Source: BusinessWeek

Rising female consumer power is changing the way companies design,
make, and market products -- and it's about more than adding pastels

Who's the apple of marketers' eye? It's not free-spending teens or
men 25-50. It's women, thanks to their one-two punch of purchasing
power and decision-making authority. Working women ages of 24-54 --
of whom the U.S. has some 55 million -- have emerged as a potent
force in the marketplace, changing the way companies design,
position, and sell their products.

Women earn less money than their counterparts -- 78 cents for every
dollar a man gets. But they make more than 80% of buying decisions in
all homes. And women shop differently from the way men do: Females
research more extensively and are less likely to be influenced by
ads. "Today's woman is the chief purchasing agent of the family and
marketers have to recognize that," says Michael Silverstein,
principal at Boston Consulting Group and author of Trading Up: The
New American Luxury.

SOARING INCOMES. Smart companies already have. Product manufacturers
are paying more attention to style and form, and marketers are
shifting away from TV ads in favor of promotional efforts in venues
women trust: reviews in women's magazines and spots on TV shows like
Oprah and Extreme Makeover: Home Edition. "Pinched for time and
skeptical, these women are forcing marketers to look at more ways
than ever when pitching a product," says Kelley Skoloda, director of
global brand marketing practice at Ketchum, a communications firm
that assists companies on marketing strategies.

Women's decision-making authority has grown in part because more
households are headed by women -- 27% at last count, a fourfold
increase since 1950. Their buying power has grown, too. In the past
three decades, men's median income has barely budged -- up just 0.6% -
- while women's has soared 63%. Some 30% of working women outearn
their husbands, notes Martha Barletta, author of Marketing to Women:
How to Understand, Reach and Increase Your Share of the World's
Largest Market Segment. And 75% of women with the title of vice-
president or higher at Fortune 500 companies outearn their husbands,
bringing home on average 68% of household income, according to
Barletta.

Little surprise that companies -- including businesses that largely
overlooked women in the past -- are trying to woo this key consumer.
Not long ago, Home Depot (HD ) marketed its power tools and drywall
to men, but it's now aggressively pursuing women with classes that
teach them how to do home repairs. It's also pursuing entertainment
partnerships with home improvement shows like Trading Spaces, which
are widely watched by women.

NEW LUXURY SECTOR. Banks and financial-service companies, including
Citibank (C ), Merrill Lynch (MER ), and Charles Schwab (SCH ), have
created entire departments that market investment products
exclusively to women. Indeed, it would be a mistake to ignore this
fast-growing segment of wealthy individuals. The Employment Policy
Foundation says the number of women earning $100,000 or more has
tripled in the last 10 years.

This deeper-pocketed female consumer's aspirations and taste have
given rise to the new "mass luxury movement," where the mainstream
public has become aware and acquisitive of designer and brand names
previously solely in the domain of the affluent. Karl Lagerfeld, the
doyen of haute couture, designed pieces for mass retailer H&M that
sold out in hours, and discounter Target (TGT ) has such names as
Isaac Mizrahi, Cynthia Rowley, and Liz Lange in its stable of
designers. Brands like Coach (COH ) are making handbags and key
chains at lower price points, and Mercedes (DCX ) and BMW (BMW ) are
putting out cars that middle-class consumers can afford.

Not that reaching this type of shopper is without challenges. The
female consumer is very busy and has a complex web of duties that
makes her less than readily available. Take Shubha Varma, a 39-year-
old vascular surgeon and mother of two children, ages 5 and 1. On a
typical day, she gets up at 6 a.m. After a short exercise routine,
she wakes up her older child and makes sure he brushes his teeth and
eats breakfast, then drives him to preschool after handing the baby
to the sitter.

PR CRUCIAL. Through it all, Varma is mentally ticking off the things
she has to do that day: remembering to pick up milk that ran out,
schedule an appointment with her kid's music teacher, and decide what
she will put on the dinner table that night for the family.

Forget multitasking -- women like Varma are "multiminding," a newly
coined buzz phrase that describes the process of simultaneously
thinking about various things. Marketers have found it hard to grab
such women's attention with TV ads. "Today's woman has less time and
is such a tough consumer she has single-handedly pushed marketers to
actually go to PR budgets," says Silverstein. "She reads magazines
and wants to know the detail around products." That's one reason
marketers are increasingly emphasizing product placement,
sponsorships, and shaping editorial content over TV ads.

That's why it was good news for Dell (DELL ) when Oprah's Favorite
Things 2004 Shopping List included two of its products, the $199 Dell
Pocket DJ and $2,199 30-inch LCD TV. In the two weeks after the
episode featuring Oprah's List aired, sales of Dell's plasma TVs
spiked, accounting for 70% of its units sold during the holidays.

MOTORBIKE SALES Retailers have had to change their approach to the
women's market as well. "Women do a lot of homework beforehand and
aren't willing to be dazzled by the salesperson who doesn't bring any
practical information," says Wendy Liebmann, president of WSL
Strategic Retail and author of How America Shops. To give female
shoppers the kind of information they're looking for, Best Buy (BBY )
is retraining its floor sales staff to talk to women in practical
terms, not in jargon or geekspeak.

The increased spotlight on the female shopper is even starting before
the marketing and selling phase in some cases. Computer maker X2 is
coming out with lighter laptops in nontraditional colors. In 2003,
contractor Barbara Kavovit, CEO of Barbara K Enterprises, launched a
line of tools ergonomically designed to suit a woman's smaller hand.
(And they come in blue, not pink.) "Women are defining the new value
equation -- combine the practical with the esthetic," says Liebmann.

This empowered woman hasn't escaped the notice of Harley-Davidson
(HDI ). In November, it added a section on its Web site for female
bikers, with tips on appropriate gear and how to ride safely. Harley
says it was responding to the growing popularity of motorbikes among
women: Sales to women grew to 10%, or 23,000, of all bikes sold in
2003 vs. just 2% in 1985.

iPOD EXAMPLE. Marketers warn that retailers and manufacturers assume
that marketing to women is as easy as changing the color of a product
to pink. "If you're serious about reaching the female consumer, you
have to care about her and get to know what she desires," says BCG's
Silverstein. It's critical they understand the female consumer's
needs and dissatisfactions, and come up with ideas and solutions, as
Best Buy has done.

Best Buy and Dell are both optimistic that their women's initiatives
of the last six months will boost their bottom lines. And if Apple's
success with the iPod mini is any indication, such optimism is well-
founded. Women are lapping up a majority of the multicolored minis,
contributing significantly to Apple's dramatic 74% sales increase in
its fiscal first quarter that ended Dec. 25.

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