Riding the Next Wave
Pet product marketers must prepare for the inevitable end of the baby-boomer boom by reaching out to emerging consumer demographics.
It has been a phenomenal decade for the pet industry. Poised to break the $50-billion mark in total sales this year, the market for pet products has nearly doubled in size since 2001, when total spending on these products was just $28.5 billion, according to the American Pet Products Association (APPA).
But changing consumer demographics may soon put this success in peril.
Most industry observers agree that the boom in pet product sales over the past 10 years has largely been driven by baby boomers who have watched their children leave the nest and have focused their attention, and discretionary spending, on their pets. Unfortunately, this segment of consumers is not infinite. In fact, many experts warn that the largest segment of baby boomers (often defined as the generation born between 1946-1964) will soon begin to forgo pet ownership as they reach their later “golden years,” prompting a precipitous drop in pet ownership, and thus pet-related spending.
“According to the numbers I’ve seen, we can expect at least another three to five years of growth,” says Bob Vetere, president of the American Pet Products Association. “Then we’re going to see the largest chunk [of baby boomers] reaching the age of 70.”
This, Vetere acknowledges, is typically an age at which pet ownership becomes a less-attractive option for the average consumer, who likely doesn’t want to be strapped with the responsibility of caring for a pet, for any number of reasons.
Consider this along with the fact that subsequent generations, as well as many of this country’s fastest-growing demographics–Hispanics, blacks and Asians–are less likely to own pets and often spend less on the pets that they do own, and it becomes apparent that fundamental changes are needed in the way that the pet care category–and the concept of pet ownership itself–is promoted to these consumers.
According to the APPA 2010-2011 National Pet Owners Survey, the average U.S. pet owner is 48 years old. While this would seem like a fairly innocuous fact on the surface, when you dig a little deeper and find that the average pet-owner age reported in the 2009-2010 edition of the survey was 47 years old, and in 2003-2004 that age was 46, the apparent trend is a drop-off in pet ownership among younger generations.
This point is not lost on the industry organizations that have taken on responsibility of broadening the appeal of pet ownership.
“We have to energize the next generation to be actively involved with pets and to understand the benefits of having pets,” says Doug Poindexter, president of the World Pet Association (WPA). “Sometimes I wonder if the generation that is between [baby boomers] and the youngest generation really understands those benefits.”
Another eye-opening trend is the variation in how much different age groups spend on their pets. According to a study conducted by The Nielsen Company last year, pet-owning baby boomers significantly outspend pet owners categorized as Gen-Xers or Millennials. For example, baby boomers spent an average of 80 percent more on pet food than Millennials did in 2010 (38 percent more than Gen-X pet owners), and 22 percent more on pet care items (9 percent more than Gen-X pet owners).
Although their spending trends well behind the baby boomers’, these younger generations will become an increasingly important audience for the pet care market–particularly the Millennials, who have yet to reach their full potential, in terms of disposable income.
“With the current [state of the economy], Millennials don’t have as much disposable money as they would in a more robust economy,” says Jim Bilello, president and founder of US Marketing, Inc., a Chicago-based niche-marketing firm. “But as the economy comes back, we’re going to see Millennials with this disposable income that results in the type of upscale lifestyle that we’ve seen in the past.”
In addition to breaking down spending trends among age groups, the Nielsen study also provides some insight into variations in pet-related spending among different ethic groups. Here, it is “white non-Hispanic” pet owners who are ahead of the curve, spending as much as 91 percent more than other ethnicities on pet food, for example.
The Hispanic community, in particular, represents a huge opportunity for pet product marketers–not only in the future, but today.
“[Hispanics’] purchasing power is huge, as we’ve all seen in the past few months with the release of the 2010 census,” says Bilello. He notes that the 50 million Hispanics in the U.S. wield over $1 trillion in purchasing power.
To Richard Vasquez, managing partner of Vasquez & Associations, a multicultural marketing firm based in Southern California, the key to increasing pet-related spending in Hispanic households lies in educating this community on the value of premium products, such as advanced diets. “You’re talking about a pretty large market,” he says. “But the industry, in general, does not spend a lot of money [on marketing in this area].”
Vasquez says that the idea of selling Hispanics on the concept of taking pet ownership to the next level has been completely unexplored. As a result, he notes, many Hispanic-American pet owners are more likely to shop for pet products–particularly food–at the supermarket, as opposed to the neighborhood pet shop.
“They’re not aware of the benefits of going there, the different offerings that are there, and the fact that there may be Spanish-speaking personnel there that can help them,” he says.
Also hurting the prospects for the continuation of the pet industry’s growth trajectory is the relatively low incidence of pet ownership among some of the fastest-growing consumer demographics. According to the 2011-2012 APPA National Pet Owners Survey, 92 percent of U.S. pet owners are white, while four percent are black and another four percent are Hispanic/other.
These figures have remained fairly consistent since the 2003-2004 edition of the survey, but when you compare them with the results of the most recent U.S. Census, which says that Hispanics now make up over 16 percent of the population (up 43 percent since 2000) and blacks make up 12 percent (up 12.3 percent since 2000), it seems that little headway has been made in promoting pet ownership among these ethnic groups.
This conclusion was also reflected in a Bain & Company study that was contracted by APPA in 2008, says Vetere.
“One of the things that the Bain survey showed was that three of the fastest-growing demographics in the U.S.–Hispanics, Asians and blacks–lagged in pet ownership versus the overall average,” he says.
Hitting the Target
With all the signs pointing to the fact that pet product marketers need to do a better job of reaching out to consumers that fall outside the white, baby-boomer demographic, the question becomes, “How is this accomplished?”
The first step in targeting specific consumer demographics is to acknowledge that it would be a mistake to paint members of a particular group with a broad brush. This is particularly important when dealing with Hispanic-Americans and Asian-Americans, who typically identify with a particular nationality, as opposed to a geographic region.
“We go by country of origin,” says Mostapha Saout, sales and marketing manager for Allied Media Corp., a multicultural communication firm based in Alexandria, Va. “The way we market to Koreans would be different than the way we approach Chinese consumers.”
Another important element of reaching out to various consumer demographics is figuring out which platforms should be used to deliver a company’s marketing message. Luckily there are a variety of media streams that are specifically geared toward certain demographics.
“There is no question that Univision, Telemundo, BET and various other channels are going to have an affinity with the cultural group that they serve,” says Bilello.
However, he notes that advertising on many of these niche-focused television stations can be cost-prohibitive for smaller companies. Instead, these companies will have to utilize other platforms for their targeted marketing efforts.
“You’re going to have to do some creative thinking about using direct mail, printed inserts or events to bring people into the store,” says Bilello.
Vasquez also acknowledges that television advertising probably will not be an option for most independent pet stores, but he says that it would be a mistake for these retailers to assume that there is nothing they can do to reach out to various ethnic communities.
“There are ample opportunities for the mom-and-pops that don’t have a multi-million-dollar budget to leverage in for [as little as $500],” he says. “One of the ways is participation in community events, which are organized and sponsored by the media as a way to get face to face with their audience. Fairs, festivals, health-and-wellness expos, lifestyle expos, sports expos–all of these are emerging opportunities.”
When evaluating prospective marketing channels, Bilello says that pet product sellers must do their homework or risk overlooking nuances that might impact the effectiveness of their message. He uses Univision and Telemundo to illustrate his point.
“There is a subtlety between Telemundo and Univision,” he says. “Univision tends to be Mexican-dominant, whereas Telemundo has more Latin and South American roots.”
Saout says that differences between media streams become particularly important when marketers are targeting Asian-Americans. “The networks we pick, the papers we pick, and so forth, are different depending on which particular community we are trying to reach,” he says.
The Right Message
Of course, there is no one-size-fits-all solution for crafting a marketing message that appeals to different demographics. Each group’s specific wants and needs, the nuances of their cultures and language, and even individual variations within these demographics must be taken into consideration.
“You need to customize the message if you want it to resonate [with the target consumer],” says Saout. He points out that failure to do so could ultimately cause a campaign to backfire on a marketer.
With this in mind, pet product sellers must do their homework before instituting any marketing campaign that targets specific consumer demographics to make sure that it makes sense for both the company and the intended audience. Otherwise, things may get lost in translation.
“You are not really translating it, but re-writing it,” says Saout. “This way, you don’t fall into the trap of looking like you are clueless or, even worse, offending the sensitivities of the community.”
“One example that has been studied a lot in the U.S. is the Milk Producers Board campaign,” says Bilello. “The ‘Got Milk?’ slogan has a very different translation in Spanish.”
To tailor the message for Spanish-speaking consumers, he says, the campaign instead asks, “Have you given your family enough milk today?”
When it comes to tailoring a marketing message for a certain demographic, Bilello cautions against taking a broad approach. Instead, he says, there are several filters that any company has to lay over its “growth targets.”
“For example, if you are in New York, the Hispanic market looks very different than it does in Los Angeles or Miami or Houston, so geography is a key filter,” he says.
Bilello also points to age, affluence and whether the target consumer was foreign born or born here in the U.S. as other key factors that must be considered.
“If your target is a third-generation Hispanic who is fully bilingual, all you really need to do is put in some cultural cues to let them know that you are friendly toward people who have a Hispanic cultural background, and perhaps that you have Spanish-speakers in the store,” says Bilello.
“If you are dealing with someone who is a recent immigrant or an older, foreign-born consumer–a person who is known as ‘Spanish dominant,’ meaning that they really don’t function that well in English–[tailoring you marketing message for them] is key. They need that language, and it’s a barrier if you don’t use it.”