, retailers and agency partners must consider how these different types of consumers access content and what they consume in order to effectively market products. Learn how low and high income consumers differ and what brands and retailers can do to capture consumer interest and convert their business. READ ON TO DISCOVER... A demographic overview and understanding about low income consumers. A detailed look at low income consumers mobile usage, shopping habits and digital consumption. A better understanding of who your high income consumers are and how to target them. Tactics for reaching high earners on multiple devices to drive conversions online. 2

3 UNDERSTANDING LOW INCOME CONSUMER TRENDS In 2014, low income consumers were the biggest social class at nearly 40%. Year 2014 The American social class system is skewed towards low earners. Low income consumers qualified as individuals with a gross income less than 50% of the average gross income of all individuals over the age of 15 was the biggest social class in 2014 at nearly 40%. That s not all: this group is the fastest growing social class in the U.S., expanding by nearly 6% between 2009 and With the group growing at a rapid pace, low income consumers are quickly becoming a more relevant segment for brands and retailers, representing essential industries like food, non-alcoholic beverages and housing. 40% 3

4 MOBILE AS THE SINGULAR ACCESS POINT It may be surprising, but low income consumers see rates of mobile device usage comparable to the rest of the population. Mobile penetration is at 87% for the poorest 10% of households, compared to 100% in the top 10% households. Moreover, low earners are using their mobile devices as a singular access point to save on home internet (only 19% of the poorest 10% of households adopted home internet compared to 100% of the top 10% households), as well as using their device as a means of entertainment and to frequently source deals. For brands, retailers and agency partners, targeting consumers on mobile might soon be the only way to share your brand with this market. Low earners are using their mobile devices as a means of entertainment and to frequently source deals. HIGH ENTERTAINMENT CONSUMPTION Low income demographics display high consumption of entertainment content, which really speaks to the inelastic nature of entertainment demand in our society. With a large appetite for media, this segment spends the same amount of time online, streaming music videos and using social media as high income consumers. Despite the large salary gap between some of the lowest and highest earners, these two types of consumers spend similar portions of their income on entertainment purchases. Promoting products with an entertainment value-add, such as an ebook, music or movie download, would portray value while specifically targeting interests in the low income earner consumer group. 4

5 SEEKING VALUE WHEN SHOPPING With less discretionary income to spend on luxurious or premium products, low income consumers stick with the essentials, posing an opportunity and challenge for marketers. While home, food and non-alcoholic beverages naturally attract low earners, other products must highlight their value in order to appeal to this market, as low earners have indicated that they are willing to pay for value. For brands and retailers, incentivizing low income earners with items like digital rewards is a creative promotional tactic. Another interesting point is that, counterintuitively, lower income households redeem 40% fewer digital coupons than medium income households. Knowing this, brands, retailers and agency partners need to think outside of the box about how they convert low income consumer business. Incentivizing low income earners with items like digital rewards is a creative promotional tactic. A digital reward positions the product as more valuable and a way of stretching a dollar, especially since the reward itself is something that they already highly desire from a lifestyle perspective. Companies drive business and this demographic obtains the value they seek. It s a win-win. 5

6 UNDERSTANDING HIGH INCOME CONSUMERS The high income consumer segment represents approximately 12% of U.S. households. Contrasting low income demographics is the high income consumer segment, as qualified by Nielsen as households with $250K - $1M in liquid assets excluding real estate. Although this segment only represents approximately 12% of U.S. households, their spending power is enormous, positioning them as an attractive market to brands and retailers. Working in finance, management, their own business or retired, about 2/3 of this group are over the age of % The affluent consumer group is growing and has a large impact on the marketplace, particularly as their behaviors evolve and shift towards digital media consumption. Between 2009 and 2014, richer Americans increased their spending the most significantly, with a consumer expenditure gain of 23%. With their wealth indicating their financial stability, brands and retailers are witnessing high earning consumers indulge by spending their large discretionary budgets on luxurious items. 6

7 ACCESS TO MULTIPLE DEVICES Unlike the low income consumer group who focuses their attention on only one mobile device, high earners own more digital video recorders, video game consoles, smartphones, and tablet devices than any other income group. Spending between 40 and 52 hours or more per week online, across a number of devices demands an effective omni-channel experience from marketers. High earners own more video game consoles, smartphones, and tablet devices than any other income group. The reality is that high earners access to information is more complex than low earners. Be it a mobile device, a social medium or television, high income consumers can be found anywhere, and are even proponents of multiscreening, meaning they use multiple devices at one time. Brands and retailers must create a synergy between all of their marketing efforts in order to target high earners on a number of platforms and channels, with the same messaging, creating a cohesive omni-channel experience. 7

8 ADVOCATES FOR ONLINE SHOPPING Knowing that high earners can frequently be found online on any given device raises the marketing question: what are they doing? Well, affluent consumers are 47% more likely than any other segment to engage in online shopping and are 74% more likely to purchase products off of a website, especially when compared to low earning counterparts. To put this into context, 60-70% of this market made a purchase last week on their computer. For businesses, providing an ecommerce and mcommerce option to the market isn t a nice-to-have it s essential to driving conversions. Affluent consumers are 47% more likely than any other segment to engage in online shopping. With a solution in place to capture online conversions, brands, retailers and agency partners must consider the ways that they can appeal to high income earners and drive repeat business, without losing to competitors. Building brand loyalty is critical. Developing a program compatible with any device that incentivizes any consumer action and especially repeat transactions will help build brand loyalty among this segment. 8

9 CORRELATION BETWEEN AFFLUENCE AND DIGITAL MEDIA CONSUMPTION Affluent households comprise a significant amount of smartphone and tablet users. Approximately 84% of high earning consumers use their mobile phone to access the internet, 46% use it to access social media, 16% use their device to watch TV and movies and 14% use it to read magazines. These statistics are telling: high earners enjoy consuming digital media on their devices. Brands and retailers could leverage this insight to differentiate themselves from competitors, by offering digital rewards in exchange for purchases. For example, offering a free ebook, music or movie download with purchase will cater to the interests of this demographic and help win their business. High earners enjoy consuming digital media on their devices. 9

10 CONCLUSION & ADVICE TO MARKETERS When segmenting audiences, brands and retailers must be cognizant of the different behaviors that low income earners and high income earners exhibit. Low earners heavily consume information, whereas high earners have significant access to information. While low income earners are not as easily accessible and have a lower discretionary budget, this group still actively participates in mobile and are willing to pay more for value. Because this segment is one of the largest groups in the marketplace, marketers must not overlook the value they bring to bottom line. High earners are easily accessible and are willing to spend dollars on luxurious items online at any time. Brands and retailers must be present with a cohesive omnichannel marketing strategy to help build this group s loyalty over time. Between these two segments, there are various differences when examining their budget, availability and interests. That said, both groups have indicated that they can be incentivized to buy and share interests in digital media. Brands, retailers and agency partners should look to establish a digital rewards strategy to better engage with these segments, build loyalty and drive repeat conversions. About Snipp Interactive Snipp s interactive marketing technology platform enables brands to drive customer engagement and purchase. Our solutions include loyalty, rebates, receipt processing, rewards, promotions, and data analytics. We provide our clients with a full spectrum of services including creative, program conceptualization, technology, legal, rewards provisioning, fulfillment and reporting. We have created hundreds of cutting-edge programs for Fortune 500 brands and world-class agencies

11 CONNECT WITH US Passport: Income and Expenditure: USA Nielsen report: finding opportunity online with the mass affluent Passport: Technology, Communications and Media: USA Nielsen report, The Economic Divide: How consumer behavior differs across the economic spectrum