A survey by Seventeen Magazine in 2009 reveals that teens choose the tangibles: 75% of teens would choose a new pair of shoes over 50 new MP3 downloads and 63% of teenagers would rather have a new pair of jeans than tickets to a concert.[i]
Mediamark’s Teenmark produces a comprehensive survey that delivers a complete picture of the demographics, media usage, product consumption and lifestyle choices of America’s teenagers, from ages 12 to 19. The survey revealed that between 1990 and 2000 the number of teens soared to 32 million, which is an increase of nearly 4.5 million. Teens’ 17 percent growth rate far outpaced the growth of the rest of the population. The current teen market represents the most multicultural population in United States history. They have significant spending power and also wield increasing influence on household purchases.
Clothing topped the list of both what teens planned to buy and what they actually purchased. Entertainment items, such as video games, CDs, and magazines, figured prominently on teens’ planned purchases and what they actually bought. The most common items recently bought by teens include food, candy, and soda. Further, magazines were on teens’ top 10 lists for both items they plan to buy and what they recently purchased.
There are some significant differences in spending habits between the genders. Twice as many teen females bought clothes the last time they made a purchase than teen males. Three times as many male teens bought video games than their female counterparts. More teen females tend to consume food and beverages, including candy, soda, snacks, lunch, and ice cream. And twice as many teen males plan to buy a car or car parts as teen females. Teens shop in shopping malls/centers, discount stores, convenience stores, apparel stores, grocery stores, drugstores, electronics stores, and department stores.
African-American/Black teens spend 6 percent more per month than the average U.S. teen, about $428 per month. Annually, they spend more on items such as clothing, jewelry, computer software, and athletic footwear in comparison with all U.S. Teens.[ii] Target Market News confirms African-American teens, who are a major influence in today’s mainstream culture — especially in music, sports and fashion — spend an average of $96 dollars monthly, 20% more per month than the average U.S. teen.[iii]
The New York Daily News reports that in a recent poll of 1,300 teenagers and college students, online marketing group Y Pulse found that Asian Americans spend more than any other ethnic group, spending an average of $140.97 each month on clothes, Fashionista reports. Further, White teenagers spend the least amount, spending only $111.58 per month.[iv]
According to a survey by Alloy Access, Hispanic teens spend $19 billion annually; their top dollars are spent on clothing and food. Hispanic teens spend an average of $320 per month, which is 4% higher than non-Hispanic counterparts.[v] Cheskin Research reported that Hispanic teens “provide rich insights into larger issues affecting the future of the American consumer identity. . . . And with a current spending power of $20 billion and a projected growth rate six times higher than the rest of the teen market, Hispanic teens are a force in and of themselves.”[vi]
[WPVI-TV Philadelphia, PA] 6ABC’s meteorologist, David Murphy, who writes a weekly Parenting blog on his experiences raising teens on 6abc.com shares his experiences as a parent on teen spending. He says, “Kids are definitely into “stuff”, but in my house, planting some good financial seeds early helped, I think. When my kids were in about 7th or 8th grade and they started earning a small allowance for helping out around the house, they were encouraged to save. And when they wanted something, like new video game, I’d suggest that they plan for the purchase themselves, but discourage them from spending everything they have all at once. Once they got jobs in high school, I opened checking accounts for them, which I then linked to my account. This made it easier to transfer money between us, when needs arose. I could keep an eye on how they were doing, discourage big purchases when their account was low, and congratulate them when their savings hit certain levels. As for credit cards, I did not push for those until they were in college. At this point, they needed one card to buy books, gas, and to establish credit. I had the bills sent to our house, though, not to college where they could be misplaced and stolen. I encouraged them to check their charges online and stayed involved in their finances, continuing to let them know when they ran up especially big bills. Since I was paying most of their college expenses, I still had a right to make sure they were helping out by staying in the black and build their savings. This worked pretty well with my daughter who decided to stay at home for a couple years out of college and continue saving. She made one big ticket purchase (a TV), but is now building savings, partly because she’s now on the hook for some big expenses, like auto insurance.”
Soraya Memminger, 14-year old South Jersey resident, says, “[I spend money on] clothes, food, parties, sneakers and stuff, and concerts. [High school] Juniors have to pay for gas and their phone bills. I love clothes. I never buy books. My mom buys my toiletries. [Television commercials and newspaper ads] wouldn’t reach me. I research products online myself. I look it up. When I see something I like, I buy it.”
Teens have $216 billion in buying power. These mall-trotting teens carry credit cards, some using prepaid plastic that functions like a debit account. Last year young shoppers spent over $170 billion — double the amount just 10 years earlier. Many work for their money; others get it from parents. For parents on a budget, these fashion aspirations are a challenge.[vii] Murphy considers, “On credit cards, I really don’t think high school kids are mature enough to handle that sort of open-ended spending option (and I don’t care a bit how many of their friends have them—I just don’t think it’s a smart way to go). And watch out, once your older kid signs-up for one. My daughter’s first bill came in, and I noticed all sorts of fees for service add-ons she didn’t realize she had agreed to pay. It took us two or three months to get these fees removed. Check their first couple of statements to make sure they’re not being cheated or fooled into paying for “credit checks” or “extra protection”. These aren’t necessary, especially for someone who’s only just beginning the credit experience and is not yet applying for mortgages or new car loans. I’d also suggest that your child signs up for online statements. We were going with the [paper] mailed bill, when her card company switched the size of the envelope to look like larger junk mail. One of the bills was inadvertently thrown out and she was slapped with a late fee. Online notification is harder to miss.”
According to the June 2009 How Teens Use Media, A Nielsen report on the myths and realities of teen media trends, the highest concentration of advertising to teens is around “image” products such as apparel and beauty. Nielsen estimates that in 2008, over $240 million was spent across 14 teen magazines. Apparel advertisers spent the largest share in the teen magazines, $40 million.[viii]
Companies who target teens include credit card, tobacco, health and beauty, clothing, sneakers, food, wireless, and electronic companies. The credit card and tobacco companies are thought to have a negative effect on teens. Teens typically do not possess the financial acumen and discipline necessary to manage multiple credit cards. This typically results in them starting their adult lives with a negative credit report/low credit score that takes many years to repair. It is during this phase that they begin to understand the effects of credit cards’ phenomenal interest rates and how non-payment affects their credit reports, which may have an adverse effect on their ability to buy a house, rent an apartment, purchase a car or get a job. Capital One is the leader of credit card companies that target teens. Further, when teens get credit cards, their parents are ultimately responsible.
Though the tobacco companies send messages of quitting smoking and warnings of the adverse effect on one’s health, the underlying idea is once a teen starts smoking, it is very likely that s/he will smoke for most of his/her life. According to the My Quit Smoking Diary, the primary way tobacco companies are able to target teens is through image. Teens are highly susceptible to marketing that gives them promises of being cool, sexy, alluring, or rugged. By creating these images and associating them with smoking, tobacco companies can convince teens that if they choose to smoke it will help them become more popular, fit in, look mature, or just be cool. In order to deliver these messages within the scope of what tobacco companies are allowed to do, they focus on magazines and movie advertising.[ix]
According to a Pew Research Study conducted in 2008, 71% of teens owned cell phones; 77% of teens owned a game console like an Xbox or a PlayStation; 74% of teens owned an iPod or mp3 player; 60% of teens owned a desktop or laptop computer; and 55% of teens owned a portable gaming device.[x]
Master your hustle.