The Pulse: exploding the myth of the pink pound

The Pulse is Media Guardian's new thinktank with research by the UK's leading market analysts. Each week we will tackle a micro-sector to give you a statistics-packed snapshot of the sectors that matter. This week, Rhodri Jones, consumer markets analyst at Datamonitor, explodes the myth of the pink pound

Rhodri Jones
guardian.co.uk, Tuesday June 5 2001 12.03 BST

Picture the scene: a double-income, no-kids gay couple with pots of money to spend, no commitments and ripe for gay-specific marketing tactics.

Typical gay consumers, right? Actually no. Hype surrounding the attractiveness of the gay market has largely been a result of studies conducted by professional firms that have contained inherent bias in their results.

The commonly held view is that lesbian and gay men have higher than average incomes and lack the financial and family commitments of their straight counterparts.

Yet many of these studies have often only focused on openly gay consumers who hold credit cards and donate to political causes. Independent studies, however, have indicated that the incomes of gay men are actually lower than average incomes.

A study conducted by the University of Massachusetts found that the average gay male in the US earned US$2,000 (£1,388), less than the average for US males each year.

This view is reiterated in the UK where a Gay Times survey of its readers in 1998 revealed that its average reader earned £14,969, compared with the national average of £16,000.

However, despite lower actual income, it is true to say that some gays may have higher disposable income, given fewer family commitments. More importantly, fewer family commitments frees up more discretionary time to pursue leisure activities.

But in saying this it is important not to fall into the trap of generalising gay lifestyles.

Many marketeers have tried to tap into "the gay lifestyle" with some using more stereotypical imagery than others.

For example, Bud Light's "Be yourself and make it a Bud Light" campaign featured a bottle clad in leather.

Despite a humorous approach, stereotypical marketing to gays runs the risk of being patronising, as with attempts to pigeonhole any consumer.

If gay consumers feel that their sexuality is being mocked by adverts they are highly likely to stop buying that product.

At best this strategy will have little effect. At worst, it may make gays feel like a manufacturer is cynically targeting them.

Manufacturers in the consumer goods industry are sure to increasingly focus their marketing efforts on gay consumers, as part of the general move towards targeting niche consumer groups with specifically tailored products.

However, the problems may outweigh the benefits. Gays are not a growing consumer group, which will make competition between manufacturers, retailers and marketers intense.

Furthermore, the difficulties in targeting this group and misconceptions about their spending power make it likely that only a small number of manufacturers will be able to profit from this community.

• Datamonitor plc is a business information company specialising in industry analysis. See Datamonitor.com for further details.