Editor's note: Susan Saurage-Altenloh is president of Saurage-Thibodeaux Research Inc., Sugar Land, Texas.

Segmenting is more than slicing a market into age-defined consumer groups. Much more. There was a time, not too long ago, that this worked. Family units were stable, geographic data held more water and lifestyle did not take into account sexual preference or country of origin. Today's game is much different. You have a multitude of life stages, lifestyles and ethnic backgrounds to consider.

The major change in defining consumer groups is the switch from chronological age to life stage. Life-changing events -- marriage, divorce, death, children, returning to school, new job, job relocation, retirement -- drive consumers to reevaluate their priorities, product needs and brand preferences. For example, the needs of a 50-year-old working mother of a young teenager are much different from those of a 50-year-old retired mother whose youngest child is long gone from the nest.

Other changes in our culture affecting segmentation include the expansion of women's presence in the workplace, an increasing ethnic population and more relaxed views on gay and lesbian issues.

Below are four age group segments and three buying power markets shaping today's product demand.

Age group segments

While chronological age is only a fraction of the formula, you still rely on this characteristic to help define segments. Age provides a broad idea of the economic, political and family unit conditions to which a person has been exposed and the attitudes they may have adopted.

What we call the Mature Market, those age 53 and older, makes up 26 percent of our population. The financially well-off grandparents within this group live better than their adult children and subsidize their grandchildren's lifestyles with their senior citizen discounts. This group is living longer than in prior years and claims to feel and act 10 to 15 years younger than their actual age.

  • The Mature Market is health-conscious and considers 50 the midpoint of life, not the endpoint. This is a time when they reevaluate their wants, needs, goals and roles on personal and consumer levels. According to a study conducted by Roper Starch Worldwide for the American Association of Retired Persons (AARP), consumer profiles based on these factors include:

1) Continuing Caregivers (median age 55) - These 13 million individuals are responsible for their parents, grandchildren or adult children.

2) New Me (median age 55) - These people have gone through a compelling personal change such as a mid-life crisis, major career change or menopause.

3) Free Birds (median age 69) - These individuals are retired, self-focused and free of family obligations.

  • The influential Baby Boomers, currently 77 million strong, are the most lucrative segment in the nation. These individuals, between 34 and 52 years of age, are known for changing every institution they encounter. Prime examples are the classrooms of the '50s and the boardrooms of the '90s.

Members of this well-educated, sophisticated, demanding, individualistic, independent, and self-indulgent group have less leisure time than their parents did. Older individuals in this segment are just beginning the battle against aging. Sales of skin cream, suntan lotions, hair coloring, cosmetics, vitamins and nutritional supplements are surging. Spirituality is seeing a rebirth as maturing Boomers search for the meaning of life.

Boomers maintain the attitude that they can always take care of themselves. They have become high-tech consumers because they can afford it, not because they are more proficient.

Memory and nostalgia are useful tools to appeal to Boomers' need for security, but it must be the real thing. In recent years, television advertisements for the Nissan 200SX showed the car zipping down the road to the theme from the old Batman television show. It is important to recognize that Nissan used the real theme and not a jazzed up remake of this tune. Other examples are Mercedes ads layered with Janis Joplin's ode to the Mercedes-Benz and Maxwell House's use of "Wild Thing."

  • Generation X, the next age group segment, comprises 17 percent of our population. The lives of these 21-to-33-year-olds are defined by education, insecurity, informality and a slow transition to adulthood.

Generations Xers can be divided into four primary attitude groups:

1) Cynical Disdainers - are primarily pessimistic about life.

2) Traditional Materialists - are like Boomers and seek the American dream.

3) Hippies Revisited - express themselves through music and spirituality.

4) Fifties Macho - are young Republicans.

The youngest Generation Xers are career-minded hard workers. They want a good job and an exciting career, but are afraid they will not find this. On the whole, Generation Xers question the price of Boomers' achievements and refuse to adopt the 14-hour-day work ethic.

Many of the 46 million Generation Xers are from fragmented families; 40 percent spent some time in a single-parent household by age 16. This was the first generation to fully experience the new extended family of step-parents and half-siblings. One-fifth of Generation Xers live at home.

This group values leisure activities, family entertainment, economical and functional clothing, quality day care and home offices. They are happy with smaller homes, economical furnishings and family-priced cars. They value today's technology - cellular telephone, pager, fax - which allows them to stay in touch and in control.

When it comes to reaching Generation Xers, remember that they dislike advertising hype, overstatement, self-importance, hypocrisy, and personal sales at home. Generation Xers are better moved by visual images than the written word and have very few role models. They are more likely than other generations to seek out local, specialized products such as microbrews and out-of-the-mainstream vacation places.

  • Echo Boomers is the label most often used to describe the next youngest age group segment. These individuals, born between 1977 and 1994, make up 27.5 percent of our population. Also known as Generation Y or the Millennium Generation, these kids are described as more competent, confident and wary than their parents.

The 72 million Echo Boomers are diverse in race, living arrangement and socio-economic class. For example, two-thirds are white and one in 35 is mixed race; 23 percent live in poverty and 27 percent have only one parent. They are the first generation to seriously question all traditional racial categories.

The teens (age 12 to 19) in this group are very knowledgeable about music, entertainment, fashion and personal care products. They influence the spending of $100 billion per year; $63 billion is their own money. The number of teens in this age range is expected to grow two times the rate of the total population during next 10 years.

Echo Boomers are the most media-savvy generation so far. Using celebrities to sell a brand is only marginally effective with this generation. These kids may reject promotions that sell a product or service to a specific gender. Appeals to this group should be designed with the knowledge that teens spend money to have fun - shopping is an experience rather than an errand. These teens understand and value quality; quality is considered the essence of cool.

Evolving buying power markets

A buying power market is defined as a homogeneous group exhibiting increasingly defined needs and demands along with growing purchasing power. The group must be large enough to capture the attention of marketers, retailers and advertisers, and often has influence over or within generational markets.

The most significant of the evolving markets is women (females over age 18) with their household purchasing power towering over other groups at $3.4 trillion. While women make significantly less than half of all household income, they influence over 80 percent of dollars spent. They make more decisions than men do about cars, tires, financial services and personal computers. As buyers, they pay more than men and are less likely to haggle over price.

Women currently make up 45 percent of the total workforce; 62 percent work at least part-time. Over the next 10 years, the percentage of women who work will increase by 16 percent, while representation by their male counterparts will increase only eight percent.

Women, as entrepreneurs, are gaining more power in the business world. There are 7.7 million women-owned firms (up 43 percent from 1990) in the United States. This 30 percent of all businesses contributes $1 trillion to the U.S. economy each year.

We are seeing some changes in the conventional male/female roles. Traditionally, men have been rather hedonistic; now we find women toying with this attitude. Having suppressed their individualistic natures as they raised children, these women are now spending money on themselves. How are men changing? They are experimenting with becoming SNAGS (sensitive new-age guys).

Ethnic markets are currently concentrated with persons of Asian, Hispanic or black heritage. In 1980, one in five Americans was considered a minority. Today the ratio has jumped to one in four. This growth is concentrated in our children where one-third are black, Hispanic, or Asian.

The traditional five P's of marketing are product, price, promotion, placement and profit. However, to attract consumers of color, replace these with passion, preparation, perseverance, recognition, relevance, respect and relationships.

The following outlines the presence and expected changes in black, Hispanic and Asian populations in the U.S.

Black

  • Currently 34 million; 12.6 percent of all Americans.
  • $500 billion purchasing power.
  • Grew by 13 percent in last decade alone.
  • Southern U.S. states are home to more than one-half of all blacks as compared to 90 percent in the year 1900.
  • The term "African-American" is preferred over "black" slightly, but only three percent are offended either way.
  • Average household income is $14,000; households with annual incomes above $60,000 are the fastest growing income segment for blacks.

Hispanic

  • Currently 30 million; 11 percent of all Americans.
  • $350 billion purchasing power.
  • Hispanics increased from 22 million in 1990 to 26 million in 1995.
  • Their presence in the workforce will increase 36 percent in the next 10 years compared to a increase in the national workforce of 12 percent.
  • The U.S. Hispanic Market Study shows that television is the medium of choice.
  • Hispanics prefer their media in the first language they learned to speak. However, 75 percent of Hispanics speak Spanish at home. Only 40 percent feel conversant in English.
  • Second- and third-generation Hispanics have strong cultural ties. Selling to their community is more effective than selling to their individual household.

Asian

  • Currently 10 million; less than four percent of all Americans.
  • $150 billion purchasing power.
  • Their presence in the workforce will increase 39 percent in the next 10 years compared to a national increase in the workforce of 12 percent.
  • The Asian population has doubled since 1980. They are the fastest growing, most diverse and most affluent minority group. Their median household income is $36,000.
  • Asians are usually found in high-tech or agricultural careers.

Gay/lesbian market

The gay/lesbian market comprises seven percent of our population. These exceptionally well-educated individuals have high levels of disposable income ($200 - $400 billion) and many have their own business. They travel frequently; one-third have traveled overseas.

This market is geographically concentrated, with lesbians tending to settle in the suburbs and males choosing the inner-city life.

The gay/lesbian market votes with its pocketbook for advertisers who have the courage to market to them. These individuals tend to stick together, support and elect each other. A strong word-of-mouth network makes it easy for marketers to reach them. While this market is proud of its distinctiveness in areas including fashion, signs and symbols, it is also afraid of being branded as different.

Effects on research

How have these demographic and social changes affected market research? The segmentation process is more complex because research results are stratified in more ways than before. You no longer rely on gender or household income delineations alone. Now, a typical stratification looks more like "males in upscale families with young children" or "economically challenged urban families." It is critical to explore statistical correlations according to complex clusters.

You must now employ more demographic categories. For example, one person may be several races or two adults living in a household may have a relationship other than husband and wife.

Today, political correctness is important when wording survey questions. "Household" is preferred over "family." The word "family" implies that the people living in the house are related by blood or marriage.

The fracturing of our population means you must explore larger samples, especially in the bigger metropolitan markets, to complete enough surveys to permit statistical analysis of smaller or more complex subgroups. For example, a sample must be large enough to capture and compare middle-class whites with middle-class Hispanics and middle-class blacks all within one area.

Who you choose to research also shifts. It is obvious that women's purchasing influence makes them more appealing research subjects than in the past. Echo Boomers are more in demand than Generation Xers ever were. Why? Because there are more of them, they are sophisticated spenders and have significant spending authority within their families.

Staying on top of these changing markets is no easy task. New segments emerge, existing influences shift and new consumer profiles surface within a market. As a researcher, your job is to help determine the beliefs, attitudes and behaviors of your client's customers. Keeping your finger on the pulse of the cultural mix is key to successfully reaching this goal.