Tweens might appear to be a very attractive market when you consider they will be buying products for years to come. But would you change your mind if you knew that baby boomers account for 50 percent of all consumer spending in the United States? Americans over sixty-five now control nearly three-quarters of the net worth of U.S. households; this group spends $200 billion a year on major “discretionary” (optional) purchases such as luxury cars, alcohol, vacations, and financial products. 1
Income is used a segmentation variable because it indicates a group’s buying power. People’s incomes also tend to reflect their education levels, occupation, and social classes. Higher education levels usually result in higher paying jobs and greater social status.
The makers of upscale products such as Rolexes and Lamborghinis aim their products at high-income groups. However, a growing number of firms today are aiming their products at lower-income consumers. The fastest-growing product in the financial services sector is prepaid debit cards, most of which are being bought and used by people who don’t have bank accounts. Firms are finding that this group is a large, untapped pool of customers who tend to be more brand loyal than most. If you capture enough of them, you can earn a profit. 2
Sometimes income isn’t always indicative of who will buy your product, however. Companies are aware that many consumers want to be in higher income groups and behave like they are already part of them (recall the reference groups discussed in Chapter 3 "Consumer Behavior: How People Make Buying Decisions"). Mercedes Benz’s cheaper line of “C” class vehicles is designed to appeal to these consumers.