In Demography, Size Does Matter

Article excerpt

Sure, each generation has its own kinks and quirks, but when it comes down to making that final sale, there's one missing factor that's so obvious it's often left out of the mix: numbers. Those pesky numbers, explains Kenneth Gronbach in his new book The Age Curve: How to Profit from the Coming Demographic Storm, are what demographics is all about, and numbers determine your market size. In the simplest, macro-level terms: A big population makes for a big market, and a small population makes for a small market. Using birth rates and population figures, marketers can not only determine the number of potential consumers today, but they can also predict the future demand for a product. CRM's Assistant Editor Jessica Tsai had the opportunity to speak with Gronbach about putting numbers back into the equation.

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CRM magazine: This numbers game seems so simple--what tipped you off?

Kenneth Gronbach: I've seen lots of businesses come and go. The one that precipitated the initial research that I did starting 12 years ago was American Honda motorcycles. We knew we were going after [motorcycle-buying men, 16 to 24 years old,] but the bikes came in 1986 and we weren't selling any. It was kind of baffling. Between 1986 and 1992, sales fell dramatically--close to 80 percent. It was a significant loss for us, and what was worse was that Honda had no understanding of what was going on; neither did Suzuki, Kawasaki, or Yamaha. The business was just gone.

In 1996, I was reading an editorial in the Hartford Courant that was talking about [members of] Gen X and how lazy they were, because they weren't participating in the political process. I didn't buy it. There's no way an entire generation is lazy. It just didn't make sense to me. So I had a research department look up in the United States Census as much as we could find out about the voting habits and political participation of Gen X. The research folks came back, and said the [members of Gen X] aren't really different from the Boomers: They vote as often for their age, they give as much money as the Boomers did when the Boomers were their age. The problem is, it's just a smaller group.

I said, "Whoa! Wait a minute--they're a smaller group? How can that be?" And they said, "Well, the fertility between 1965 and 1984 dropped 25 percent," owing to the zero population growth and Roe v.Wade. Fertility in the U.S. had dropped like a stone.

So I said, "Give me the stats on motorcycle sales!" In 1986--the peak of the Baby Boomers--a huge mountain of people exited the motorcycle-buying age, men [who were] 16 to 24 years old. It wasn't qualitative at all, it was quantitative. We were accusing a smaller group of not liking the food because they didn't eat as much. …