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1 BUYographics

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3 BUYographics How Demographic and Economic Changes Will Reinvent the Way Marketers Reach Consumers Matt Carmichael

4 BUYOGRAPHICS Copyright, Matt Carmichael, All rights reserved. First published in 2013 by PALGRAVE MACMILLAN in the United States a division of St. Martin s Press LLC, 175 Fifth Avenue, New York, NY Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / Some material herein appeared in Advertising Age and on adage.com as part of the American Consumer Project. That material is reprinted here with permission of Advertising Age, copyright Crain Communications Inc. Esri Tapestry data was provided courtesy of Esri and is used herein with permission. Copyright 2013 Esri. All rights reserved. Patchwork Nation data is reproduced courtesy of the Jefferson Institute, Maps in Appendix II reproduced courtesy of Leo Burnett. Library of Congress Cataloging-in-Publication Data Carmichael, Matt. Buyographics : how demographic and economic changes will reinvent the way marketers reach consumers / Matt Carmichael. pages cm 1. Consumer behavior Social aspects. 2. Age. 3. Consumption (Economics) 4. Marketing. I. Title. HF C dc A catalogue record of the book is available from the British Library. Design by Letra Libre Inc. First edition: November

5 To my family for their inspiration, motivation, and unwavering support.

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7 Contents Acknowledgments xi Introduction 1 1 The Changing Middle Class 7 2 How the Other 18 Percent Live 29 3 Home Economics 47 4 The Buyographics of Family 63 5 The Majority Myth 77 6 The Buyographics of City Living 93 7 The Buyographics of Aging The Buyographics of Health Care The Connected Consumer The Car Culture Crash 159 Epilogue 175 Appendix I: Methods and Data 179 Appendix II: The Millennial Disconnect 187 Notes 199 Index 213

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9 List of Figures Figure 1.1: Change in Average Income 11 Figure 1.2: Total Consumer Debt 14 Figure 1.3: Family Net Worth by Percentile of Income 16 Figure 2.1: The Out-sized Spending of the Affluent 33 Figure 3.1: Share of Selected Household Types 49 Figure 4.1: Percent of Parents Who Stay at Home 67 Figure 5.1: Median Income by Select Race/Ethnicity 81 Figure 5.2: Population Projections 85 Figure 7.1: The Growing Senior Population 117 Figure Appendix Figure Appendix

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11 Acknowledgments FIRST AND FOREMOST I WANT TO THANK ALFREDO, ANDREW, BASHA, CHRIS, Dale, Jay, Liz, Michael, Sandra, Rosemary, and their families. This book would never have been written if they hadn t been willing to open their lives and often their homes to a total stranger and, by extension, to all of you. Thanks for allowing me to tell your stories. Also to everyone along the way who helped connect me to you, especially the folks at Communispace, which used its online community-building skills to help me find some needles in haystacks. My family deserve infinite thanks: my wife for her incredible support of this project and all it required of us and for picking up the slack when I was at the office more than at home; the twins for inspiring the project; and my elder daughter for her constant interest in the book after I explained that her daddy wouldn t have to go live in the library himself once he was an author. Also, to my very literary parents and sister for leaving me little choice but to be journalist/writer, and to Grandpa Ray and Grandma Darcy for their invaluable sitting services. My editor at Advertising Age, Abbey Klaassen, not only listened with an open mind when I pitched her on the scope of the Consumer Project but gave it the resources it needed to happen. Further, the project would

12 xii BUYographics never have happened without David Klein, Allison Arden, and the rest of the Ad Age and Crain family. Particular thanks to Judann Pollack for editing many of the original stories, to Charlie Moran and Rahmin Pavlovic for helping make maps and databases, to Jesper Goransson and Jenn Chui for making it look good in print, and to Kevin Brown and Brad Johnson for being Kevin and Brad. Three people in particular made the transition from magazine project to book happen. My patient and spot-on editor, Laurie Harting, who made this book much, much better than it ever would have been otherwise. And of course my fantastic agent, Cynthia Manson, and my lawyer, Thomas Levinson at Reed Smith. You should buy his book, too. I also wish to thank the rest of the team at Palgrave Macmillan for stellar work in bringing this book to you and getting Buyographics into the world. Thanks to Lauren LoPinto, Alan Bradshaw, Elizabeth Tone, Lindsey Ruthen, Yasmin Mathew, and copy editor Georgia Maas who put the r back in throng. Journal Communications was kind enough to accept this project as part of the deal when I joined, and I thank Bob Schwartzman and Casey Hester for letting me make room for it. I was fortunate to have Stephen J. Serio shoot my author photo. He must have a good camera because his photos are always inspiring. There s a lot of data in this book from a lot of great organizations. Thanks to the great people I worked with at each of them, including John Fetto at Experian Marketing Solutions, Julian Baim at GfK MRI, Andrew Lipsman at comscore, and Steve Krauss at Ipsos Mendelsohn. Also, to Andrea Bradner and David Shanker, who have since moved on from my survey partner, Ipsos Observer, and to Natalie Robuck there who oversaw the survey that was the backbone of chapter ten. I d also like to thank all the great people I met as I toured many of these counties, but especially Diane Travis, Ray San Fratello, Jamie Cox, Josephine Picerno, Kim Myers, and the fine folks in the Wednesday senior s league at the Clermont Bowling Center. Very special thanks go to Donna Fancher at Esri who has been a prime enabler for this demographics junkie. Esri Tapestry data was provided courtesy of Esri and is used herein with permission. Copyright 2013 Esri. All rights reserved.

13 Acknowledgments xiii Dante Chinni s work with the Patchwork Nation was an inspiration for all of this. Thanks to Aaron Presnall at the Jefferson Institute for allowing me to use the framework. Carol Foley s unending curiosity gives agency research a good name. She and the team at Leo Burnett who conducted the automotive research with me were a joy to work with. Along the way I had great conversations with many amazing people about this book and related topics. Many are quoted on the record in the book. Some are not. Now that it s done, I owe each of you, especially George Scribner, Rose Cameron, Bill Frey, Dee Cohn, John Bracken, Bob Shullman, and Margaret Mueller, another beverage or two. And finally the existence of American Demographics really set the stage for bringing this entire field of research into modern marketing. Its founder, Peter Francese, has been a great mentor throughout this process.

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15 BUYographics