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C-K: Hard-Working-Class Study


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C-K: Hard-Working-Class Study

  1. 1. connecktionsThe Hard-Working-Class:An American Evolution ofthe Middle-Class MomApril 2013
  2. 2. A Consumer That Can’t Be Ignored2 //
  3. 3. The spotlight shone brightly on America’s struggling middle class during the At C-K, we saw an opportunity torun-up to the 2012 presidential election. Amidst the conversation and endless debate better understand this segmentaround class wars, “the 99%,” “the 47%” and the progress (or lack thereof) of economic – and specifically those at therecovery, it seemed everyone was focused on the plight of the middle class and how eye of the storm – moms whosebest to solve the problems they face. families earn between $30,000 - $50,000 – an income level thatBut there’s a disparity between the political lip-service paid to the struggling middle generally doesn’t qualify forclass and really understanding who they are. This is a group that’s largely misunderstood government assistance. We foundand often ignored by marketers who assume they don’t have the income or influence they are re-defining themselvesto be worth their time or investment. But they are also a large segment that is growing into a new social class and socialrapidly. In fact, half of U.S. households now have incomes of less than $50,000, and this mindset.segment is growing nearly three times faster than any other segment.1At C-K, we saw an opportunity to better understand this segment – and specificallythose at the eye of the storm – moms whose families earn between $30,000 - $50,000 –an income level that generally doesn’t qualify for government assistance. We found theyare re-defining themselves into a new social class and social mindset.If sheer size alone isn’t enough for marketers to sit up and take notice, their potentialinfluence on other consumer segments should. More specifically, in many ways wefound these consumers behaving as early adopters - a group of women who are leadingthe way at a time when everyone is a value consumer. And while yes, they are price-sensitive, they have many smart strategies for making ends meet that marketers canleverage to build relationships in a forever-changed climate.1 U.S. Census Bureau, Current Population Survey, 2008-12 Annual Social + Economic Supplements; Futures Company Analysis 2012 A Consumer That Can’t be Ignored 3
  4. 4. An Evolution in ProgressWhat do polar bears have in common with struggling American moms? Scientists haveconfirmed that due to climate change and the melting of the polar ice caps, polar bearsare moving inland and mating with grizzly bears.This has created a new hybrid called the “Grolar” or “Pizzly Bear” that is able to hunt onland as well as in the sea—finding a way to survive in a forever-changed environment.At C-K, we believe we’re seeing a similar adaptive process among strugglingconsumers due to the economic climate change, the effects of which we predict lingerlong after the economy recovers. A Consumer That Can’t be Ignored 4
  5. 5. A New ‘Self-Defined’ SocialClass and Social Mindset5 //
  6. 6. In setting out to gain a better understanding of this increasingly influentialgroup, we didn’t just uncover an evolving consumer, but an evolving social class. Only25% of these technically middle-class consumers identified themselves as such: Discovery 1“I don’t see myself as middle class, lower class or blue collar…all I These struggling consumers cannot identify know is I work hard.” their “class” in the traditional classification system. They don’t feel any of the currentFor them, the middle-class promise is not their reality. Said one woman we spoke with: labels accurately reflect their realities.“I’m technically middle class, but I don’t feel that way. If you’re Discovery 2 middle class, you should be able to have a home, be able to save for These women may not qualify for government college. I’m barely able to make ends meet. Every day is just a struggle.” assistance, but they don’t want it either.They don’t associate with the 99% either. While aware of the movement, only 2% ofthose we surveyed aligned with this label. Perhaps this is because overwhelmingly they Discovery 3take responsibility for their financial situation, believing that their life decisions got them These women have more in common than justto where they are. If anything, they blame their current circumstances on not furthering an income bracket.their education, starting a family too soon or simply bad luck. Said one:“The 99% movement is all about assigning blame. I know what got me here. I take responsibility for my situation.” Death of Middle America and a Rising Social Class 6
  7. 7. Key uniting factors are an incredible work ethic and a sense of perseverance. Thewomen we spoke with aren’t on government assistance, and are proud of it: 79% feelthey are doing everything they can to keep their family above the poverty line. Said one:“We live paycheck to paycheck—doing the best that we can to makeends meet without having to ask for help. That’s the way we wantit.” Said another: “We want to provide for ourselves, so we have towork twice as hard, usually just so we can make ends meet.” Death of Middle America and a Rising Social Class 7
  8. 8. Meet The Hard-Working-Class8 //
  9. 9. This diverse and growing group doesn’t picture themselves as part of themiddle class “American Dream.” Instead, 77% of those we surveyed identify them- Identify with being inselves with a new class called the Hard-Working-Class, defined not by what they do, but 25% the middle hard they work.“I am not the working class. I am the Hard-Working-Class. Identify themselves with a I’m above the poverty line, working over 60 hours a week to keep 77% new class called the “Hard- my family above water.” Working-Class.”It’s surprisingly difficult to define them by age, ethnicity, region or education level, too.Hard-Working-Class moms can be found everywhere. They shop where you shop – Currently feel that the U.S.although never without a sale or coupon. They take their kids to museums and familyactivities – but certainly know the free days. And they’re next to you on the soccer 15% economy is improving.field – although their kid is likely on the payment plan. Meet The Hard-Working Class 9
  10. 10. Demographic SnapshotWhile there tends to be a higher number of children in the household, there’s no one “typical” profession among them. We spoke to nurses, office administrators,housekeepers, speech specialists, entrepreneurs, waitresses, and stay-at-homemoms—many of whom are college educated.Ethnicity Education Number of Children 82% 45% Caucasian 32% College Grads 8% 42% 36% Some College Hispanic 8% 22% African American High School 19% 1% Asian/Pacific Islanders 1% OtherMarital Status Employment Home Ownership 43% 65% Own Full Time 73% Married 16% 31% Rent Part Time 27% Not Married 32% 4% Other Stay at home 10% Unemployed Meet The Hard-Working Class 10
  11. 11. Forever ChangedRegardless of profession, as a group they’ve been hit hard, going through a lot ofemployment flux over the last five years: 35% Lost their job • 35% Lost their job • 35% Experienced a pay cut • 33% Began working multiple jobs 35% Experienced a pay cut • 19% Went from full-time to part-timeIn light of this, over half of the women we spoke to felt worse off financially than beforethe recession. And although many Americans are getting back to a sense of normalcy, Began workingonly 15% of our Hard-Working-Class respondents currently feel the U.S. economy 33% multiple jobsis improving.Even when it does, these consumers consider themselves forever changed. Of thosewe spoke with, 84% said they wouldn’t go back to their old spending habits, even if theeconomy were to rebound or their circumstances were to change. 19% Went from full-time to part-time Meet The Hard-Working Class 11
  12. 12. Snapshot of our Hard-Working-Class MomsNicole, 34 Home Housekeeper Sei Im, 28 Salon Manager Bessie, 42 Retail SalespersonDivorced mother of two. College Single mother of one. Caretaker for Single mother of two boys. Part-timegraduate. Nicole lost the support of her parents. Salon manager. Sei Im is an retail salesperson who hopes to go backfamily and friends after having her first example of the “Comfort in Cohabita- to school for radiology one day. Lives inchild at 15. She managed to finish col- tion” trend of moms who support and a single-family home with her youngerlege, but hasn’t been able to break out care for both their children and elderly sister and helps her take care of herof maintenance jobs and really leverage parents. She never went to college, but daughter while she’s going to college.her degree due to financial pressures worked her way up from salon recep- Has a huge support network that sheafter a divorce. She was forced to ma- tionist to managing five salons in a relies on and that relies on her.ture at a young age, and still feels stuck growing business. She is finally begin-as a “teen mom” statistic. ning to focus on her own life and look “I’ve never been an ‘I,’ I’ve always been a to the future. ‘we.’” Having less brings you more fam-“I’ve always felt like a statistic having a ily togetherness. It’s how I remember child at 15. It dragged me down a bit. “I’m adapting to change. All the hard growing up.” It’s just me, I don’t have support. I try work has been paying off. I just got a not to look at the past and just look at promotion. Now I have to focus on not the future. It could have been easier if I being such a workaholic and try to have didn’t have a child so young, but I’m very more balance between my work and proud of my accomplishments. It could personal life.” be better, but it could always be worse.” Meet The Hard-Working Class 12
  13. 13. Five Things To KnowAbout These Women13 //
  14. 14. 1 2 3They’re In Transition They’re Strong And Durable They Strive For SecurityThese women feel they are in a state of They’ve been through many obstacles, and These moms are living on the lower levelsevolution. Our study found 54% feel they’ve haven’t been broken. Seventy-two percent of Maslow’s Hierarchy of Needs right now,adapted and evolved as a result of the recession. agree their strength and resilience have helped worrying constantly about money (63%) and them through tough times. One woman we struggling every day to make ends meet (51%). spoke to described herself as a crayon, Said one: “because you can break it, sharpen “Life is paycheck to paycheck. We it, peel away the layers, but the are stressed constantly, because vibrant color still remains.” things are getting more and more expensive while my paycheck remains the same.” Security for this group is hoping that the furnace will make it through another winter. Or that the gas company will wait another month on the payment so that they haveWe asked them to create headlines for chapters intheir autobiographies—chapter one being where funds for school supplies. And it’s puttingthey are now, chapter two where they are going. aside enough money to have pizza for herThis example underscores the state of evolution we kid’s birthday party next month.kept hearing about. Five Things to Know About These Women 14
  15. 15. 4 5 78% They’re Living In The Moment They Make the Most of What They Have Relentlessly focused on fulfilling their families’ They keep a positive outlook as best they can. basic needs, these women take it one day at a They’re realists who recognize it could always More stability time. They told us that if they let their minds be worse – in fact, 87% said there is always and control get too far in the future, the stress can be someone out there who has it worse than overwhelming. Said one: them. Said one: 13% “I want to look ahead, but you have “It would be nice to live the dream, More excitement and discovery to be in the here and now, or things but that just isn’t an option.” get out of control.” This group doesn’t have the traditional safety 9% Neither nets to fall back on. So they rely on friends, family and credit cards for unexpected wrenches. And unfortunately, those wrenches happen all the time. Say a $1,000 expense would be a 83% major financial hardship.We asked our moms to pick one wish, either more security or more excitement in their lives. Say they would have no way to 38% pay for such an expense. Five Things to Know About These Women 15
  16. 16. Life As A Balancing Act16 //
  17. 17. It takes a lot of juggling and strategizing for the Hard-Working-Class to stayabove water. Especially in the past few years, life has been a constant balancing act ofcalculated tradeoffs. We asked these women about how their behaviors have changedsince before the start of the recession – what they’re doing more of and what they’redoing less of. We heard they’re doing more budgeting, staying at home and being morecreative with resources. But we also heard that they are getting less sleep and evenseeing fewer old friends because they don’t have the money to go out like they once did. For the Hard-Working-Class consumer, life is a constant balancing act of calculated tradeoffs. More: Work, Budgets, Coupons, Generics And More Staying Home: Cooking, Reading, Family Time, Creativity Less: Sleep, Cable, Haircuts, Shopping, Fresh Food, Traveling And Less Going Out: Dining, Girls Night, Movies, Old Friends Life as a Balancing Act 17
  18. 18. The Paycheck journeySeventy-four percent of Hard-Working-Class consumers say they live paycheck to pay-check. We sought to better understand what that means.Based on feedback from our Hard-Working-Class moms, C-K charted the “PaycheckJourney” for a typical family, month to month. The top line represents the rare goodmonth when things go as planned and there might even be money left over to go outfor $5 pizza or save for that birthday party.But for most, a good month is a rarity. Often car trouble, a broken appliance, or an unexpectedmedical or school expense takes them down the second track. For Hard-Working-Classmoms, the “unexpected wrench” has come to be expected. In these cases, 90% of those wesurveyed said they stay home and make do with what they have until payday.Payday! Check Balance Check Balance Payday! Paycheck splurge on Round 2 Bills & Nice-to-Haves Save? Treat? Or Empty Must-Haves & Round 1 Bills Unex pected Wrench! Borrow or Default on Payments Slim Week Hibernation Life as a Balancing Act 18
  19. 19. Part of this paycheck-to-paycheck reality for the Hard-Working-Class is food insecurity. What they’d doSome of the women we spoke to told us they are never certain where the next meal will if the economy rebounded:come from, and more groceries are at the top of the list of things they would buy if theeconomy were to rebound. Said one:“When I go to the grocery store, I feel so poor. When I go to the 53% Vacationgovernment website, they tell me I’m not.”We asked our Hard-Working-Class moms to tell us where their money goes after payday.Groceries are one of the last things to get funded, as it’s a variable expense. 53% Extra Groceries 32% Dining Out Life as a Balancing Act 19
  20. 20. As we got to know some of these women, we were struck by how remarkably resourcefuland resilient they are. Here are some of the ways they surprised us:Yes-what you might think But also-what you might not• Many single and early moms • No typical age, education or ethnicity• Lives in underprivileged areas • Lives in the suburban house next door• Puts her personal care last • Can’t pick her out by her looks• Her kids are her priority • Her kids aren’t kept from tough realities• Struggles to make ends meet • Doesn’t blame anyone for her situation• Lives paycheck to paycheck • Lives within her means• Aware of financial inequalities • Doesn’t identify with an existing class• Anxious and feeling the stress • Strong, proud and determined• Catching up • Leading the way Life as a Balancing Act 20
  21. 21. Lessons From The Hard-Working-Class:Doing More With L.E.S.S.21 //
  22. 22. This resilient, resourceful consumer is highlyadept in the art of making ends meet, earning a master’sdegree in “making it work.” In the next few pages, C-Kdistills some of her key survival strategies into lessons inhow to do more with L.E.S.S. (Live, Eat, Spend and Shop).Marketers, take note. Doing More With L.E.S.S. 22
  23. 23. LIVE Community Karma Splurging on Markers of Normalcy Her community is a survival network. She relies In contrast to many higher-income consumers on it for swapping deals, sharing items, childcare who may swap out brands they prefer in the EAT support and feeding her family—and they rely name of responsible spending, a different on her. So it’s little surprise that 72% share dynamic is at play among the Hard-Working- coupons and deals with family and friends. Class. We found a greater resistance to sacrifice SPEND It’s just one way women of the Hard-Working- their favorite “affordable” tried-and-true brands: Class help each other out. 53% said they continue to buy certain brand names to maintain some sense of normalcy. SHOP C-K Food for Thought: How can brands help facilitate and Said one: “The car may be in the shop, my grow her support system and provide “currency” bills might be late, but I can still have my Heinz® of value to the network? What’s the next evolution of progressive coupons? Ketchup.” Continuing to buy these brands reminds them of comfortable times (past or Act of Friendship: Deal Seeking Mom, started by a mom to come). of five “teaching others how to save big so they can live large,” is one of many community-created online resources C-K Food for Thought: If you’ve been marketing your relied upon by the Hard-Working-Class. At 100,000+ brand as a “justified indulgence,” are you sure it’s not members strong, the blog is not only a one-stop shop for a “marker of normalcy?” If you’ve been losing share to deals and freebies, but also a resource for making ends meet. private-label brands, take a look at where the share loss is coming from. If the truly struggling are holding on to you more tightly than the higher-income consumers, you may be a marker of normalcy. Act of Friendship: Heinz® Ketchup (a C-K client) has recently launched an economical stand-up pouch for 99 cents as a way to help loyalists keep using the ketchup they love in these uncertain times.2 MRI Doublebase, 2012 Doing More With L.E.S.S. 23
  24. 24. LIVE Ingredient v. Recipe Driven Food Stretching Unlike higher-income moms who often tell us The Hard-Working-Class knows how to make boredom fuels their mealtime planning, the ends meet through food: 88% said they buyEAT Hard-Working-Class moms are driven by what food that “stretches” across meals. Pasta, rice, they can afford. Their meal decisions are based noodles and ground beef are staples, as they on the ingredients in the pantry or what’s on are both filling and versatile. Said one mom: “IfSPEND sale: 87% make an effort to plan meals around I bought a pack of frozen snacks that small, my ingredients they already have in the house. son would eat them in 10 minutes. I can’t have Said one: “I purchase the same food all the time, that. I buy food that will feed a lot of mouthsSHOP unless I have a new recipe, but it’s basically the and stretch as far as possible.” same items with different seasoning.” C-K Food for Thought: If you’re a food brand, is there a C-K Food for Thought: What can marketers do to help new innovation in your product usage that would allow her fulfill higher-level emotional needs with the basic you to stretch? If not, can you partner with “stretchable” ingredients she has on hand? How can you help her give foods so that you can go farther? her family variety leveraging the ingredients of her basic pantry stock? Act of Friendship: Campbell’s® Soup isn’t just for the bowl anymore—they are encouraging consumers to pour Acts of Friendship: Recipe Matcher, Supercook, and a can of soup over rice or mashed potatoes to create a RecipePuppy are just three of the many websites that hearty meal that stretches. allow people to enter the ingredients they already have on hand to create a meal. Kraft has gotten in the game, too, with their iPhone application that allows people to search 70,000 recipes by ingredient. Doing More With L.E.S.S. 24
  25. 25. LIVE Hibernating Mid-Cycle Recycling Their Money Just like bears, the Hard-Working-Class These families are leveraging every coupon, consumer instinctively knows when to wait out sale and special offer they can to make endsEAT tough weather. When necessary, 91% say meet. In fact, 89% said they use coupons they stay home and make do with what they whenever they can. But beyond stretching their have until payday. dollar, there’s an emotional component to theSPEND “art of the deal” as well – the rewarding feeling Said one mom, “When I am able to cook, I try that you’re getting something back for what to do a lot of freezing. That way when my hours you put in.SHOP are cut and I don’t have money for groceries, we still have good food to eat.” Said one mom: “I’d never go shopping without a coupon. You need a coupon to feel like you’re C-K Food for Thought: How can marketers plan around getting a deal.” the payday “holiday”? How can brands help the Hard-Working-Class make do in between? C-K Food for Thought: How can brands elevate couponing to a more emotional experience? Can you help these Acts of Friendship: Panera Bread (a C-K client) has consumers play the recycling game? What tools can be changed their entire business model to be a friend created to help them benchmark their savings? during slim weeks to struggling consumers like the Hard-Working-Class moms. Among other initiatives Act of Friendship: Target has moved to an instant designed to fight food insecurity, they’ve created five gratification system with their Target Redcard®. Purchasers (and counting) Panera Cares® cafes around the country, get an instant 5% discount on all purchases—and tangible with the mission to “feed each and every person who evidence of “feeling the deal.” walks through our door with dignity regardless of their means.” The cafes have a pay-what-you-can policy that allows people to choose how much they’re able to pay for the food and experience that’s available in any Panera Bread location. Doing More With L.E.S.S. 25
  26. 26. LIVE Cart Segmenting Over-Purchase Prevention As a brand, it’s not just enough to make it into Perimeter shopping and selective aisle the cart—it’s where in the cart you’re placed. shopping help these women avoid over-EAT 42% place less important items in the back purchasing: 60% skip certain aisles to avoid of their cart to put them back if they go impulse buys.Said one mom: “If it’s not on my over budget. list, I won’t go in that aisle. I don’t want to getSPEND tempted to pick up something I don’t need.” “I put the items we can’t do without in the front of the cart, and the less important items in C-K Food for Thought: What can you do as a brand toSHOP build your presence on the perimeter through cross- the back. So when we hit my dollar limit at the promotion, display or even alternative sources of checkout, I just hand back what’s left in the cart.” distribution? C-K Food for Thought: Are you front-cart worthy or a Act of Friendship: Customer-centric grocers are starting back-cart indulgence? What strategies can you employ to to stage more sophisticated meal displays that feature become more of a priority? select recipes and corresponding ingredients—in many cases, bringing products out from their aisles and into Act of Friendship: “Select supermarkets within China and the consumer’s perimeter pattern. A “16-week analysis at Korea are testing SKTelecom’s Smart Cart service, which six participating stores (including Harris Teeter® and Save syncs tablet-equipped shopping carts with consumers’ Mart) found that the grocers saw an average incremental smartphones to offer real-time, relevant geo-target increase of 19.2% for display items.” information. A companion mobile app automatically (, May 21, 2012). synchronizes with the cart’s tablet, upon which it displays shopping tips, targeted coupons, and product information based on where shoppers are in the store and what’s on their list. At the checkout counter, the tablet compiles a list of purchased items, membership points accumulated, and available coupons.” (Source: Cassandra Daily, June 20, 2012). Doing More With L.E.S.S. 26
  27. 27. Be A Friend: Brands CanOffer A Meaningful Hand-Up27 //
  28. 28. A hand up, not a handout.Hard-Working-Class moms are doing everything they can to keep their families afloat. As Feel brands could be doingwe learned, part of this is finding ways to continue to buy brands that give them a sense 73% more to offer a hand-up.of familiarity and comfort in tough times. In many ways, they’re still supporting us, butas marketers, what are we doing to support them? There’s a great opportunity to domore to fully appreciate her situation and identify ways to help—building lifelong loyaltyin the process.The Hard-Working-Class isn’t looking for a handout. But 73% of them told us they feelbrands could be doing more to offer a hand-up during these tough times.While price matters, these women are so much more than value-driven consumers.There are many opportunities to offer a hand-up by connecting beyond the wallet.Whether that’s through rewarding them, acknowledging and/or elevating them,helping them build a community of support or further her master’s degree in “makingit work,” there are many potential pathways to befriend this important, influentialand inspiring consumer. Be a Friend 28
  29. 29. Methodology For more information, contact:At C-K, our philosophy is “Make friends, not ads.®” We look at consumers as friends— Becky Johnscurrent or potential. In looking across our clients’ businesses, we realized there was an Cramer-Krasseltopportunity to better understand how to build friendships with an often-overlooked (312) 616-3871consumer—moms within the struggling “lower middle” class. bjohns@c-k.comSo we spent a lot of time getting to know them through home visits, shop-alongs,qualitative group discussions, ethnographic research and a quantitative study to betterunderstand this influential group, their needs and how brands might be able to betterserve them. In particular, we spoke to 18- to 54-year-old women with children under 18in the household, with household incomes of between $30,000 and $50,000 (an incomelevel that generally doesn’t qualify for government assistance).Research was conducted throughout 2012 and supplemented by secondary sourceson socioeconomic trends. Special thanks to Iconoculture for select examples of brandshelping the Hard-Working-Class. Methodology 29