Marketing analysis of white Generation X consumer spending patterns and demographics

Strategic Marketing Strategy for Whites: Identifying the Most Profitable White Generation X and the Most Profitable Consumer Product for These Consumers

Demographic Profile of the Most Profitable White Generation X

White Americans make up the largest segment of Generation X by far, with an absolute population of over 37 million consumer units (92.5 million individuals, approximately), which comprised 86% of the U.S. population in our age group 25-44 in 2008 and 70.6% of overall employment in 2009. With an annual average income of $63,916, we see a purchasing power for this sample of some $2.365 trillion dollars for 2008. If this seems like a vast amount, considering this group comprises 85% of the population in question, that population is in the prime of its work years, and we have a $14.4 Trillion GDP, that figure sounds more realistic. This includes "White and all other races" not Black or Asian. Again, since many Hispanics identify themselves as White (and Black, or Asian) at the same time, we have to remember the categories "Race" and "Hispanic Origin" include many of the same people, and will not add up to the same amounts. We see this difference when we consider "White Alone" in our age belt as share of total polulation, because White Alone GenXers make up an average of 16% of the total population without including Hispanics. We use the broader figure in order to include the White Hispanic Generation X group into our marketing analysis, because we want their money.

61% of White GenX Americans had college education, 34% had maximum high school education, and only 5% did not attend high school (Census 685). 53% of the White population is female overall, with 50% of the 25-34-year-old group overall being female and 54% of the 35-44-year-old group female. White renter-homeowner split of the reference age was 30%/70%, with 67% of the overall GenX 25-34-year-olds owning homes and 75% homeownership for the aged 35-44 segment.

Trends in Purchasing Power for White Generation X 2005 to 2009

Personal income was higher for Whites than all other races, and largely mirrored the aggregate average in rate of increase year over year.

all races white alone blackAlone

Black AOIC

Asian Alone

Hispanic

2005

25,036

26,496

16,874

16,629

27,331

14,483

2006

26,352

27,821

17,902

17,564

30,474

15,421

2007

26,804

28,325

18,428

18,107

29,901

15,603

2008

26,964

28,502

18,406

18,054

30,292

15,674

2005-06

5.26%

5.00%

6.09%

5.62%

11.50%

6.48%

2006-07

1.72%

1.81%

2.94%

3.09%

-1.88%

1.18%

2007-08

0.60%

0.62%

-0.12%

-0.29%

1.31%

0.46%

Most Profitable Product to Offer to White Generation X

Propensity

Index

White

Avg $/Year

In-Group

Average annual expenditures (dollars)

52,265

..Housing

17,456

33.40%

33.40

....Shelter

10,345

19.79%

19.79

..Transportation

8,889

17.01%

17.01

Owned dwellings

7,095

13.58%

13.58

..Food

6,676

12.77%

12.77

Mortgage interest and charges

3,951

7.56%

7.56

....Food at home

3,865

7.40%

7.40

..Health care

3,211

6.14%

6.14

..Entertainment

3,007

5.75%

5.75

....Vehicle purchases (net outlay)

2,885

5.52%

5.52

....Food away from home

2,811

5.38%

5.38

....Gasoline and motor oil

2,790

5.34%

5.34

....Other vehicle expenses

2,698

5.16%

5.16

Rented dwellings

2,484

4.75%

4.75

White GenXers spend above all on their homes, with housing comprising 33% of the 25-44-year-old spending when sorted for aggregate expenditures for the White segment. The table above outlines their major purchases with some categories like home utilities and social security removed as not really constituting marketable consumption products for our purposes. Since White Generation X of Hispanic origin or not constitutes the majority of absolute dollar marketshare, we would do well to target this group first, focusing on "Owned dwellings," "Food at home," mortgage and health care products, because those products represent the largest baskets of consumer spending in the entire marketplace.

White

25-34

35-44

Prop 25-34

Prop 35-44

Average annual expenditures (dollars)

48,159

58,808

..Housing

17,318

20,649

35.96%

35.11%

....Shelter

10,935

12,689

22.71%

21.58%

..Transportation

8,699

9,797

18.06%

16.66%

Owned dwellings

5,873

9,056

12.20%

15.40%

..Food

6,229

7,849

12.93%

13.35%

Mortgage interest and charges

4,151

6,194

8.62%

10.53%

....Food at home

3,393

4,509

7.05%

7.67%

..Health care

1,737

2,499

3.61%

4.25%

..Entertainment

2,766

3,603

5.74%

6.13%

....Vehicle purchases (net outlay)

3,149

3,122

6.54%

5.31%

....Food away from home

2,836

3,340

5.89%

5.68%

....Gasoline and motor oil

2,754

3,347

5.72%

5.69%

Rented dwellings

4,734

3,013

9.83%

5.12%

Within the White GenX group, however, if we break the two age cohorts out from our aggregated totals above, we see from our propensity to spend, that the different ages buy different shares of these products.

Hispanic Generation X

Trends in Purchasing Power for Hispanic Generation X

Purchasing power for Hispanics was increasing faster than the rate of increase for all other ethnicities / origins over 2005-06, but that growth rate slowed to less than average as we approach 2008.

all races white alone blackAlone

Black AOIC

Asian Alone

Hispanic

2005

25,036

26,496

16,874

16,629

27,331

14,483

2006

26,352

27,821

17,902

17,564

30,474

15,421

2007

26,804

28,325

18,428

18,107

29,901

15,603

2008

26,964

28,502

18,406

18,054

30,292

15,674

2005-06

5.26%

5.00%

6.09%

5.62%

11.50%

6.48%

2006-07

1.72%

1.81%

2.94%

3.09%

-1.88%

1.18%

2007-08

0.60%

0.62%

-0.12%

-0.29%

1.31%

0.46%

Most Profitable Product to Offer to Hispanic Generation X

While Hispanics spend their incomes on much the same goods as the White group for Generation X does, the proportion of income is different. Hispanics spend 36% of incomes on Housing, 12 and 9 percents respectively for owned and rented shelter; spend more of their incomes on food at home, and a higher share of income on vehicle purchases.

Hispanic All

Average

Prpp.

Index

In-Group

Average annual expenditures (dollars)

43,052

1

..Housing

15,582

0.362

36.19

....Shelter

9,688

0.225

22.50

..Transportation

7,986

0.185

18.55

..Food

6,596

0.153

15.32

Owned dwellings

5,334

0.124

12.39

Rented dwellings

4,065

0.094

9.44

....Food at home

4,039

0.094

9.38

Mortgage interest and charges

3,525

0.082

8.19

....Gasoline and motor oil

2,717

0.063

6.31

....Food away from home

2,556

0.059

5.94

....Vehicle purchases (net outlay)

2,554

0.059

5.93

....Other vehicle expenses

2,335

0.054

5.42

..Apparel and services

2,119

0.049

4.92

Black Generation X

U.S. Black Alone Generation X are the third largest segment of American Generation X in 2009, there were 15 million Black Generation X consumers, who represented 14% of both the U.S. population aggregate population, and of the GenX segment (U.S. Census), which indicates a total GenX Black population of 6.026 million consumer units (roughly 15 million people), who represent under 11% of the workforce. With an average annual income of $43,482 for Blacks of reference age, we find an aggregate consumption spending of some $262 million in 2008. Black Generation Xers had a lower college attendance rate than Whites and Asians at 50%, which was higher than Hispanic 38% attended college; 45% of Blacks' maximum education was in high school, the highest of all the racial / ethnic demographics.

Trends in Black Purchasing Power of Generation X

Purchasing power for Blacks both alone and in combination with other ethnicities (AOIC) increased faster than all races from 2005-2007, but started to lose that growth rate over 2007-08. The consumers who identified as polyethnic increased earnings faster at first but those slowed to even more sharply negative at the end of our period.

all races white alone blackAlone

Black AOIC

Asian Alone

Hispanic

2005

25,036

26,496

16,874

16,629

27,331

14,483

2006

26,352

27,821

17,902

17,564

30,474

15,421

2007

26,804

28,325

18,428

18,107

29,901

15,603

2008

26,964

28,502

18,406

18,054

30,292

15,674

2005-06

5.26%

5.00%

6.09%

5.62%

11.50%

6.48%

2006-07

1.72%

1.81%

2.94%

3.09%

-1.88%

1.18%

2007-08

0.60%

0.62%

-0.12%

-0.29%

1.31%

0.46%

Most Profitable Product to Offer to Black Generation X

With a smaller share of total population and smaller per-unit incomes, the Black consumer group ranks third in our aggregate spending comparison, but they consume largely the same major purchase fields as all other consumers, particularly Housing, transportation and food, although they spend different shares of their incomes on these purchases than the other sectors. These are the "Big spender" categories for all ethnicities and origins, but we see for example, that Blacks spend much less of their income on food away from home for example, so targeting restaurant purchases to that segment instead of any other, would be a mistake. Rental real estate, for another example, consumes a far larger share of Generation X Black incomes relative to owned shelter than it does for Hispanics, and double the share compared to owned homes for Whites. Targeting marketing for rental dwellings may have more return per capita for Blacks than for Whites, although the dominance of the aggregate size of the White expenditure for everything would make them the primary target if we measured return on a fixed advertising budget in overall dollar return on investment. Even though Blacks spend more of their income on rent than whites do, Whites still spend more in total at the bottom line.

Black

Propensy

Index

Avg

In-Group

Average annual expenditures (dollars)

36,721

..Housing

13,770

37.50%

37.50

....Shelter

7,985

21.75%

21.75

..Transportation

6,520

17.76%

17.76

..Food

4,594

12.51%

12.51

Owned dwellings

3,940

10.73%

10.73

Rented dwellings

3,762

10.24%

10.24

....Food at home

2,825

7.69%

7.69

Mortgage interest and charges

2,463

6.71%

6.71

....Gasoline and motor oil

2,257

6.15%

6.15

....Other vehicle expenses

2,033

5.54%

5.54

..Apparel and services

1,983

5.40%

5.40

....Vehicle purchases (net outlay)

1,969

5.36%

5.36

....Food away from home

1,768

4.81%

4.81

Asian Generation X

U.S. Asian Generation X are the smallest segment of American Generation X we consider here, . In 2008 comprising 4.4% of the overall total population (4.7% of aggregate U.S. employment in 2009), 4.9 million consumer units and 11.5 million total individuals. Average income for our reference population was $73,528 after tax, which for a Generation X Asian population of 1.93 million returns a total market spending of over $260 billion. Asians had the highest educational attainment, with 78% of Asians attending college vs. 19% with high school diplomas and no college.

Trends in Asian Purchasing Power of Generation X

The Asian segment of Generation X has increased purchasing power far faster over the shoulders of our consideration period, at more than double the rate of all races before and after the soft middle where Asian purchasing power fell while others increased; but that slowed drastically and went backward to double the rate of increase for all other races 2007-08.

all races white alone blackAlone

Black AOIC

Asian Alone

Hispanic

2005

25,036

26,496

16,874

16,629

27,331

14,483

2006

26,352

27,821

17,902

17,564

30,474

15,421

2007

26,804

28,325

18,428

18,107

29,901

15,603

2008

26,964

28,502

18,406

18,054

30,292

15,674

2005-06

5.26%

5.00%

6.09%

5.62%

11.50%

6.48%

2006-07

1.72%

1.81%

2.94%

3.09%

-1.88%

1.18%

2007-08

0.60%

0.62%

-0.12%

-0.29%

1.31%

0.46%

Most Profitable Product to Offer to Asian Generation X

The most profitable product to offer to Asian Generation X is again real estate, with owned dwellings nearly twice the proportion of total expenditures by share for Asians, with the corresponding expense on mortgage products and home services. Asians spend a closer share of their food dollar eating outside the home than the other groups, which makes them a per-capita target for restaurant marketing, even though their aggregate annual expenditures are far lower in absolute terms than those of all other groups.

Asian

Avg $/year

Propens

Index

In-Group

Average annual expenditures (dollars)

55,430

..Housing

20,138

36.33%

36.33

....Shelter

13,703

24.72%

24.72

..Transportation

9,049

16.33%

16.33

Owned dwellings

8,471

15.28%

15.28

..Food

7,089

12.79%

12.79

Mortgage interest and charges

5,479

9.88%

9.88

Rented dwellings

4,680

8.44%

8.44

....Food at home

3,943

7.11%

7.11

..Entertainment

3,447

6.22%

6.22

....Food away from home

3,147

5.68%

5.68

....Other vehicle expenses

2,815

5.08%

5.08

....Gasoline and motor oil

2,539

4.58%

4.58

....Vehicle purchases (net outlay)

2,414

4.36%

4.36

..Health care

2,233

4.03%

4.03