The percentage of people who fall into the market segment they are targeting is shrinking.
I'm a melancholy-choleric, the wrong kind of person to question the facts on, you're about to get unloaded on.
First, let's start with some common knowledge. Credit Card debt is at an all time high. Personal Savings is at an all time low. While these are not proof positive that people with money are becoming a smaller percentage of the population, it is an indicator of the financial sickness in our society.
The rest of the information, the real meat, is taken from three tables found at Historical Income Tables - Households from the US Census Bureau and Historical Income Tables - People from the US Census Bureau.
NOTE: The charts shown below start with 2006 or 2005 on the left and go further back in time towards the right. That is different than most charts and may take a little getting used to. It puts the most recent information closest to the values on the left, making it easier to evaluate the most recent data (most important in my opinion).
I couldn't quickly find the study done on inflation that stated that when the government reported inflation at 3% it was really 8%, so all the following will use the inflation number reported by the government, which paints a grim enough picture.
UPDATE: Someone pointed me to a website that had the following chart showing the differences in inflation numbers from www.shadowstats.com. The rest of this post has not been updated, so keep in mind that the rest of the inflation numbers may be about 2.5 points lower than they really are.
And with that, let's start with inflation. Below is a chart of the inflation reported by the federal government from 1968 to 2005.
What I find funny is the last six years. Anyone who has paid for medical insurance or had any medical expenses knows that their overall expenses have increased a lot more than 3% or 4% per year. Also, if you live in a "hot" housing market (like Southern California) you know that your overall expenses have gone up more than 3% or 4% per year. So let's stick with these inflation numbers and call them conservative numbers.
Now lets look at how income is distributed among our population. Here is a chart of the population divided into 5ths. There is an even number of people represented by each 5th. This chart is the income of each 5th, adjusted for inflation.
Notice how the highest 5th pulls away so quickly from the rest. I've included the top 5% also, notice it pulls away even faster. The other incomes are basically flat (relative to the explosive income growth of the top 5th). Basically this chart states that the rich get richer and the poor at least stay the same. It's that 5% that is pulling up the top 5th. It looks like if you pulled the top 5% out of the top 5th, it would be flat too.
UPDATE: I've remembered my algebra, and have updated the graph to show the Highest Fifth, without the top 5%:
This chart alone shows that there is a widening gap between the 5% and the 95%. It also shows that if you are looking for a very large market, target those whose incomes are $50,000 and under, which is 60% of the population. If you want to bump that to 80% target $75,000 and under. 60% of the people probably couldn't afford to spend $800 to $1,200 per month (300 PV in Quixtar), not to mention tools, conferences, seminars, etc.
Now you may argue that with Quixtar, you would quickly be able to become self-sustaining. If that were the case, 60% of the people would not quit after 3 years. The reason they are not in a higher fifth is their thinking. It is going to take more system to help get their thinking to the point that their business will pay for itself, especially in 6/4/2 or 9/4/2 business building. That was the beauty of Team Approach. You could start getting up to 25% back on the products pretty quickly (making the pricing more in line) and have time to get your thinking in line to produce more income. Imagine if the products were a great deal to begin with. It would be a no-brainer for anyone to be a customer, better prices and personalized service. Then you could actually have people getting to break even within a month of getting started. But I digress.
Now let's look at how fast incomes rose for each 5th. The chart below shows what the average yearly increase (after inflation) in income was per year for each 5th. The 2000's should probably be ignored, since we only have the first half of that story (which starts out pretty sad).
Notice that again, the top 5th far exceeds everyone else in growth. The top 5th, on average, got just over 2% raise every year during the 90's. However, the top 5% was pulling that up, since they were getting almost 3% raise every year. Everyone else is sitting there on the low end of 1% (actually, the three lowest got 0.93%, 0.78% and 0.85%, and the 4th Fifth got 1.13%). Now these are the increases in income after inflation, which is probably a little on the low side, so these are actually more likely to be negative growths. Of course if you look at the 2000's, its just not a pretty picture so far.
UPDATE: Again, due to my remembering algebra, I'm able to bring you this updated chart, with the 5% taken out of the Highest Fifth:
Now there are a few reasons I think many people may not have felt this as much. One of which is that we have gone from a single earner per household society to a two earner per household society. The chart below shows the average Household Income and the Income Per Capita (all income in all households divided by the number of people).
The Per Capita number is a bit misleading. Family sizes have been shrinking over the years. That means that a typical family in 1970 might have had a father (the bread winner), a wife and three children. This means his income was divided by 5. Today it may be more like a father (one bread winner), a wife (another bread winner) and two children. This is the combined income of two divided by 4, or each bread winner's income divided by 2.
Notice how the Household income still pulls away faster, even given the information above. There are more two income-earner families, which has taken the brunt of the economic force. But what will the average family do to keep up? Dad works two jobs? Multiple nuclear families living together? What will be the social trend to help bear the brunt of the increasing expense of getting by?
So back to the questioned statement:
The percentage of people who fall into the market segment they are targeting is shrinking.
If you focus on people who make $75,000 and less, you get 80% of the market. Of course, there are people in the Highest Fifth that shop at Walmart, because everyone would rather spend their money on fun stuff, and save money on the everyday stuff to do it. Even Emeralds and Diamonds shop at Walmart (as seen in a few of the Affidavits).
However, if you price yourself so that only the upper end of the 4th Fifth and the Highest Fifth could afford it, that is a 30% market share. While they have more money, I'd rather have 1% of 100 men than 100% of 1 man.
If you would like the full spreadsheet, PDF and images used for this posting, email me at ThomasEvanAnthonyMorris (at) gmail (dot) com, and I will email you everything I used (1.3 MB zip file).
