Jan 01 2001

Life Cycle Marketing for Credit Unions: Young Households

Report  
Number  
64

This study is the first in a series of four publications on life cycle marketing for credit unions. This volume addresses the financial service needs of young households.

Jinkook Lee
University of Georgia
William A. Kelly, Jr.
Center for Credit Union Research
University of Wisconsin-Madison
Report Number 64

Executive Summary

The concept that households' needs for products and services depend on where they are in their life cycle has natural intuitive appeal. However, life cycle categories can be defined in different ways. The categories used here are based on extensive prior research on consumer behavior. The categories developed by Gilly and Enis have been recognized as the most effective life cycle model to use for marketing purposes. In this report, the focus is on four categories that comprise young households. Gilly and Enis define young households as those in which the head of household is 18-24. Within these households, they define four life cycle categories: (1) childless singles, (2) childless couples, (3) single parents, and (4) couples with children. 

What is the research about?

Data was used from the Survey of Consumer Finances, sponsored by the Federal Reserve System. This data was chosen for the study because it is unrivaled in scope, detail, and accuracy. It is based on 2-hour, in home interviews, which allow collection of detailed and accurate information about all aspects of a household's finances. The usable sample size for this project was 4,305 households. For this study, all households were used in order to have as large a sample to work with as possible. However, researchers found that households are sufficiently representative of credit union member households that the results apply to both groups. 

What are the credit union implications?

Looking at the four segments, researchers found two patterns of special interest to credit unions. The first is that these households are less likely to use traditional credit union products beyond checking and savings than to use non-traditional offerings such as mutual funds, stocks, and life insurance. The second is that grouping households by age alone has significant flaws as a way to segment households for marketing strategy. These findings imply that credit unions need to use non-traditional products to develop a well-rounded relationship with young households, and that effective marketing requires different strategies for the four different groups.