Family life cycle

1960’s, based on their research Wells and Gruber came up with a new concept
of segmentation, called the family life cycles. Family life cycle can be a part of
the segmentation targeting and positioning triangle or even the consumer buying
behavior study as it concerns itself with the various phases and generations
of people present within an individual family and how to target them with your
marketing efforts.

Thus, in a joint family, there might be youngsters, parents, grand parents,

uncles and aunts, all in different phases of their life. By taking each of them as
a target market or a target demography, what can be the
marketing strategies that you can adopt, can be answered by Family life cycles.

The concept has grown in popularity in the last few decades because of being
applied in different kind of industries with successful results. Until now you
might have heard about product life cycle or customer life cycle. However, the
family life cycles is focusing on shopping styles, information use and decision
making differences by a person in the different stages of his life.

As we grow older, we are moving steadily from one stage to another, moving
from an initial buying behavior focusing only on ourselves to a more mature
and responsible one, by taking into consideration not only our needs but also the
needs of our families. By understanding in which stage a person is in the family
life cycles, marketers can anticipate their needs, and determine the products and
services they can provide him.
Basically, the family life cycles model describes the stages through which
consumers pass through their lives when they have families. There are different
versions of the categorization of the stages but the most common are: bachelor
stage, new married couple, fully nest 1, fully nest 2, empty nest, solitary
survivor.

Stages in the Family life cycles

1) Bachelor stage in the family life cycles –

During the bachelor stage people are usually characterized by being interested
mainly in appearances. Therefore, people at this stage tend to invest more in
fashionable clothing and vehicles. Impulsive buying as well as premium buying
is a common characteristic of the Bachelor stage.

2) The newly married couples –

In the family life cycle, the new married couples are considered to be in a better
financial position in the initial stage due to the absence of children. It might be
possible that both, the husband and wife, are earning members. Thus, the buying
decisions focus on quality and not quantity. A family person will always think
about savings and insurances, and at the same time, they will invest in long term
products like good furniture, new home, etc. Once married, they are less prone
to impulsive decisions.

3) Families in full nest 1 and 2 (and in some version also 3) –

This segment of the family life cycle consists of families already having
children. The number of children may vary and hence they are categorised in
Nest 1, Nest 2 etc. The purchases of these people are dominated by the
children’s needs mostly.

Thus, people having 2 kids are likely to save money and spend more in the
future of their children (this is most targeted by insurance companies and
products like Boost and Complan).

In the empty nest category, children are going away from home. This type of
segment may be targeted for investing in their children who are away from
home or to start spending money for their own vacations and hobbies and also
focusing on savings for the retirement period.

Young and Single

The young and single demographic includes those who are unmarried and do
not have any children, as well as same-sex couples, whether or not the couple
has children. This demographic is most interested in buying fashionable
clothing and vehicles.

People in the young and single category will also buy basic kitchen appliances
such as toasters or can openers, as well as basic furniture such as beds or
couches, but there are unlikely to splurge on fancier items such as chaises or
ottomans. These consumers make several purchases that will make them
attractive to a potential mate as well, such as designer cologne, facials or hair
salon services.
Recently Married Households

Newly married couples with no children are in better financial shape than they
will be once they have kids, according to the family life cycle theory. Because
they are combining two incomes and splitting major expenses such as rent and
utilities, they are in have more spending power than when they were single,
according to WisdomJobs. People in the newlywed category may purchase
high-end furniture that will last for years, along with life insurance, as a
precautionary tool to keep their potentially growing family financially safe.

Full Nest 1, 2 and 3

Families in the Full Nest 1 classification have more children in the home than
adults. The kids in the house are all younger than 6, the parents rely primarily
on credit for purchases and buy mainly household necessities. The Tutor 2U
website asserts that people purchase home-related items the most during the
Full Nest 1 stage.

Full Nest 2 families have children 6 and older. The house is still dominated
with children, but these individuals tend to have a little more control over their
finances, as wives who took off work to raise children are likely returning to
work around this time. Necessities, such as groceries and children's clothing,
are still the main purchases in these homes.

When a family reaches Full Nest 3 status, its children are older, and in many
cases, the children in the family are also working or in college. A large portion
of the family's money goes to fund the children's education, and parents are
more likely to buy high-end furniture items and purchase vacation packages.

Empty Nest 1 and 2

Empty Nest 1 families have adult children who are no longer living at home.
Home ownership is very common for this group. Those in the Empty Nest
category are very likely to spend money on vacations and hobbies and have
plenty of retirement money saved.

Empty Nest 2 families have taken a reduction in income, as the breadwinner is

retired. People in this category most likely spend significant money on medical
care and prescriptions and will often assist their children and grandchildren
financially.

4) The last category in the family life cycles is the solitary survivor.

This can consist of either a widow/widower who are still working or who are
retired. Their main focus is on savings and their purchases are dominated by
accommodation and medication mostly.

What all these stages have in common are the criteria based on which they are
formed involving age, marital status, career, disposable income and either
presence or absence of children. Thus, based on all four type of segments, the
typical demography can be made and targeting can be carried out accordingly.

Considered to be a useful method for segmenting the market, the model

provides an understanding in customer behavior by looking into various stages
of the family life resulting in different buying patterns. It takes into account
changes in family structures and behavior accompanying progression from birth
to death.

As companies go through different stages such as early entrance, growth,

maturity and decline, consumers spending habits are also passing through
different stages according to its development depending on the consumer’s
ability and willingness to consume various items and undertake the financial
burdens involved with their preferences. Thus, a youngster may be more likely
to purchase a product during its entry stage than a person in family nest 2.

Advantages of Family life cycles

The main two advantages of the family life cycle concept is

 It provides a technique of anticipating the market growth through market

estimation, by forecasting the number of persons entering into each stage
of a cycle in one year.
  It provides an overview of the variables which affect the entry of a family
into the different stages of life.

Focusing on the demographic patterns and social trends of people, the family
life cycle concept describes the effect of time on a family through the different
stages of life focusing on their patterns of consumption and spending based on
their income.

Product life cycles vs Family life cycles

The product life cycle deals mainly with the process that the product goes
through in its life. Both, Product life cycle and Family life cycle are parts
of Marketing strategy. However, Family life cycle concerns itself more with
Segmentation, targeting and positioning whereas the Product life cycle is more
connected with the Planning and tactical thinking for the product. Thus, though
the core concept of Product and family life cycle is to study different phases of
a product or a family, the end analysis and its result are completely different.