Monday, June 2, 2014

Free Market Research Tutorial – Income and Spending by Age and Sex

Knowing income and expenditures of your consumer is important because it helps you as a new business:
(1) Determine demand for products and services
(2) Identify potential size of market
(3) Craft a pricing strategy

In addition to income and expenditures, this tutorial also focuses on age. Census statistics show that the older you are the more you spend and on different things than younger individuals do. Which! Is kind of obvious anyway but if you study what I show you in this tutorial; you will know exactly who (Age & Sex), how much and on what. I’ll show you where to find the information and you can choose what information to study.
A “Maybe” is better than an “I don’t know”.  So do your research and attract the people you want.
In the last tutorial we learned how to scout for basic population data using American Fact finder. In continuation, this tutorial will cover Generation Y Female income and spending characteristics. We are still crafting our consumer profile and this is an important thing to know. 

What is the income of Generation Y females and how much do they spend annually on apparel?

We’ll be using a different government website for this research, the Bureau of Labor Statistics (BLS). This agency measures labor market activity, working conditions and price changes in the economy.

The BLS gets their data from the CPS (current population survey). In the last tutorial we used information from the ACS (American community survey) to find 2012 population estimates because it had the specific information that we needed. 

Preferred for:
National Analysis
Subnational Data

Timely and accurate national data on income and is the official source of national poverty estimates.
Single year estimates of income and poverty at the state level.
detailed demographic characteristics
If you want to know the expenditures of consumers to their income and characteristics, the Consumer Expenditure Survey is your best source. To review this information go to:

BLS.GOV  > Subjects > Consumer Expenditure (Under "Spending & Time Use")

This page displays tables for the current calendar year. Scroll down until you see Annual Calendar Year Tables. There are two types of annual tables: Combined and aggregate. We want to know the average income and expenditures of Generation Y Females and the combined tables will provide us with that information. 

You can compare more years if you want but just to make it easy and keep  consistent with our research, we’ll stick to the 2012 calendar year. Open the Excel spreadsheet for “Age of reference person”.

Once the spreadsheet is up, select whatever age group applies to your research. In our case, females aged 16-35. 

First we'll figure out income.This is found at the top of the report.


Control+F to find "Apparel and Services" and scroll down until you see "Women, 16 and over" (If you're not researching apparel, there are other expenditures as well). 

We can now add to our consumer profile that: Generation Y Females make an average of $47,800 and usually spends $489 on apparel annually.

The male and female distrubution of consumer units is at the top of the report, as well as other characteristics needed for research.

Free marketing information is cool isn't it? The government gives you all this information for free. AaAnd that's how you figure out income and expenditures for a specific age group and sex. 


My tutorials are for entrepreneurs who seek free market research for their business plan, marketing plan or personal use. I am just like you! So I hope you like this blog.

Research topics are mostly related to fashion / retail and wholesale trade but can also be applied to other industries as well. I get the majority of my information from government websites and it can get confusing for first timers. SoOo, I'll try to explain things as simple as I can. If I've confused you, Just ask!

My tutorials primarily show you where to find things, so if you need additional information on items discussed, please review the Q&A section of each blog post.

In the last tutorial we:
Learned how to research very basic population data using American Fact Finder
In this tutorial:
Income and spending habits of Generation Y Females
In the next tutorial:

Geographic segmentation (Location Research)

Updated research summary for our fashion company:
Tutorial Results
General Population Research

Our company name is California Fashions (Made up for tutorials), a fashion design company specializing in apparel for women. Our target consumers are females ages 16-34 (Generation Y Females). There are roughly 41.7 million females in this age range.
Income and Spending by Age and Sex

Generation Y Females generally make an average of $47,800 and spends $489 annually on apparel. 


For users interested only in income information:

What is a consumer unit?
A consumer unit consists of any of the following: 
(1) All members of a particular household who are related by blood, marriage, adoption, or other legal arrangements; 
(2) a person living alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent; or 
(3) two or more persons living together who use their incomes to make joint expenditure decisions. Financial independence is determined by spending behavior with regard to the three major expense categories: Housing, food, and other living expenses. To be considered financially independent, the respondent must provide at least two of the three major expenditure categories, either entirely or in part.

Who is the reference person?
The reference person of the consumer unit is the first member mentioned by the respondent when asked to "Start with the name of the person or one of the persons who owns or rents the home." It is with respect to this person that the relationship of the other consumer unit members is determined.

What is the difference between combined and aggregate reports?
- Combined: Average annual expenditures, income, and characteristics
- Aggregate:
Shows total national expenditures by category for all consumer units and percentages of the totals for various demographic groups. 
What is the difference between the CPS and ACS?

American Community Survey
Current Population Survey

Principal purpose
Provides detailed demographic, socioeconomic and housing data on an annual basis; replaces the once-a-decade census long form.  Provides median household and other measures of money income, earnings and poverty estimates.
Provides estimates of median household and other measures of money income, health insurance coverage and the official annual estimate of poverty for the nation.

Time frame
Data collected continuously throughout calendar year with a previous 12-month reference period.
Data collected over a three-month period (February, March, and April) with a previous calendar year reference.

Single-year estimates provide data for the nation, states, counties, places (cities), congressional districts, American Indian and Alaska Native areas and all areas with a population of 65,000 or more.
Nation and states.

Sample size
250,000 addresses each month or about 3 million addresses a year.
100,000 addresses over a three-month period.

Collection method
Mail, phone or personal visit.
Phone or personal visit.

Length and detail of questions
A series of eight questions about income.
A series of questions about more than 50 sources of income and up to 27 individual income values.

Group quarters in sample
Yes (institutional and noninstitutional group quarters).
Yes (noninstitutional group quarters only).