One of the most important factors to consider in the new product development process is the size of the potential market. For purposes of this report, a “market” is defined as the “set of potential purchasers” of a new product. While few products have universal appeal, it is possible to generally define a broad market to give an indication of its size. Since most products are targeted to specific groups of consumers with specialized interests, it is often possible to segment the market into submarkets. Each submarket differs in its requirements, buying habits, or other critical characteristics.
It is not our intention in this section to imply that all or even any of the markets identified would represent actual purchasers of “BELLA GUARD”. Our purpose is simply to identify those groups which we view as being appropriate potential market targets for the invention in the event that it is manufactured and marketed.
The Primary Market would consist of the parents of infants and children younger than age 5. The Census Bureau estimates the population of this age group to be 19.6 million boys and 9.6 million girls. By 2020, this segment of the U.S. population is projected to increase to 22.9 million, including 11.7 million boys and 11.2 million girls, and it is expected to reach 28.1 million by 2050.
Of family households in the U.S., 15.0 million, or 21 percent, have children younger than age 6, while 8.8 million, or 12 percent, have children younger than age 3.
According to the U.S. Department of Agriculture’s annual report, “Expenditures on Children by Families,” the average cost of rearing a child born in 2003 totaled about $178,590. These estimates include food, housing, transportation, clothing, health care, childcare and education, and miscellaneous expenses for the first 17 years of the child’s life. The report noted that family income affects child-rearing costs, with low-income families spending $130,290, middle-income families spending $178,590, and upper-income families spending $261,270 over a 17-year period.
In addition to parents, grandparents are an important segment of the consumer market. About 70 million Americans (approximately one-third of all adults) have at least one grandchild and the number is expected to rise to 80 million by 2010, according to Washington, D.C.-based American Association of Retired Persons (AARP). The new generation of baby boomer grandparents is more youthful, more involved, and has more money with which to dote on their grandchildren. The average age of a first-time grandparent is 47. With today’s life expectancy of 76, this generation of grandparents may have as many as 30 years of grand parenting ahead of them.
According to a 2002 study by the AARP, grandparents spend an average of $500 on their grandchildren annually. More than half of grandparents surveyed (52 percent) reported they spend money for grandchildren’s educational needs. Roughly 45 percent of grandparents said they help pay living expenses of their grandchildren. A significant percentage (25 percent) also helps to pay the medical expenses of a grandchild. These results indicate that significant numbers of grandparents are helping their children support their grandchildren on a day-to-day basis. Specific items grandparents are likely to purchase for their grandchildren include clothing (87 percent), books (80 percent), fun foods such as snacks or fast food (78 percent), and toys or other non-computerized games (76 percent).
The AARP study also indicates that approximately 15 percent of grandparents provide childcare services for their grandchildren. Twenty-four percent of grandparents who provide childcare services for their grandchildren do so at least once a week to once every two weeks while the parents are not at work. Almost 80 percent of grandparents who provide childcare are looking after one or two grandchildren. Another 17 percent look after as many as three or four grandchildren.
The number of children under 18 years old living in their grandparents’ home, with or without one or both of their parents, rose from 2.3 million in 1980 to nearly 5.8 million in 2000. Approximately 42 percent (2.4 million) were “grandparent caregivers,” defined as people who had primary responsibility for their co-resident grandchildren. Among grandparent caregivers, 39 percent had cared for their grandchildren for 5 or more years. More and more grandparents are being called on as primary caregivers, often filling a void created by the prevalence of divorce, poverty, teen pregnancies, substance abuse, incarceration, child abuse/neglect, illness or disability, abandonment, or death of a parent.
Also interesting to note in relation to the “BELLA GUARD” would be the passenger car and light truck aftermarket, including the owners/operators of 133.6 million passenger cars and 77.8 million light trucks registered in the U.S. as of 2000. The light truck registrations that year included 38.2 million pickups, 21.5 million sport utility vehicles, 17.3 million vans, and 863,300 other light trucks.
There are 190.6 million licensed drivers in the U.S. Of this total, 95.8 million are men and 94.8 million are women. By age, 13.5 percent of drivers (25.7 million) are younger than 25, 19 percent (36.7 million) are 25 to 34, 41 percent (78.2 million) are 35 to 54, 20 percent (38.5 million) are 55 to 74, and 6 percent (11.5 million) are 75 or older.
The Secondary Market would consist of owners/operators of child care centers in the U.S. The Washington D.C.-based Children’s Foundation reports there are about 116,410 day care centers in the U.S., Puerto Rico, and Virgin Islands. According to the U.S. Census Bureau, about 29 percent of the stand-alone child day care service establishments with paid employees are exempt from federal tax (such as not-for-profit organizations). In 1997, these 64,054 tax-exempt and taxed firms with payroll reported receipts totaling $14.18 billion, and in March 1997, they employed 628,712 individuals. The research data published by the Children’s Foundation reflects a 20 percent increase in the number of licensed child care centers between 1997 and 2003.
California alone has more than 13,800 licensed child care centers, while Texas is home to 10,400, and Florida and Michigan have 6,300 and 4,900 respectively. Seven other of the more populous states have 3,000 or more child care centers; while 12 have 500 or fewer.
According to the Census Bureau, of preschoolers with employed mothers, 18 percent were placed in organized day care facilities (as of spring 1999). Since about half of these children were in the care of a parent or relative and another 3.3 percent were cared for in their own home by a non-relative caregiver, the 18 percent share of children who were in day care centers actually reflects the choice of nearly two of five mothers who have a non-relative care for their child outside the home. The Census Bureau estimated that the total of 10.6 million children younger than 5 have mothers who work. The shares who were regularly cared for in day care centers would amount to 1.9 million.
This market could also include operators of home-based child care services.
According to the Children’s Foundation, there are 306,800 family child care homes in the U.S. While 85 percent of these regulated (licensed) homes provide care for up to six children, about 44,500 of the homes are larger (group) child care homes providing care for seven to 12 children, including those of the operator and any assistants.
The Tertiary Market would consist of the international market.
Many products today enjoy worldwide distribution. The interdependence of nations, growing import and export trade, and expanding common markets have all tended to draw our world closer together in both buying habits and product utilizations.
In 2003, the value of U.S. exported goods totaled $724.0 billion; manufactured goods accounted for $626.1 billion of this total, or 86 percent. Canada is by far America’s highest volume trading partner, accounting for $169.77 billion of U.S. exports. Mexico imported $97.46 billion in U.S. goods; Japan, $52.06 billion; the United Kingdom, $33.90 billion; Germany, $28.85 billion; and South Korea, $24.10 billion. Eleven additional countries each imported more than $10 billion in American goods: China, Netherlands, Taiwan, France, Singapore, Belgium, Hong Kong, Australia, Brazil, Malaysia, and Italy. The value of U.S. exports to these nations totaled $174.82 billion.
According to the Foreign Trade Division of the Census Bureau, U.S. firms exported $1.37 billion worth of games, toys and children’s vehicles in 2004, a 3 percent increase over exports in this category during 2003, which totaled $1.33 billion.