Asked recently if his company's marketing executives would care to speculate on the auto markets of the future, a spokesman for one of the Big Three automakers replied, "No, thanks. Our people have sworn off forecasting.
"Why? Well, mainly because we've been burned too often. Certain journalists, particularly in the general news media, have taken our forecasts--they're really only educated guesses--and turned them into declarations of fact. Later those so-called facts come back to haunt us.
"Cars of the future? Third world markets? Very interesting to speculate about, but we'll pass, thank you," he added. "Besides, if you want to know the truth, our people are a lot more concerned about what the prime rate will be next year."
So what's the answer? How do you make reasonable, useful forecasts on the marketplace of the future?
Facts are what you need. Hard, tedious facts. Lots of digging and reading in the right places, and then some cautious extrapolation, with the solid lines prudently fracturing into dotted lines.
In the sections that follow, we're attempting to report facts--along with a few opinions from qualified sources--that will help you to plan for the future. You won't find all the facts you need, but perhaps you'll at least become inspired to dig, ask questions, think, and start constructing concrete plans. Trends to watch in the US marketplace
As you casually observe the people, trees, houses, cars, and other phenomena on the street come and og as usual, a neighbor gets a new car, another moves away, and season blends into season.
Deep down, though, the magma flows, and the plates shift. Important changes are taking place; you may not see or feel them, but they will have profound effects on the American marketplace of tomorrow. We're getting older and...
Back in October, 1982, the US Dept of Commerce's Bureau of the Census issued an interesting and important document called "Projections of the Population of the United States: 1982 to 2050 (Advance Report)." The projections are based on the July 1, 1981, population estimates and race definitions.
Among the Bureau's forecasts that would have a bearing on your company's marketing and manufacturing plans are the following:
Life expectancy for US males is assumed to rise from 70.7 years in 1981 to 73.3 in 2005 and 75.1 in 2050. Life expectancy for females will likely rise from 78.3 years in 1981 to 81.3 in 2005 and 83.6 in 2050.
Fertility rates are expected to remain fairly steady, increasing slightly from 1.83 births per women in 1980 to 1.96 in 2000, and then decreasing to 1.90 births per woman in 2050.
Net immigration is expected to be a constant 450,000 a year.
The annual rate of population growth will slow from 0.9 percent in 1981 to 0.6 percent in 2000, and will reach virtually zero population growth (ZPG) by 2050.
The total US population will increase from 230 million in 1981 to 268 million in 2000. Population will reach an alltime high of 309 million in 2050 before beginning to decline.
While the rate of births is projected to be negative after 2035, net immigration results in a growing population until 2050, after which the population will start to decline.
The Bureau notes that these changing components of population will likely lead to marked changes in the age and race distribution of the population during the next 70 years:
The percentage of the population 65 and over will rise from 11.4 percent in 1981 to 13.1 percent in 2000, and then to 21.7 percent in 2050. At the same time, the percentage of the population aged 85 and over will rise from 1.0 percent in 1981 to 1.9 percent in 2000, and to 5.2 percent in 2050.
In the school-age population--those aged 5 to 13 years--the total will decrease from 30.7 million in 1981 to 29.6 million in 1985. This group will then gradually increase to 34.4 million by 1995.
Secondary schoolers--those aged 14 to 17--will decline from 14.9 million in 1981 to 12.9 million in 1990, then increase to 15.4 million in 2000. People aged 18 and 19 will decline from 8.5 million in 1981 to 6.5 million in 1995, before rising slowly to 7.5 million by 2000.
The population of young adults aged 25 to 34 is likely to increase from 39 million in 1981 to 44 million in 1990. This group will then decline to 36 million by 2000.
Overall, said the Bureau, the US population will grow substantially older. The median age will increase from 30.3 years in 1981 to 36.3 years in 2000, and then to 41.6 years by 2050.
Racially, the percentage of the population that is black is projected to increase from 11.9 percent in 1981 to 13.4 percent in 2000, and 16.8 percent by 2050. The middle class is shrinking
According to the Bureau of Labor Statistics (BLS), US Dept of Labor, the percentage of American households that are usually described as "well to do"--those having total annual incomes of $50,000 or more--is growing. So, too, is the percentage of "poor" families, those earning $15,000 or less (see graph). Between those two groups, the middle class--families earning $15,000 to $35,000 a year--is shrinking.
According to recent figures from the BLS, the percentage of all US families comprising the middle class shrank (in constant 1982 dollars) from 53 percent of the total in 1970 to 44 percent last year. Those earning less than $15,000 a year grew from 26 percent in 1970 to 29 percent in 1982. During the same period, those families earning $50,000 or more grew from 22 percent to 27 percent.
Notably, the richest one fifth of families received nearly 43 percent of the country's total money income last year, the largest share in 30 years. That comes to more than 9 times what the poorest fifth earned. A decade ago, the richest fifth took in 7-1/2 times more than the poorest.
Bureau projections indicate that most gains in employment will continue to occur in the extremes of the income spectrum. This means that there likely will be more rich, more poor, and fewer in the middle. We're moving south and west
Bureau of the Census figures show that the shift of population to the Sunbelt continues. The fastest-growing state is Nevada, followed closely by Arizona and Wyoming. At the same time, though, the largest increases in gross numbers of people have been occurring in Texas and California.
"Their tastes (those of the people in Texas and California) are likely to be indicators or forerunners of the larger market," said Dr Roger D Blackwell, professor of consumer research at The Ohio State University, Columbus, OH. Co-author of the book called "Consumer Behavior" (CBS Publishing, 1982), Dr Blackwell gave a talk called "Changing life-styles: implications for auto manufacturing" at the Autofact 4 conference in Philadelphia.
"If you live in the northeast quadrant of the US, ZPG has already arrived," he added. "The State of New York declined in population by about 640,000 people, and other states declined also. Many auto dealers have gone out of business, of course, but some survive and prosper.
"Those firms that have learned to prosper in ZPG should become the models for future prosperity in the industry," he stressed. "If you were to study the auto models they are selling, the market targest they rifle toward, and their methods of management, you would probably have many clues to the future of the American auto industry."
The shift to the Sunbelt will likely result in some obvious differences in demands for products such as housing, air conditioning, and recreational and leisure products. More subtle, but highly significant, will be the impact on manufacturing.
"The process of abandoning older plants in the Frostbelt and building new ones in the Sunbelt is accelerating the renewal of US industries," said Stephen Moss, director of Operations Management Practice at Arthur D Little Inc, Cambridge, MA. "The newer plants tend to be equipped with current and more automated equipment. In addition, because much of the work force in the Sunbelt is more mobile and less well trained than that in the Frostbelt, industry is driven to do more training. This is beneficial for the overall competitiveness of US industry."
The shift to the south and west has begun to meet opposing forces, however, and may be slowing. "Companies that have been seeking the lower wages and better economies of production in the Sunbelt have also been fleeing the environmental restrictions found in the north and east," observed Richard S Lindstrom, senior member of Arthur D Little's Product Technology Group.
"Some southern states have been more lax than most Frostbelt states in environmental matters," he said. "As the population grows in the Sunbelt, though, state regulations there are becoming more stringent. For example, Texas is enacting some of the country's most stringent laws concerning pollution of air and water.
"Then, too, a number of Sunbelt cities have begun to experience problems such as availability of water and cost of housing. In California's Silicon Valley, for instance, many companies have given up trying to hire people from the east and midwest. Housing in the San Jose area has grown so expensive that people from other areas don't want to move there." Consumer attitudes are changing
Changes in population age groups, family incomes, and the relative cost of energy are among the main factors that have been altering the buying habits of Americans. Another is a shift in attitude toward what Ohio State's Dr Roger Blackwell called Frontier Consumerism.
"This is the frontier of intelligent consumption," he said. "Examples abound everywhere today. For instance, generic brands are capturing large market shares in some product categories, and couponing is growing. Off-price merchandising is very important, even in automobiles.
"The search is not for cheap products; the search is for value."
This shift to more intelligent consumption will have an impact not only on manufacturers that make consumer products, but also on industrial manufacturers that sell to the makers of...