United States: reaching the consumer - SwiftERM

flag United States UNITED STATES: REACHING THE CONSUMER

Consumer Profile

The average age having been more or less constant since 2010 despite a slight upward trend. It reached 38.3 years in 2020. More than 18.5% of the population is under 14 years old, 65.2% ages between 15 to 64 years old and 16.2% is over 65 years old. The population growth rate is 0.5%. The average size of a household is 2.6 people, with 28% of households living alone, 34.5% of people living in two and 15.1% of households of 3 people.

The percentage of women out of the total population in the US is 50.5%. About 82.8% of the population lives in urban areas. The most populated areas are in the eastern half of the United States (Great Lakes, Northeast, East and Southeast) and in the western states. The least populated populations are mountain areas, deserts and boreal forests in the extreme north.

In 2019, the main cities by population are New York City, Los Angeles, Chicago, Houston, Phoenix, Philadelphia and San Antonio. The level of education is high with 91% of adults aged 25 to 64 having completed secondary education, 47% of the population 25 to 64 years old who had attained any postsecondary degree. The main occupations are administrative and trade jobs, followed by health, management, business, finance, transportation and construction.

 

Purchasing Power

The GDP per capita PPP in the United States is 65,118.358 USD in 2019. According to the Bureau of Labor Statistics (BLS), the median wage for workers in the United States in the first quarter of 2020 was $957 per week or $49,764 per year. Purchasing power has increased recently, thanks to the increase in promotions and the use of credit. In the United States, the average household net-adjusted disposable income per capita is USD 45 284 a year, much higher than the OECD average of USD 33 604 a year, and the highest figure in the OECD.

The personal consumption expenditure grew by 1.4% in September 2020, according to the Bureau of Economic Analysis. The Gini index on income inequality has stabilized at 0.41 since 2016. Overall, women earn just 81.4% the amount their male counterparts make, according to data from the Bureau of Labor Statistics for the second quarter of 2019. Wages in the east of the country are higher, while the south has the lowest wages. Asian-born households have the highest median wage, ahead of the non-Hispanic white population, the Hispanic population and the Afro-American population.

 

Consumer Behaviour

The United States is a very developed consumer society. While the population had a fairly high level of confidence in the past, the financial crisis first and the Coronavirus crisis later has pushed consumers to move towards lower-priced products. US consumers are more likely to pay attention to promotions and compare prices. The most popular supermarkets are Walmart and Sam’s Club (more than a fifth of market share), followed by Kroger, Albertsons, Costco etc. Americans are generally willing to travel to major shopping centres.

Most US consumers shop and buy on various channels, making the whole buying process long and complicated. For retailers, omni-channel selling – both online and offline – is key to success. During the peak of the COVID-19 pandemic, the second quarter of 2020, consumers spent $200.72 billion online with US retailers, up 44.4% from $138.96 billion in the same quarter of the previous year, according to the Department of Commerce.

The Conference Board’s index – index of consumer confidence – increased 15.5 points to 101.8 in September 2020 from August’s 86.3, according to Bloomberg. Generally, consumers are open to international companies and brands. According to McKinsey’s latest report dated August 2020, the COVID-19 crisis has caused a surge in new activity, with an astonishing 75% of US consumers experiencing new purchasing behaviour in response to economic pressures, shop closures and changing priorities.

Overall, 36 per cent of consumers have tried a new product brand and 25 per cent have incorporating a new private-label brand. Among consumers who have tried different brands, 73% intend to continue to incorporate the new brands into their routines. Gen Z and high income consumers are more inclined to change brands. Social networks have a large impact on consumers, 34% of Generation Z make purchases through social media every single day. Moreover, social media creates opportunities for virtually every type of brand to engage with their customers: food and foodservice brands have the highest overall social media following, with clothing and footwear companies in second place. When buying online, almost 80% of US consumers indicated that they preferred using a debit or credit card. Some 71% of consumers are worried about big data and 34% do not trust tech companies with regard to personal data.

Among consumer trends in the United States ‘Made in America’ is an important issue. Some 70% of Americans consider it significant to buy American products. Also, responsible consumption is increasingly attracting consumers who want sustainable, transparent, clean products.  Some 48% of consumers say they want to change their habits to reduce their impact on the environment. Young people are even more concerned about the subject and are willing to pay more to reduce their footprint. The second-hand market is constantly growing and buying and selling websites are multiplying. The $29 billion secondhand apparel market will nearly double to $51 billion by 2023 according to the ThredUp report. The collaborative economy is highly developed in the United States, especially in large cities.

 

Household Consumption Expenditure

Sector Percentage
Health 21.8%
Housing, water, electricity, gas and other fuels 19.0%
Miscellaneous goods and services 14.1%
Transport 9.5%
Leisure and Culture 9.0%
Restaurants and Hotels 6.9%
Food and non-alcoholic beverages 6.4%
Furnishings, household equipment, everyday house maintenance 4.1%
Clothing and Shoes 3.1%
Education 2.2%
Communication 2.1%
Alcoholic beverages, tobacco and narcotics 1.8%

Source: OECD Stats, 2017.

Consumer Recourse to Credit

In the United States, the use of credit and debit cards is widespread. With card payments, around 70% is made by debit card, while credit cards are used in the remaining 30%. However, the amount of purchases made with credit cards is higher. Household debt has increased significantly in recent years and exceeds the pre-crisis level. In the second half of 2018, outstanding debt reached $ 13.29 trillion.

More and more Americans are in debt (about 73% of the population). On average, an American has $ 137,000 in debt, and 38,000 if one withdraws mortgages. Consumer credit is used primarily to finance vehicles, education and sustainable products. The rise in defaults, threatening financial stability, and a possible rise in interest rates could have a negative impact on consumer credit.

 

Growing Sectors

Leisure, culture, education, vehicles, transport services, tools,  equipment for the home and garden, newspapers, books and stationery, holidays, home textiles, household crockery and utensils, alcoholic beverages.

 

Consumers Associations
US Government , Lodge a Consumer Complaint
CR , Consumer Association
CFA , Federation of American Consumers
 

Population in Figures

Total Population:
328,239,523
Urban Population:
82.5%
Rural Population:
17.5%
Density of Population:
36 Inhab./km²
Men (in %)
49.2%
Women (in %)
50.5%
Natural increase:
0.47%
Medium Age:

37.8

 

Ethnic Origins:
According to the U.S. Census Bureau, the majority of Americans have European or Middle Eastern ethnic origins, representing over 77% of the population. Over 17% of the population has Hispanic or Latino ethnic origins, 13% of the population is African American and about 5% is of Asian ethnic origin. Native Americans and Alaskan Natives constitute about 1% of the population and Native Hawaiians or other Pacific Islanders are about 0.2% of the population.
 

Population of main metropolitan areas

City Population
Los Angeles 17,718,858
New York 16,713,992
Chicago 9,655,015
San Francisco 6,989,419
Houston 6,519,358
Miami 5,805,883
Washington 6,022,391
Atlanta 4,762,159
Dallas 4,547,218
Philadelphia 4,066,064
Phoenix 4,163,445
Detroit 3,801,161
Boston 3,684,250
Minneapolis 3,496,061
San Diego 3,215,637
Seattle 2,776,119

Source: OECD, 2014 – Latest available data.

 

Age of the Population

Life Expectancy in Years
Men:
76.1
Women:
81.1

Source: World Bank, last available data.The CIA World Factbook, 2015 – Latest available data.

 
Distribution of the Population By Age Bracket in %
Under 5:
6.9%
6 to 14:
13.3%
16 to 24:
14.1%
25 to 69:
56.6%
Over 70:
9.1%
Over 80:
3.8%

Source: United Nations, Department of Economic and Social Affairs, Population Division, Prospects 2010 – Latest available data.

 

Household Composition

Average Age of the Head of the Household 45.0 Years
Total Number of Households (in million) 116.7
Average Size of the Households 2.6 Persons
Percent of Households of 1 Person 26.7%
Percent of Households of 2 Persons 32.8%
Percent of Households of 3 or 4 Persons 29.5%
Percent of Households of 5 Persons and More 11.0%

Source: UN Data, 2013 – Latest available data.

 

Consumption Expenditure

Purchasing Power Parity 2018 2019 2020 2021 (e) 2022 (e)
Purchasing Power Parity (Local Currency Unit per USD) 1.00 1.00 1.00 1.00 1.00

Source: IMF – World Economic Outlook Database, Latest Available Data

Definition: Purchasing Power Parity is the Number of Units of a Country’s Currency Required to Buy the Same Amounts of Goods and Services in the Domestic Market as USD Would Buy in the United States.

Note: (e) Estimated Data

 
Household Final Consumption Expenditure 2016 2017 2018
Household Final Consumption Expenditure
(Million USD, Constant Price 2000)
11,721,408 12,027,165 12,388,548
Household Final Consumption Expenditure
(Annual Growth, %)
2.7 2.6 3.0
Household Final Consumption Expenditure per Capita
(USD, Constant Price 2000)
36,296 37,008 37,922
Household Final Consumption Expenditure
(% of GDP)
68.8 n/a n/a

Source: World Bank, Latest Available Data

 
Consumption Expenditure By Product Category as % of Total Expenditure 2017
Health 21.8%
Housing, water, electricity, gas and other fuels 19.0%
Miscellaneous goods and services 14.1%
Transport 9.5%
Recreation and culture 9.0%
Restaurants and hotels 6.9%
Food and non-alcoholic beverages 6.4%
Furnishings, household equipment and routine maintenance of the house 4.1%
Clothing and footwear 3.1%
Education 2.2%
Communication 2.1%
Alcoholic beverages, tobacco and narcotics 1.8%

Source: OECD Stats, Latest available data

 
Information Technology and Communication Equipment, per 100 Inhabitants 2012
Telephone Subscribers 105.9
Main Telephone Lines 44.0
Cellular mobile subscribers 105.9
Internet Users 81.0
PCs 80.5

Source: International Telecommunication Union, Latest available data

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Marketing opportunities

 

Media in Which to Advertise

 

Television

TV advertising in the US is expensive but it reaches consumers massively. While TV will command a strong USD 72.72 billion in ad spending this year (a 5% increase compared to 2016), increases are forecasted to be sluggish through 2021, hovering between 2.0% and 2.5% each year. As more dollars are further allocated to digital, TV’s share of total spend will decline from 35.2% in 2017 to 30.8% by 2021.Despite the range of OTT platforms and the trend for time-shifted viewing across a range of devices, linear TV remains the primary medium to consume video in the US. While this will continue to be the case for the foreseeable future, linear TV’s dominance is in decline.

Main Televisions
News Corporation
Disney
Time Warner
Viacom

 

Press

There are some 1,300 daily newspapers in the US, most of them with a local or regional readership. In regional and local newspapers, it is efficient mainly  for a product with strong potential in a specific region. Hard-copy circulations are in decline as readers go online. In the foreseeable future print media will continue its downward trajectory, with magazines slipping 2.0% and newspapers down 5.0%. The magazine advertising market is composed of two main segments: consumer magazines and trade magazines. Advertising in specialised magazines is a more affordable option for small- to medium-size companies. It is the best advertising option to reach a focused target, consumer group or to sell industrial and commercial products. The consumer magazine advertising market in the US has estimated value of USD 16.6 billion this year, and will remain essentially flat through 2021 (USD 16.7 billion). Of all the media types, newspaper advertising is the only market expected to see a decline in revenues between 2017 (USD 16.8 billion) and 2021 (USD 12.2 billion). Unlike magazine advertising, digital advertising in the newspaper market is not growing quickly enough to offset print advertising losses.

Main Newspapers
The Wall Street Journal
The New York Times
USA Today
Los Angeles Times
Daily News
New York Post
The Washington Post

Mail

The total ad spending in this sector has been stable in recent years, at around USD 45 billion. This form of advertisement is widely used for political campaigns, nevertheless its use for commercial purposes is slowing down (mainly due to digital advertising).

 

In Transportation Venues

Out-of-home (OOH) advertising has the strongest projection of the traditional media types, though its promising outlook is mostly the result of the expected growth in digital out-of-home advertising. Overall, OOH ad revenues are predicted to grow from USD 9.2 billion in 2016 to USD 11 billion in 2021.

Market Leaders:
Outfront Media
Clear Channel Outdoor
LAMAR

Radio

In the US there is a wide variety of radio stations at federal and state level. Companies choose to advertise on specific hour, day of the week related to radios audiences. The radio ad market will increase marginally from USD 18.2 billion in 2016 to USD 19.1 billion in 2021, excluding satellite radio advertising, which represents just a fractional share of total radio advertising. Terrestrial radio online advertising will be the fastest-growing segment. However, as with TV (and unlike print and out-of-home), digital ad revenues will represent just a small portion of overall radio revenues. Forecast to comprise 8.2% share of total radio ad revenues this year, online radio is projected to grow to 10.7% share of radio revenues by 2021. The major form will continue to be terrestrial radio broadcast advertising, although terrestrial radio ad revenues are projected to remain mostly stagnant between the period 2017-2021. For more information, consult the Global Entertainment and Media Outlook 2017-2021 (PwC).

Main Radios
Entercom
ABC Radio
Public Radio International
National Public Radio
Sirius Satellite Radio
XM Satellite Radio

Web

The USA is the biggest market of the world in online advertising. Digital ad expenditures surpassed TV for the first time in 2016, and the gap will widen in the next years. Digital spending will see double-digit growth each year of the forecast, soaring from USD 83 billion in 2017 to 129 billion in 2021.
Mobile has been the main driver of digital’s growth in 2017, accounting for over 70% of digital and more than 25% of total media expenditures. Growth will remain in double digits through the end of the forecast, with mobile ad spending expected to surpass TV in 2019. With a strong 9.9% compound annual growth rate from 2016 through 2021, according to the Global Entertainment and Media Outlook 2017-2021 (PwC) by the end of the forecast period online advertising should be a market worth USD 116 billion. That would make it more than 50% larger than the TV advertising market at that point. Online advertising has already outpaced TV in 2016 by roughly USD 15 billion.

Market Leaders:
Double Click
RAPP
Epsilon
Wunderman
FCB

Main Advertising Agencies
Amobee
IPG – Interpublic Group
Omnicom Group
Cramer-Krasselt
Team One
 

Main Principles of Advertising Regulations

 

Beverages/Alcohol

Long-standing regulations already prohibit false or misleading claims regarding the “curative or therapeutic effects” of an alcoholic beverage in an advertisement or on a label. In general, under the new rules, beer, wine and liquor companies can make a claim about a specific health benefit about their products on labels or in advertisements only under limited circumstances.

The claim must be substantiated by scientific or medical evidence; information must be provided about the health risks associated with moderate and heavier levels of alcohol consumption; and information must be disclosed about the “categories of individuals” for which any alcohol consumption poses risks. Currently, the standard is that alcohol advertisements can only be placed in media where 70% of the audience is over the legal drinking age. Alcohol advertising’s creative messages should not be designed to appeal to people under the age of 21.

Advertising cannot promote brands based on alcohol content or its effects. Advertising must not encourage irresponsible drinking. Another issue in media placement is whether media vendors will accept alcohol advertising. The decision to accept an individual ad or a category of advertising is always at the discretion of the owner or publisher of a media outlet.

Cigarettes

Bans outdoor advertising within 1,000 feet of schools and playgrounds. Permits black-and-white text only advertising for all other outdoor advertising. Color and imagery advertising is allowed inside places minors are not allowed to enter.

Permits black-and-white text-only advertising in publications with significant youth readership (under 18). Prohibits the sale or giveaway of tobacco products like caps, jackets or gym bags that carry cigarette or smokeless tobacco product brand names or logos.
The current regulations prohibit the brand name sponsorship of sporting or entertainment events, but permit it in the corporate name. Sponsorship of individual teams or entries within a sporting event is also prohibited.

In 2010, the Tobacco Control Act became active and placed new restrictions on tobacco marketing, including extensive constraints concerning the circulation of cigarettes and smokeless tobacco to minors. Newly effective with this act, audio advertisements are not permitted to contain any music or sound effects, while video advertisements are limited to static black text on a white background. Any audio soundtrack accompanying a video advertisement is limited to words only, with no music or sound effects. For more information, consult the FDA regulations guidance.

 

Pharmaceuticals/Drugs

The Food and Drug Administration (FDA) handles most matters regarding the labeling of over-the-counter drugs. Given the health and safety issues that can arise in marketing these products, advertisers should take care in substantiating their claims. Depending on the claim, advertisers may be required to their representations with competent and reliable scientific evidence, including tests, studies, or other objective data. You can consult the Advertising guidance by the FDA for further information.

 

Other Rules

Under the Federal Trade Commission Act:advertising must be truthful and non-deceptive; advertisers must have evidence to back up their claims; and advertisements cannot be unfair.
Additional laws apply to ads for specialized products like consumer leases, credit, 900 telephone numbers, and products sold through mail order or telephone sales. For some specialized products or services, additional rules may apply.
For further info, consult Federal Trade Commission guide.

 

Use of Foreign Languages in Advertisement

Foreign commercials must always include some English language.

 

Organizations Regulating Advertising
FDA
FTC: Federal Trade Commission Act
FTC Division of Advertising Practices

 

Learn more about Sales in the United States on Globaltrade.net, the Directory forInternational Trade Service Providers.

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