Should we forget about ‘the older consumer’? An expert roundtable on market segmentation - 22.10.2013
- 1. Should we forget about ‘the older consumer’? An expert roundtable on market segmentation 22nd October 2013 This event is kindly supported by PFRC
- 2. Welcome David Metz Visiting Professor Centre for Transport Studies, University College London This event is kindly supported by PFRC
- 3. David Sinclair Assistant Director of Policy and Communications ILC-UK This event is kindly supported by PFRC
- 4. Laurence Miklichansky-Maddocks Director of Brand and Business Insights for Europe Brown-Forman Beverages This event is kindly supported by PFRC
- 5. Spending by older people David Hayes Research Associate PFRC This event is kindly supported by PFRC
- 6. Exploring patterns of expenditure: Segmenting the older UK consumer using the Living Costs and Food Survey David Hayes and Sharon Collard Brown-Forman 22 October 2013 www.pfrc.bris.ac.uk/esrc 6
- 7. Our Approach • Using the Living Costs and Food (LCF) Survey, we: 1. Describe average household expenditure by age (using descriptive analysis); 2. Segment older households based on their patterns of expenditure (using cluster analysis); 3. Explore cluster membership (using descriptive and CHAID analysis). www.pfrc.bris.ac.uk/esrc 7
- 8. Standard LCF expenditure categories • • • • • • • • • • • • Alcohol & tobacco Clothing & footwear Communication Education Food & non-alc. drinks Health Household goods & services www.pfrc.bris.ac.uk/esrc 8 Housing, fuel & power Recreation & culture Restaurants & hotels Transport Miscellaneous goods & services
- 9. Data Considerations • Good sample of household heads aged 50+ • To cover transition into and beyond retirement • Total sample size of 2,769 • Good distribution of age groups (even 80+ ~ 12%) • Equivalised expenditure • To take account of household size www.pfrc.bris.ac.uk/esrc 9
- 10. Absolute and equivalised expenditure by age 600 Pounds per week (£) 500 510 400 300 Absolute 286 189 200 160 100 0 50 but under 55 yrs 55 but under 60 yrs www.pfrc.bris.ac.uk/esrc 60 but under 65 yrs 65 but under 70 yrs 10 70 but under 75 yrs 75 but under 80 yrs 80 and above Equivalised
- 11. Proportion of total expenditure by age ↑ Food & non-alc. drink increases: 12% to 19% ↑ Housing, fuel & power doubles: 12% to 24% ↔ Communication constant: 3% ↓ Clothing & footwear halves: 6% to 3% ↓ Transport decreases: 18% to 7% ↓ Recreation drops: 16% to 11% www.pfrc.bris.ac.uk/esrc 11
- 12. The segmentation (clustering) process • Exploring how types of expenditure co-vary • Identifies dominant patterns • Classifies people into segments based on these • Clustered on the 12 expenditure categories • ...the optimal solution contained six clusters www.pfrc.bris.ac.uk/esrc 12
- 13. Drivers of cluster membership • Highly statistically significant variations in expenditure for all 12 categories • Three categories were particularly strong • Alcohol and tobacco • Clothing and footwear • Housing, fuel and power www.pfrc.bris.ac.uk/esrc 13
- 14. The clusters Percentage in cluster (%) Mean weekly expenditure ‘Conservative consumers’ 46 138 ‘Foodies’ 19 228 ‘Burdened by bills’ 11 231 ‘Smokers’ 9 245 ‘Recreation and clothing’ 4 392 ‘Socialites’ 12 405 The average equivalised expenditure across the sample is £217. www.pfrc.bris.ac.uk/esrc 14
- 15. Spend far below average on non-essentials (such as recreation and hotels) Conservative Consumers • • • • • • Spent £138 on average Transport (£18) much lower than average (£32) Only 47% connected to the internet More likely to be the oldest old (22% cf. 15%) 38% in the lowest income quartile; 60% retired 56% gave benefits as main source of income www.pfrc.bris.ac.uk/esrc 15
- 16. Very high expenditure on food (£58 compared to the average of £34) Foodies • • • • • • Spent £228 on average Close to average expenditure in most categories A half (54%) live in two-adult households Very few households are renting (12%, cf.25%) Only 18% in lowest income quartile Larger houses (58% cf. 50% with 6+ rooms) www.pfrc.bris.ac.uk/esrc 16
- 17. Very high proportion of expenditure on housing costs (£4 in every £10, twice the average) Burdened by Bills • • • • Spent £231 on average All other expenditure is relatively low Low transport costs (lowest petrol expenditure) 70% in rented accommodation (cf. 24%) • Including 45% from a social landlord • More single households www.pfrc.bris.ac.uk/esrc 17
- 18. Spent £28 a week on tobacco products Smokers • Spent £245 on average • Very high spend on alcohol and tobacco (£36 per week/15% of total expenditure, cf. 3%) • One of the ‘younger’ clusters (62% under 65) • Almost a third still in full-time employment • Home-ownership is relatively low (42% cf. 54%) www.pfrc.bris.ac.uk/esrc 18
- 19. Recreation and Clothing • • • • • • At £65 each week, these fashionistas spend more on clothing than all the other groups combined! One of the two high-spending clusters (£392) High spend on recreation (£65) & transport (£53) Only 21 per cent of this cluster are 70 and above Two-thirds in larger houses (6+ rooms) 20% say benefits main income (cf. 10% socialites) Half of the cluster in the highest income quartile www.pfrc.bris.ac.uk/esrc 19
- 20. Enjoy the finer things in life, spending £131 per week on eating out, holidays and recreation The Socialites • • • • • • One of the two high-spending clusters (£405) Spent £96 on transport costs (24% cf.15%) Three quarters under 65; 41% working full time Income – 57% earnings; 33% investments More than half in highest income quartile 90% of households connected to the internet www.pfrc.bris.ac.uk/esrc 20
- 21. Important socio-demographic characteristics • Tenure: 97% of Socialites were homeowners • Compared with 29% of Burdened by Bills • Age: 40% of Smokers aged under 60 • Compared with just 26% of Conservative Consumers • Income: 7% of R&C in lowest income quartile • Compared with 39% of Burdened by Bills www.pfrc.bris.ac.uk/esrc 21
- 22. What does this research tell us? • • • • • • Equivalised expenditure decreases with age... ...but other factors important No such thing as the ‘older consumer?’ Depends on preferences, resources, mobility However - Smokers are young (stop/morbidity) Housing costs key in wellbeing (+/- constraints) www.pfrc.bris.ac.uk/esrc 22
- 23. But, we only know so much... • Conservative Consumers are a diverse group • And need unpacking further to understand why they spend comparatively little • Hostels, boarding houses, and institutions such as rest/care and nursing homes are excluded • The true effect of ageing vs. generational effects remains unclear – further analysis needed www.pfrc.bris.ac.uk/esrc 23
- 24. Exploring patterns of expenditure: Segmenting the older UK consumer using the Living Costs and Food Survey David Hayes and Sharon Collard Brown-Forman 22 October 2013 www.pfrc.bris.ac.uk/esrc 24
- 25. Response Dick Stroud Managing Director 20plus30 This event is kindly supported by PFRC
- 26. Debate and Q&A This event is kindly supported by PFRC
- 27. Should we forget about ‘the older consumer’? An expert roundtable on market segmentation 22nd October 2013 This event is kindly supported by PFRC
Editor's Notes
- #12: Little variation in expenditure on alcohol & tobacco and household goods & services