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[17 comments]

Women's Purchasing Power Grows

February 23, 2009

By Tom Ryan

An often-cited marketing maxim holds that around 80 percent of consumer purchases are driven by women. The figure is often cited to emphasize how women are underestimated and under-served as customers. But the generally-accepted principle frequently leaves retailers and brands guessing at the extent of women's buying influence within given categories.

The theory bases its high purchasing power on how much a women will buy for herself, how much she buys for others (i.e., husband, boyfriend, kids, nephews, male friends, etc.) and even how much a women will influence other purchases. Their buying acumen is often backed by stats around the female gender's growing economic power, their increasing influence in the household, as well as perhaps stereotypical views on their propensity to shop.

The finding is most often quoted from Tom Peters' Re-Imagine! Business Excellence in a Disruptive Age. In the book published in 2003, the management guru claims that women make up 83 percent of all consumer purchases. The book notes that in category after category, women are "instigators-in-chief" of most consumer purchases.

Breaking out few categories, the book estimates that women determine a whopping 94 percent of home furnishings purchases, 92 percent of vacations, 91 percent of new homes, 80 percent of DIY (do-it-yourself) projects, 68 percent of car purchases, and 51 percent of consumer electronics buys. The book also found that women make up about 89 percent of the spending decisions around new bank accounts and 80 percent around healthcare decisions.

But it's tough to figure out women's influence across all categories.

For instance, take the often male-skewed sporting goods industry. In its annual Sporting Goods Market Report, the National Sporting Goods Association (NSGA) finds that women on their own behalf acquire about 55 percent of units sold in 14 categories of athletic footwear (excluding rugged outdoor, hunting boots, cleated footwear and water sport). Including purchases she drove for her husband, sons, and other male friends, purchasing power around athletic footwear could be argued to come close to the 80 percent mark. Falling well short might be the category of sports equipment, in which women make up about a third of sales and where purchasing decisions for children are often driven by the father.

But in his book, Mr. Peters laments on how, given their dominant purchasing power, women are rarely turned to when it comes to marketing and product design. And he predicted in Business Week last year that with women outpacing men in college degrees, they'll increasingly be leading decision making in Corporate America.

Mr. Peters said, "It's going to be so extreme in the next 20 years, it's just eye popping."

Discussion question: How valid is the notion that women determine around 80 percent of consumer purchasing decisions? In what categories is the theory highly relevant? In what categories may it be irrelevant?

Discussion Questions:

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

While the marketing standard claims it's around 80 percent, how much do you think consumer purchases are determined by women?

Comments:

As the Japanese say, "the opposite side has an opposite side," meaning sometimes, the answer is staring you right in the face. We've felt for years that the real issue here is; why can't we market to men? In terms of Blue Ocean strategy, doesn't the thought of 50% of our population NOT buying seem to be a bigger opportunity?

Clearly, women are the proverbial low-hanging fruit of retail marketers, especially given the statistics/facts. But are they really making the decisions for the rest of the family or are they just the purchase tool? Many CPG companies call her the "buyer, but not the user," and if that's the case, we can't forget to think about the rest of the family when marketing at retail.

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Lee Peterson, EVP Creative Services, WD Partners

Certainly, that family where the woman is head of household reflects women making almost 100% of the decisions. These households purchase categories that are normally associated with men...electronics, automobiles, sporting goods.

But, the question is what goes on in the male/female households. I think the women win again. The difference is she cares about the purchase much more than the man. She knows the details better. She knows the implication of the purchase better. Check out women's participation on healthcare websites versus men. Men should certainly be investigating health as much as women, but they don't.

Consider the layout of the department store. The men's department is always the easiest to get to. The reason is that is if it isn't easy; the men won't go find it. Women will shop, compare, study before they make a purchase. When I buy a pair of jeans by myself, I go in the store, tell the salesperson the size and inevitably the fit or style or something is wrong. If I take my wife, I end up with the right size, style and fit. She even understands the implications of purchasing a pair of sneakers better than I. That is because when she buys hers, she asks questions, checks out specs on the internet and can't help but add her knowledge to my purchase.

Perhaps it makes no difference if you tip the advertising target toward women. Maybe, women are not effected by advertising as much as men might be?

What categories are highly relevant? Housing, furnishings, food, entertainment, healthcare, education, savings. What is irrelevant? Beer!

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Gene Detroyer, Professor, Independent

Frankly, I find the question and discussion a bit ridiculous. Is there anyone out there who, in their gut, doesn't know that women are responsible for major decisions in most categories?

There's research out there that will tell you that women are responsible for purchasing decisions on condoms, so why not high-def TVs?

Once again, the discussion is not about satisfying women or men--but consumers and not view either gender as one monolithic group.

Len Lewis, President, Lewis Communications, Inc.

While women may be the principal decision makers in a category they are not usually the only decision maker and not all those women are basing their decisions on the same criteria.

"Who is purchasing which products with which criteria in mind?" is a better question for today's diverse marketplace.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Smart consumer goods companies--and retailers alike--know the difference between who is the "consumer" and who is the "shopper."

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

It's hard to think of a single category where women are not the principal decision-maker about a purchase, or at least a key determinant. Best Buy, for example, recognizes that more and more tech purchases in its stores (whether big-screen TVs or computer equipment) are made by or driven by women, and is starting to experiment with store design to help feed this trend. So Mr. Peters' findings are not surprising at all.

In fact, marketers who haven't already recognized major societal changes need to wake up to the fact that the nuclear family of the 50s and 60s no longer exists as the primary definition of a "household" today. As of 2005, the "traditional" family with a man in the workforce and a stay-at-home mom is almost outnumbered by families led by single women...and of course two-income families are the norm today. So any retailer or marketer just coming to terms with the role of the female decision-maker is years behind the times.

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Dick Seesel, Principal, Retailing In Focus LLC

LOL, Warren. In fact, my wife just vetted this comment before I posted it :). This discussion topic immediately reminded me of a New York Times article from a couple weeks ago on one of the recession's byproducts; women are poised to surpass men on the nation's payrolls. Regardless of if and when this happens, we're already at a point (partially a result of unemployment levels and recent layoffs) where countless men's roles are changing in their households.

Men are responsible for a greater share of household jobs than ever. That being the case, we could be in the midst of a rebalancing. Consumer product manufacturers could see a steady growth in male influence as men adopt a more hands-on approach in areas that have traditionally been outside their purview.

Mark Baum, SVP & CCO, Food Marketing Institute

Women make 80% of all purchasing decisions? Yes; and the brands are connecting the female customer to the brand will and are cashing in, especially e-commerce. A recent survey conducted has found that 96% of women in the USA who have shopped online in the past 12 months have purchased at least one product over the Internet. Lastly....

1. Women purchase strategically; men purchase immediately.
2. Women are cogno-emotionally placial; men are spatial.
3. Women consider other's opinions as a guide to making their own decision; men consider others' decisions as a guide to forming their own opinions.

Brian Anderson, President, BA Search Group

Retailers and brands have learned the hard way not to make "logical" assumptions about categories that would seem to be immune to women's influence. At a talk late last year, John Fleming, Walmart's CMO, shared his delight in revealing, to the retailer's own employees, that 68% of the retailer's Tire and Lube Express customers are women; an insight that led to a visual and process overhaul for the division. You know what they say about "assumptions," right?

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Carol Spieckerman, President, newmarketbuilders

Tom Peters may be right, and the whole notion of female-dominated purchasing may be right. But to align sales, marketing or operational strategies with it is a very risky bet for retailers. Suppose retailers align with this trend and shift advertising away from male-targeted ads. Let's say they ramp up their budgets from 60-40 to 80-20. That is an extreme position and is therefore vulnerable to random events and even subtle shifts in purchase patterns. Interesting trend, but not one to bet the budget on.

John Gaffney, Senior Analyst, Retail Touchpoints

Tom Peters' "Re-Imagine" from 2003 is a great reference, and I have seen that a lot more brands are at least talking the marketing to women talk (if not fully committing to the walk). What I have noticed of late, in interviewing men...mainly from marketing/biz realms, is that it's really not about gender as much as right-brain vs left-brain thinking. Plenty of these guys do the grocery shopping or cooking, and many are proud of co-parenting or their fine housecleaning work. What seems to be going on now is that our culture is perhaps allowing men to get more engaged in shopping. It is no longer so emasculating to admit to co-managing the household or taking responsibility for your own health and grooming, etc. Men are happily buying skin care and hair care, fashion and things for their kids as well as the stereotypical lawn mowers and gadgets. (and vice versa for women who buy skin care and hair care, and cars and houses...).

Women tend to be guided by their right brains and men tend to be guided by their left. The highest consumer standard is that represented by right-brain guided thinkers because they take a lot more in (more holistic in their process) and raise the bar for everyone. The women's market is a great one to study and learn to serve to the utmost because men are getting up to the same speed--and we can't miss that boat. More and more, there will be no gender about great customer experience and marketing.

Andrea Learned, President, Learned On, LLC

It's so interesting to compare the advertising on daytime television, prime time television, and during sporting events. Advertisers seem to think that men purchase trucks, beer, and Cialis...and pretty much nothing else. Rather than reinforcing women's overwhelming purchasing power, advertisers might want to try de-marginalizing the male audience to grow sales.

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Cathy Hotka, Principal, Cathy Hotka & Associates

I think its a very valid notion. Women generally get to spend all their money along with half of their male companion's as well. I have always felt that when it come to income for consumer spending, women have outpaced men now for decades. While the earning power might be slightly less than men, their consumer spending power is much greater. With the downturn in the economy, more men--as a result of unemployment--might be inclined to ask female companions to contribute something towards the mortgage, rent, and monthly expenses, etc. This will reduce women's purchasing power.

Categories in which this is most relevant, where women drive 80% of the purchases, would be just about everything that doesn't require a signature for a loan or negotiation on price.

David Livingston, Principal, DJL Research

Might as well put my foot in it. I'm a guy. My instinct is to buy based on function, not appearance. I also tend to buy quickly, without shopping around a whole lot, mostly because I really dislike the shopping experience. I don't really care much if a shirt is blue, red, or striped, so long as it tucks in right and has a pocket that buttons. I'll get it home, and my wife will tell me I have three like it already, or stripes are "out" this year, or some such, but it just doesn't matter to me. So, over the years, I've ceded more and more of the shopping and decision-making to her. This is true for most every guy I know. (Those who make their own buying decisions, we hold in a quiet, reverential awe.) I think this is a big factor. Not a complaint. My wife has taste, and I don't.

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Warren Thayer, Editor & Managing Partner, Frozen & Refrigerated Buyer

I think that in most categories, women are the decision maker and the purchaser. However, I don't believe it is 90%. There are many categories where, although some are saying the woman is making the purchasing decision, I don't view it that way. I believe they are simply the ones with the "veto power." Men know what fishing equipment they want, not the women. They know what cigars they want to buy and what tools they want from Home Depot. However, women tend to handle the finances. It is more of a "Presidency" position. The man might want to buy something, but he goes to the wife to see if there is money. She handles discretionary spending. If the money is there and he wants or needs a new drill, she will agree, but I doubt she will research the voltage and other features. He is making the decision on which tool. She is making the decision on the amount.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

I have two words: Marlboro Man. Marlboro Man is the classic example of capturing the fancy of the market by appearing to appeal to a narrow segment of the market. The "target" is not necessarily the market. In the context of women's purchasing power, if a brand that is ultimately intended for someone else goes too far in appealing to the woman shopper, other influencers (like the ultimate user of the product) may protest, and worse yet, it may lose its appeal to the woman because she doesn't see the appeal for the person she's shopping for.

I would argue that if you really want to appeal to "the woman shopper" (and really, it makes me a little ill to talk about it this way--shoppers have needs and wants and preferences, and many of them have little to do with their gender), then I would recommend that you spend the effort on service, rather than marketing. The product and the marketing for the product has to stay focused on appealing to the market by focusing on the target. The retailer needs to focus on the shopper--sometimes, that's two completely different objectives.

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Nikki Baird, Managing Partner, RSR Research

Women may rule the roost and the household pocket and check books, but yesterday at my local Kmart, the men were filling their carts with more sales than the women.

Case in point, an elderly female shopper was looking for Martha Stewart Every Day chair pads which were advertised at a great price, $9.99 in their weekly circular.

We had both headed over to the endcap where they were displayed.

She surveyed the selection and left, I bought the plumpest four chair pads in deep red that I could find.

So which sex rang up sales that day? The men were buying, and the women were just shopping.

'weo'

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