NEW YORK, Feb. 8, 2017 /PRNewswire/ -- Often, marketers and strategists prioritize the middle class consumer for growth opportunities. However, reaching consumers through income-based approaches (dividing the market into specific groups based on financial standing – e.g., middle class) is an insufficient and outdated predictor of consumer spending, according to a report released today by The Demand Institute, a non-profit think tank jointly operated by The Conference Board and Nielsen. Rather, the report defines a new concept, "Connected Spenders," that better enables companies to effectively reach consumers who are ready and able to spend on goods and services. The interactive digital report, Introducing the Connected Spender: The Digital Consumer of the Future, can be viewed here.
Income-based approaches ignore two critical factors: consumer mindset and engagement, and access to goods and services. For the first time, these shortcomings are addressed with the "Connected Spenders" consumer group. As a result, this group gives businesses a more relevant population to prioritize as it identifies the most engaged consumers from each income group, with no lower or upper boundary. Furthermore, the number of global Connected Spenders increased by nearly twice as much as the number of middle class consumers between 2001 and 2011.
"The Connected Spender is the ideal consumer for a variety of goods and services," said Louise Keely, president of The Demand Institute and executive vice president of the global retail vertical at Nielsen. "Consumer-facing businesses should use Connected Spenders as a lens in making decisions about which markets to invest in, how to communicate with and reach consumers and what actions they can take to support growth across different markets."
Low- and High-Income Consumers Can Be Connected Spenders, Too
Connected Spenders, who will account for 46 percent of the world's consumer spending over the next decade, are defined by two factors. First, and most importantly, they have access to the internet. The ability to participate in the digital economy hinges on this access. Over the next decade, an additional 2.3 billion consumers will gain access to the internet, and nearly all of that growth will come from emerging markets. Second, they believe they have discretionary income. In fact, even the lowest income Connected Spenders participate more frequently and allocate more income to discretionary products than the highest income non-Connected Spenders.
With internet access increasing globally, the number of Connected Spenders will increase dramatically. Over the next decade, the number of Connected Spenders around the world will more than double, from 1.4 billion in 2015 to 3 billion in 2025, rising from approximately 19 percent to 37 percent of global consumers. More importantly, spending by Connected Spenders could grow from about $15 trillion in 2015 (about 35 percent of global consumer spending) to more than $32 trillion in 2025.
Other key findings from the report include:
- More than any other consumers, Connected Spenders expect a full omnichannel experience. They use their internet access for a variety of consumer activities, including researching and shopping online, sharing ideas and reviews on social media, and viewing media and advertising.
- Emerging markets such as Indonesia, Pakistan and Nigeria will contribute significantly to growth in Connected Spenders due to increased access to the internet.
- By 2025, the typical Connected Spender in a mature market will spend nearly $40,000 annually, 10 times the amount of a typical Connected Spender in an emerging market.
To learn more about Connected Spenders, view the report here.
About The Demand Institute
The Demand Institute illuminates how consumer demand is evolving around the world. We help government and business leaders align investments to where consumer demand is headed across industries, countries and markets. A non-advocacy, non-profit organization and a division of The Conference Board, The Demand Institute holds 501(c)(3) tax-exempt status in the United States and is jointly operated by The Conference Board and Nielsen. For more information, please visit: demandinstitute.org.
About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c)(3) tax-exempt status in the United States. For more information, visit: conference-board.org.
Nielsen N.V. (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen's Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry's only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90% of the world's population. For more information, visit: nielsen.com.
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SOURCE The Conference Board