American Woman: The Purchasing Powerhouse
The phrase “emerging market” is typically used in reference to a place. Associated terms like BRIC, 3G, and Next Eleven all reference up-and-coming countries. But business leaders might do better to think less about “where” and more about “whom” when it comes to exploring new market opportunities.
Today, women are far and away the most powerful emerging market on Earth. Global estimates predict women’s incomes will reach $18 trillion by 2018, and they are poised to control 75 percent of global discretionary spending.
Despite these impressive statistics, women face many challenges to harnessing the full extent of their purchasing power. More than 40 percent of women in America are non-participants in the labor force, which means their spending power is tied to a partner or other sources of income. Furthermore, women in the workforce often face unique challenges related to work-life-family balance. Finally, the wage gap continues to artificially deflate the amount of purchasing power women should have.
These paradigms are shifting, albeit slowly. Marketers would be wise to pay close attention to this powerful, emerging market.
Women Are the “Deciders”
In 2008, Boston Consulting Group reported US consumers spent $5.9 trillion. Of that, women controlled an estimated $4.3 trillion (about 73 percent of all purchase decisions). In 2011, the Wall Street Journal estimated women controlled as much as 80% of all purchase decisions — and it isn’t hard to understand why. Although it is difficult to define a “typical” American household, among two-parent homes in the US, men are more likely than women to work full time. In those cases — and even when full-time work is evenly split — women tend to make more purchases for the household.
When it comes to purchasing power, women add what author Bridget Brennan calls the “multiplier effect.” More often than not, women are primary caregivers to children, elderly parents and even extended family. So, more than any other demographic segment, in addition to themselves, women tend to shop for other people. This gives women an immense amount of influence over how marketers position products. And that influence is on the rise.
More Women in the Workforce
The number of women working full-time has more than doubled since 1970 (32 million to 73 million today). Earning alongside or even instead of their partners, women have dramatically increased their personal purchasing power. In turn, the multiplier effect of a woman who makes buying decisions for herself, her immediate family, and her extended family grows exponentially.
A complex web of societal and familial pressures keeps many women from realizing — and maintaining — their earning potential. Some women feel obligated to step away from their careers to take care of family. Notably, the US still lags the developed world when it comes to paid maternity leave. Others have difficulty finding suitable employment following a break in their work history.
Some companies are improving their approach. Online crafts retailer Etsy offers employees up to six months of paid maternity leave. And nonprofits like Path Forward aim to help women who’ve taken time away from the workforce get back to work at a level comparable to where they left. Smart companies will continue to make work-life balance a priority, extending flexible arrangements so women no longer feel compelled to choose between family and career. As more women are able to enter and stay in the workforce, their purchasing power further increases.
Minding the Wage Gap
The wage gap continues to stymie growth in this emerging market, though legislation has slowly nudged the issue forward. In 1963, Congress passed the Equal Pay Act, requiring equal pay for equal work. At the time, women who worked full-time year-round made about 59 cents for every dollar their male counterparts made. Today, women still earn only about 79 cents on the dollar as compared to men. The wage gap may be decreasing, but equal pay advocates argue it is not closing quickly enough.
The 2016 election has brought the discussion to light. Hillary Clinton has long campaigned for pay equity. In 2009, she co-sponsored legislation that became the Lilly Ledbetter Fair Pay Act. Bernie Sanders has called the extant wage gap “unconscionable.” Donald Trump has been less forthright, though he has made qualified references to women needing to receive equal pay for equal work.
One thing all candidates agree on is the importance of growing the economy. And economists have predicted closing the wage gap could result in as much as a 4 percent net positive bump to GDP. Equal pay is good for everyone.
Know Your Customer
Marketing to women is a complex venture. Even as you are learning about individual preferences, so too must your strategies take into account the multiplier effect. Products and positioning must be simultaneously multifaceted and customer-centric.
It can be easy to get lost in monolithic ideas about what the “average American woman” looks like, how she communicates and what types of products she’s interested in. The truth is, every woman is an individual, and your marketing must treat her as such.
Segmentation and testing are still valuable tools as you discover more about this emerging market. Research can elucidate trends related to what women are buying for themselves and how they make decisions about what to buy for others — but each individual consumer’s behaviors and preferences should inform ongoing marketing efforts. Tailor product features, packaging, offer details, and messaging to meet their individual needs. Above all, please remember, pink is not always the answer.
Jen Ribble's marketing career spans 15 years and several industries. She currently leads Return Path’s content marketing and PR efforts. In her spare time, Jen is an aspiring chef and travel junkie.