Beyond “HHI”: Redefining Consumer Households, Wealth and Purchasing Power
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Beyond “HHI”: Redefining Consumer Households, Wealth and Purchasing Power
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Investigating new ways to understand consumers
Currently, household income (HHI) is used almost universally in consumer market research for screening, profiling, and data segmentation. Can you recall ever seeing an online survey, bulletin board, or community recruit where some indication of household income was not asked for? “Which of the following best describes…”, followed by annual gross income ranges is the standard, time-worn approach.
The market research industry has used this view of HHI as a proxy for a “richer-poorer” continuum for many years. We assume those with high household incomes have more and spend more, and those with lower HHI don’t and can’t.
But using household income measurement in this way today is outdated, at best. Much more likely, it’s heavily biased and misleading when used to indicate wealth, spending and especially purchasing power.
Collaborating with Fordis Consulting on this topic, we first explored hard data trends across several decades showing the reality of:
We also needed to hear the voice of the consumer – we conducted original research through a survey of 1000 U.S. households across all demographic types and income ranges to ask about not only their income, but also their perceptions of personal wealth, including mandatory and discretionary spending, winners, and losers when their finances change, and more. Some of their answers were surprising and unexpected!
From our research we suggest a different way to ask about and combine several factors for a more realistic and representative picture of households and income that will benefit researchers and brand marketers of all kinds.
Feel free to reach out to Scott at sworthge@questmindshare.com to discuss more about our work in researching B2B best practices and how you can use our results to advise your stakeholders and clients.