I Am Woman, Hear Me Shop
Business Week Feb. 14, 2005 Rising female consumer power is changing the way companies design, make, and market
products -- and it's about more than adding pastels
Who's the apple of marketers' eye? It's not free-spending teens or men 25-50. It's women, thanks to their one-two punch of purchasing power and decision-making authority. Working women agesof 24-54 -- of whom the U.S. has some 55 million -- have emerged as a potent force in themarketplace, changing the way companies design, position, and sell their products.
Women earn less money than their counterparts -- 78 cents for every dollar a man gets. But they
make more than 80% of buying decisions in all homes. And women shop differently from the waymen do: Females research more extensively and are less likely to be influenced by ads. "Today'swoman is the chief purchasing agent of the family and marketers have to recognize that," saysMichael Silverstein, principal at Boston Consulting Group and author of Trading Up: The NewAmerican Luxury.
SOARING INCOMES. Smart companies already have. Product manufacturers are paying moreattention to style and form, and marketers are shifting away from TV ads in favor of promotionalefforts in venues women trust: reviews in women's magazines and spots on TV shows like Oprahand Extreme Makeover: Home Edition. "Pinched for time and skeptical, these women are forcingmarketers to look at more ways than ever when pitching a product," says Kelley Skoloda, directorof global brand marketing practice at Ketchum, a communications firm that assists companies onmarketing strategies
.Women's decision-making authority has grown in part because more households are headed bywomen -- 27% at last count, a fourfold increase since 1950. Their buying power has grown, t oo.In the past three decades, men's median income has barely budged -- up just 0.6% -- while
women's has soared 63%. Some 30% of working women outearn their husbands, notes Martha
Barletta, author of Marketing to Women: How to Understand, Reach and Increase Your Share of
the World's Largest Market Segment. And 75% of women with the title of vice-president or higher
at Fortune 500 companies outearn their husbands, bringing home on average 68% of household income, according to Barletta.
Little surprise that companies -- including businesses that largely overlooked women in the past --are trying to woo this key consumer. Not long ago, Home Depot (HD ) marketed its power tools
and drywall to men, but it's now aggressively pursuing women with classes that teach them how
to do home repairs. It's also pursuing entertainment partnerships with home improvement showslike Trading Spaces, which are widely watched by women.
NEW LUXURY SECTOR. Banks and financial-service companies, including Citibank (C ), Merrill
Lynch (MER ), and Charles Schwab (SCH ), have created entire departments that market
investment products exclusively to women. Indeed, it would be a mistake to ignore this fast growing segment of wealthy individuals. The Employment Policy Foundation says the number of
women earning $100,000 or more has tripled in the last 10 years.
This deeper-pocketed female consumer's aspirations and taste have given rise to the new "massluxury movement," where the mainstream public has become aware and acquisitive of designerand brand names previously solely in the domain of the affluent. Karl Lagerfeld, the doyen ofhaute couture, designed pieces for mass retailer H&M that sold out in hours, and discounterTarget (TGT ) has such names as Isaac Mizrahi, Cynthia Rowley, and Liz Lange in its stable ofdesigners. Brands like Coach (COH ) are making handbags and key chains at lower price points,and Mercedes (DCX ) and BMW (BMW ) are putting out cars that middle-class consumers can afford.
Not that reaching this type of shopper is without challenges. The female consumer is very busy
and has a complex web of duties that makes her less than readily available. Take Shubha Varma,a 39-year-old vascular surgeon and mother of two children, ages 5 and 1. On a typical day, shegets up at 6 a.m. After a short exercise routine, she wakes up her older child and makes sure he brushes his teeth and eats breakfast, then drives him to preschool after handing the baby to the sitter.
PR CRUCIAL. Through it all, Varma is mentally ticking off the things she has to do that day:
remembering to pick up milk that ran out, schedule an appointment with her kid's music teacher
and decide what she will put on the dinner table that night for the family.
Forget multitasking -- women like Varma are "multiminding," a newly coined buzz phrase that
describes the process of simultaneously thinking about various things. Marketers have found it
hard to grab such women's attention with TV ads. "Today's woman has less time and is such a
tough consumer she has single-handedly pushed marketers to actually go to PR budgets," says
Silverstein. "She reads magazines and wants to know the detail around products." That's one
reason marketers are increasingly emphasizing product placement, sponsorships, and shaping
editorial content over TV ads.
That's why it was good news for Dell (DELL ) when Oprah's Favorite Things 2004 Shopping List
included two of its products, the $199 Dell Pocket DJ and $2,199 30-inch LCD TV. In the two
weeks after the episode featuring Oprah's List aired, sales of Dell's plasma TVs spiked,
accounting for 70% of its units sold during the holidays.
MOTORBIKE SALES Retailers have had to change their approach to the women's market as well."Women do a lot of homework beforehand and aren't willing to be dazzled by the salespersonwho doesn't bring any practical information," says Wendy Liebmann, president of WSL StrategicRetail and author of How America Shops. To give female shoppers the kind of information they'relooking for, Best Buy (BBY ) is retraining its floor sales staff to talk to women in practical terms,not in jargon or geekspeak.
The increased spotlight on the female shopper is even starting before the marketing and selling
phase in some cases. Computer maker X2 is coming out with lighter laptops in nontraditional
colors. In 2003, contractor Barbara Kavovit, CEO of Barbara K Enterprises, launched a line of
tools ergonomically designed to suit a woman's smaller hand. (And they come in blue, not pink.)
"Women are defining the new value equation -- combine the practical with the esthetic," says
Liebmann.
This empowered woman hasn't escaped the notice of Harley-Davidson (HDI ). In November, it
added a section on its Web site for female bikers, with tips on appropriate gear and how to ride
safely. Harley says it was responding to the growing popularity of motorbikes among women:
Sales to women grew to 10%, or 23,000, of all bikes sold in 2003 vs. just 2% in 1985. iPOD EXAMPLE. Marketers warn that retailers and manufacturers assume that marketing to
women is as easy as changing the color of a product to pink. "If you're serious about reaching the female consumer, you have to care about her and get to know what she desires," says BCG's Silverstein. It's critical they understand the female consumer's needs and dissatisfactions, andcome up with ideas and solutions, as Best Buy has done.
Best Buy and Dell are both optimistic that their women's initiatives of the last six months will boosttheir bottom lines. And if Apple's success with the iPod mini is any indication, such optimism iswell-founded. Women are lapping up a majority of the multicolored minis, contributing significantlyto Apple's dramatic 74% sales increase in its fiscal first quarter that ended Dec. 25.
Whether their efforts involve retraining sales staff or redesigning products, companies that pay
attention to the female consumer could hit the mother lode.
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