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Household Psychology 101: Who’s Making Decisions on What, and Why

Household Psychology 101: Who’s Making Decisions on What, and Why

The best way to market to your customer is to understand your customer, which is why we’ve created this, Household Psychology 101. In this post we’re going to take some time to break down who’s making decisions on what and why in a few key market groups.

The “Traditional” Household Is Disappearing

In fact, in 2014, many sources hailed the traditional family structure as dead. We don’t mean this in the political sense — the erosion of “family values” vs. the evolution of it is not our concern. Rather we mean this in a simple, literal sense, and one that will affect the way you market to households as a whole as well as individuals. There’s copious amounts of in-depth research evaluating the effect this has on family roles, on the way children develop, and the ties it has to financial circumstances. However, we’ll provide a quick snapshot of these changes in general.

  • Only 16% of households match the so-called Leave It to Beaver standard of two parents married to each other in their first marriage with at least one, but probably two children.
  • Americans are waiting longer for marriage, currently the longest historically at 29 years (men) and 27 years (women) of age.
  • American women are waiting even longer to have children (only 22% of mothers are 24 years old or younger) and are having fewer children (from 2.1 to 1.9 in their lifetime).
  • Although they remain statistically underrepresented, more LGBT Americans are having children at 37% on average.
  • More mothers are unwed, but those that are still more likely to be cohabitating.
  • More families are blended: 15% are interracial and 44% of young adults (18-29) have step-siblings.
  • More families with two parents are families where both parents are breadwinners.
  • 38% of heterosexual marriages feature the woman as earning more than her husband, without taking cohabitation or LGBT coupling into account.
  • 31% of parents described themselves as “always feel rushed,” and another 53% “sometimes feel rushed.”
  • 71% of parents solicit opinions from their kids about purchases, and of those, 66% actively take their kids’ opinions into consideration, to the tune of granting children $1.2 trillion buying power annually.

A Quick Note on Gen Z

Since this generation still qualifies as children, it can be easy to ignore them if your target is their parent. However, in households with teens in particular, they can be extremely influential in terms of purchasing decisions. This applies to the things they want, as you’d probably expect, but it also extends to which restaurants to eat at (88% sit-down, 95% fast food), in-home entertainment (78%), out-of-home entertainment (93%), and even which vehicles they should purchase (45%), where to go on vacation without the kids (44%), and what phone they should buy (18%).

Millennials

This demographic clocks in between 18 and 34 years of age, and it’s the largest, most diverse population in the country. Driven by personalized experiences, they avoid being pinned down as a group in that their diversity brings much more nuance to understanding them. What’s more, there’s much more equality between the sexes in this generation: Millennial women earn 95% of what their male counterparts make. As young urban professionals, they tend to be renters with more than one adult in their household, either a roommate or cohabiting partner. A few quick stats about this generation and technology:

  • 91% more likely to obtain coupons via the Internet.
  • 77% search for coupons using their smartphone.
  • 80% will actively search for coupons after hearing about the offer through social media

They’re less likely to have kids or a house, but once they do, the chances are getting higher and higher that they’ll be joining the sandwich generation, i.e., those caring for children and the elderly at the same time. This broadens their influence on other shoppers, but also plays a huge part in their own purchasing decisions. Because of this, you’re going to have to rely more on market research of your audience to understand how to reach your customers, because the influences won’t be the same across the board.

You’ve undoubtedly heard about the shift in consumer behavior that leads to a focus on micro-moments, wherein meeting the need in the moment is more important than brand loyalty. Brand authenticity and transparency can be huge in earning Millennial trust. This extends to most of the younger generations, but is driven by Millennials, who are influenced by the ability to support social causes when they shop, as you can see in these statistics:

  • 63% are willing to be loyal to brands engaging with philanthropies and causes
  • 40% see social responsibility as one of the most important qualities in a business
  • 85% consider the brand’s responsible efforts as part of the decision to purchase or recommend it

It’s worth bearing in mind that while leading edge Millennials are professionals with degrees, trailing edge Millennials haven’t quite left the nest. Even when they don’t live at home, they may still be dependent on their parents for money or advice, so keep this influence in mind when looking at the younger set of this generation.

When They Are Parents:

While the influences of their perspectives on technology and social activism remain the same (50% still try to support causes with their purchases), their shopping habits start to align more with older generations. They’re more likely to shop at Wal-Mart (although that favoritism shifts to Target in higher income brackets), and while quality is still important, they’re more likely to be influenced by price over quality than their childless counterparts.

Perhaps surprisingly, once they become parents, they’re also more likely to say their children do best if there’s a stay-at-home mom (48%), yet the labor force participation among Millennial moms is 61%. This makes for an interesting balance of influence on purchases at home. About 48% are also less willing to exchange information for promotional perks now that they’ve become parents.

Millennial dads are more likely than their female counterparts to say they’re the same person as before parenthood (45% vs 30% respectively), however that doesn’t mean their roles in the family structure aren’t changing. Both genders view work-life balance as  more important with parenthood (76% men, 74% women), so it’s worth taking a look at your market research to see if stay-at-home dads play a larger role in purchasing decisions.

Gen X

This generation sits at 35 to 55 years of age, and while most attention gets passed on to both the generation that preceded them and the generation that followed, it’s actually fairly influential in that it’s responsible for 29% of net worth and 31% of income. Aside from being on the brink of taking over businesses from retiring Boomers, 17% of Gen Xers are also the current sandwich generation, i.e., they are currently financially responsible for both a senior and a minor, and may be supporting a trailing edge Millennial to boot. Given the family dynamics we’ve already discussed, we can see that their kids do play a role in their decision making, but it’s important to remember to market to them for the needs of these other groups as well.

About 60% of them use smartphones daily, a neat parallel to the 67% that use their laptop or computer daily, and they’re receptive to digital marketing, provided you give them enough information in the process. (In fact, 47% of online shoppers may be represented by Gen X, and they tend to have the most disposable income.) Where Millennials lead the way in micro-moments, Gen X was the first to be influenced by online reviews, opinion sites, and social media, and they remain a big influencer in Gen X purchasing decisions today. They also lead the trend of wanting personalized more than generic marketing.

It’s worth pointing out that while the Boomer generation has a relatively stable age range, Gen X overlaps a great deal with leading edge Millennials. What that means for marketers is that there’s a good mix of consumers that take preferences from both generations, and that in many regards, Gen X describes itself as a way of viewing the world rather than a statistical grouping. They’re slow to trust, and are dubious about the benefits of loyalty, but they are influenced by a swathe of media in such a way as to be willing to take purchase risks if given ample reason.

Hispanic Gen-Xers

These households tend to be full of family with three or more people in the home on the small end, and 17 people including children on the large end. They’re extremely family oriented, and the influence on purchasing decisions may travel along any number of vectors. Leading edge members tend to be religious, but across the spectrum of this generation, they’re very culturally influenced, for instance, they’re 3 times more likely to watch Mexican Soccer and 74% more likely to watch European or International Soccer. Many are also bilingual. They tend to be even more digitally engaged than most Gen Xers, which leads them to be one of the most influenced by digital advertising. They’re also 17% and 18% more likely to use coupons through QR code or text message, respectively.

Bargain Hunting Moms

About 90% of Gen X moms use the internet, and most of those use smartphones and social networking, but for support systems and for helping to keep tabs on their kids. Even so, 78% turn to traditional print sources for food related coupons, and 86% are influenced most by price when they’re making the decision whether or not to try a new brand.

Suburban Homeowners

This particular subset tends to be married but not have children. In fact, if they haven’t already had children, they probably won’t. This frees this type of Gen Xer to look for and enjoy creature comforts, for instance, they’re 78% more likely to drink wine three or more times per week, and twice as likely to eat at upscale restaurants. Despite being working professionals, they’re also three times more likely to have taken four or more vacations or other personal trips in the past year. It’s no surprise that they’re 45% more likely to obtain coupons through something as hassle free as email.

Boomers and Other Seniors

The 55 years plus bracket may be retiring, but this generation hasn’t given up its purchasing power or its influence yet. They’re twice as likely to own a second home, more than 30% more likely to participate in relaxing outdoor activities like gardening and golfing, and they still prefer to find promotions and savings on their purchases through newspapers and magazines (as much as 43%). The internet still influences purchasing decisions, though — 57% will turn to the Internet to do brand research and find other shopping information. It should be no surprise that they’re responsible for $2.3 trillion in consumer expenditures annually, but as more of them retire, they become more careful in their spending since they’re on fixed incomes. Boomer finances tend to be caught up in emotionally important bills like paying for weddings or helping to pay for college in the younger generations. Boomers haven’t lost their sense of independence, either — 90% prefer to live in their own home, and are willing to spend on the tools and technology they need to make it happen. The biggest influencers are still friends and family recommendations, but Boomers aren’t ignoring consumer reviews. They’re just much less likely to be looking for those reviews online.

Seniors also tend to become less of a purchase maker as much as a purchase influencer as they age. Many are living with their children — the sandwich generation — and their needs will play to those younger audiences. Those that don’t, or who need home care, will also be greatly influenced by their caregivers. They tend to be penny pinchers due to limited disposable income.

Now that you’ve been through our Household Psychology 101, it’s time to audit your marketing strategy, and even your marketing research. Do you know who’s making decisions on what and why in your audience segments? Truly understand your audience segments and course correct where you foresee opportunity.