Tuesday, February 23, 2016

microISV Software Sales
and Demographics

Kenneth Gronbach writes that Detroit's economic woes are caused by the automobile manufacturers not paying attention to the demographics of buying cars.

Gronbach is the author of the book "The Age Curve – How to Profit from the Coming Demographic Storm." Gronbach's book looks at the marketplace from the perspective of demographics, and delivers insights that can help all businesses, including microISVs.

In the US, men aged 43 purchase automobiles. Okay, men aged 33 to 53 are the heaviest buyers of vehicles. Generation X (the 69.5 million Americans born between 1965 and 1984) can't buy cars at the same level as Baby Boomers (the 78.2 million Americans born between 1945 and 1964) bought cars because there are nine million fewer people in Generation X. Simple demographics dictates that fewer cars will be sold as the Generation X buyers replace the Boomers as car buyers.

Toyota, Gronbach explains, has figured it out. Instead of mainly targeting traditional buyers, Toyota crafts cars that attract the much larger group of young Generation Y buyers (the 100+ million Americans born in 1985 and later.) Toyota took the time to study the types of used cars that young adults are buying today. And Toyota built new vehicles that are attractive to these younger buyers.

Gronbach talks about an advertising campaign from Porsche 20-or-so years ago. Porsche of America encouraged prospects to buy used Porsches. Even though this didn't create an income stream for Porsche at the time, the company depended on the sale of used Porsches to sell new ones. By making the market for used Porsches strong, the company increased the trade-in value of these older automobiles. Many people traded in their old Porsches for new ones.

There is no doubt a lesson here for microISV business owners: Perhaps it's time to give your software to college students without charge. And to high school students. And to educators. Plant the seeds today with users who don't have the disposable income to buy your application software. When they graduate and find jobs, they'll remember how great your software was, and buy it. And they might encourage all of their business colleagues to buy it, too.

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