Think Pink! How American Women Will Make Or Break Corporate Earnings Over The Next Decade

Includes: EBAY, LUV, TGT, TM
by: Kyle Spencer

At any given moment, there are (literally) thousands of analysts poring over hundreds of pages of New Delhi housing starts, Japanese birth rates, and Shanghai's weekly electric consumption figures.

But the real 800 lb gorilla in the room, the single most important demographic in the 21st century continues to fly just below the radar.

I'm talking, of course, about American Women: the healthiest, wealthiest women in human history. If the Golden Rule is "He She who has the gold makes the rules," then the U.S. is a de facto Matriarchy. Women are the primary purchasers of computers, automobiles, banking, financial services and most other big ticket items.

Nevertheless, much of Corporate America is still premised on the male dominated, smoke filled era of AMC's Mad Men, despite the fact that women process information and make purchasing decisions differently from men. Forget the finger pointing and charges of sexism, ignoring women in the 21st Century is a losing financial proposition.

Demographics is destiny. If the retail businesses you're currently invested in aren't "thinking pink," it's fair to say that none of their other successes will matter very much. The pro-female demographic bias going forward is so large that it will reshape every facet of America's consumer driven economy within the next seven years.

High-net-worth women account for 39% of the country's top wealth earners; 2.5 million of them have combined assets of $4.2 trillion. More than 1.3 million female professionals and executives earn over $100,000 annually. 43% of Americans with more than $500,000 in assets are female.

That these numbers would be much higher if female C-Level participation was proportional to the number of women in the population only underscores the growing economic disparity between men and women in America, and men are getting taken to the cleaners by the ladies.

Women Make The Decisions (Men Only Think They Do)

Consider this: In 1998, only 69% of women between 18 and 24 were involved in home electronics purchases. By 2008, that number has grown to 91%, in part driven by the prevalence of personal electronics such as cell phones and tablets.

Nowhere else is this trend better exemplified than in the ailing PC space. Affluent working women with family incomes of $75,000 or more are growing in number, and 94.3 percent access the Internet during an average month.

When is the last time you saw an ad by Hewlett-Packard (NYSE:HPQ) micro-targeted for women, even though women now account for 66% of all PC purchase decisions? 22% of women shop online at least once a day, a phenomena that eBay (NASDAQ:EBAY) was quicker to recognize than most, with its Pink Ribbon week in recognition of Breast Cancer Awareness.

Women also have different mobile shopping preferences which are more often than not ignored by predominantly male app developers. In fact, unless you're designing a video game or selling a better stock screener, your first thought in the morning and last thought at night should be about how women feel about your app, program and digital content.

(Source: The Realtime Report)

The Older, the Richer

Middle aged and Seniors women directly control over $19 trillion, and own more than three fourth of the nation's financial wealth. Taken as a group, women account for 85% of all consumer purchases, including:

  • 91% of New Homes
  • 66% PCs
  • 92% Vacations
  • 80% Healthcare
  • 65% New Cars
  • 89% Bank Accounts
  • 93% Food

The more mature luxury consumer places the highest priority in making memories and experiences. They don't buy things to have more things; they want the experience to go along with it. Luxury consumers expect superior quality and are extremely discerning.

Pivot on Sports

Women make up 47.2% of all major league soccer fans, 46.5% of all MLB fans, 43.2% of all NFL fans, 40.8% of all fans in attendance at NHL games, 37% of all NBA fans, and purchase 46% of official NFL merchandise. So why are sports products still being produced and marketed as if men made up 80+% of the viewing audience?

When 66% of women feel misunderstood by health care marketers, 59% feel misunderstood by food marketers, 74% feel misunderstood by automotive marketers and 84% feel misunderstood by investment marketers, corporations are leaving literally trillions on the table through misguided marketing campaigns.

The chart below illustrates just how important marketing to the new reality of "It's a Woman's World" will be over the next 5 years.

(Source: AccountingWeb)

Know Thy Customer

Men and Women identify differently with tone and theme - basically, the two most important elements of a marketing campaign apart from the product. For example, imagery of strong, female celebrities in fun, high-energy situations fosters emotional connection with women.

By contrast, the average young man tends to respond more to action-oriented, competitive scenes and extreme visual images.




Upbeat (Lively, Hip, High Energy Scenes)


Action-Oriented, Whimsically Humorous



Competition and/or extreme imagery



Offbeat Slapstick, Edgy Sarcastic

Happy Situations ("I could be her.")


Normal Guys, Exaggerated Situations

Source: Nielson


Not only are women superconsumers, they're "super deciders." Women allocate the lion's share of all household income, and later in life, household wealth.

That this financial superbeing still feels misunderstood and unfulfilled means that the most profitable enterprises going forward will, as a general rule, be the companies that wake up to the fact that it's now a Woman's World and reposition themselves accordingly by repositioning accordingly.

I contend that a full appreciation of the data would lead any rational observer to conclude that women are, at the very least, becoming more

a) independent

b) affluent, most likely due to a combination of the "college advantage"[PDF] and the huge lead women enjoy over men in efficient social networking

c) efficient at manipulating men into believing that is the men who make the household decisions aggregate, and that this extreme demographic bias will not only result in a continuation of the trend, but in an acceleration and amplification of the trend, which means that, going forward, women's loyalty as a group will become the single most durable competitive advantage that a company can possess.

With this in mind, I've selected three of the top 10 brands desired by women. While each of these companies is different in terms of their core business model and financial condition, they all share the widest moat there is: The love of Women.

Southwest Airlines (NYSE:LUV): Think, "accessible, affordable memories," at least, according to a 2012 study released by Buyology, a strategic neuromarketing firm, and uSamp, a provider of technology and survey respondents used to obtain consumer and business insights, women chose Southwest over all other major brands.

Target (NYSE:TGT): Target has made the list for two years running, with a bullet at number 8. According to On Your Mark Research, here's why women love Target: a) "Indulgence veiled by practicality", b) aesthetically pleasing stores make women feel like they can "escape for an hour", and c) quality at comparable prices.

Lexus/Toyota (NYSE:TM): Women love Lexus like Germans love forests. Lexus is now Japan's largest selling make of premium cars. However, the brand's success is often marginalized by the problems of its parent company, Toyota. If the Lexus make were spun off from Toyota into a separate company, the result (assuming it wasn't saddled with too much of its parent company's debt) would be one of the most profitable manufacturers in the automotive market today. As Koji Endo, an auto analyst at Credit Suisse Securities, notes:

The contribution of Lexus to Toyota's profit probably is double or triple the proportion of the brand's volume to Toyota's sales.

Simply put, it doesn't cost that much more to make a Lexus than it does to make a Honda Accord. The margins are as beautiful as the women driving them.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.