Source: Yulia-Images/Moment/Getty images.
Much of the discussion around new consumer tech, new tech adoption and using new tech to redefine the user or customer experience centers around age groups. More specifically, a lot of tailoring is directed at millennials and Generation Z, who currently make up advertisers’ coveted 18-34 target group. But what about income? What role does income play in tech adoption and in narrowing or exacerbating socioeconomic gaps?
This report presents the findings of a survey conducted by S&P Global Market Intelligence 451 Research, which asked US consumers about their technology adoption habits and attitudes toward embracing digital experiences.
Key takeaways from the survey
Adoption of new tech is a slow process. Similar to previous reporting, the current results also show a large number of respondents (41%) fall into the “tech laggard” category, meaning they tend to wait until new products have been well received before purchasing. Only 18% are considered “tech leaders” who say they usually try new products before others.
Household finances play a role in being a tech leader. Household resources are a big factor in many types of spending, but especially so on mostly discretionary items like consumer electronics. Higher-income households (more than $100,000 per year; 39%) and lower-income households (less than $50,000 per year; 41%) have surprisingly similar proportions of tech laggards within their cohorts.
The key difference is that higher-income households are more than twice as likely to try new products before others (28% versus 12%) compared with lower-income ones, and almost three times as likely to pay more for new innovative products (29% versus 11%).
This creates a clear imbalance in terms of who is engaging with, influencing and benefiting from new types of technology once they are available to consumers.
Lower-income households are more risk averse. Another barrier to new tech adoption is familiarity with the “old way” of doing things. In general terms, this is simply reluctance to change or not seeing any clear benefit to changing established routines. From an economic standpoint, it can also mean not having the luxury of potentially wasting money on the unknown. This aversion to risk is more prevalent among lower-income households, with 38% saying they are more comfortable buying brands and products they are familiar with, compared with 25% of higher-income households.
Higher-income households are also quicker to adopt digital experiences. One very real outcome of the different approaches to new technology adoption is that higher-income households (42%) are much more likely than lower-income ones (26%) to say mobile apps are essential to their daily lifestyles. This also makes lower-income households more than twice as likely to say they do not rely on digital experiences beyond basic phone usage, like taking photos or texting (30% versus 14%). Also, on average, lower-income households hold onto their devices, like smartphones and computers, longer than higher-income ones. This means they typically use older generations of devices, which likely affects their ability to engage with some aspects of the newest digital experiences.
Income remains an important factor in the brand versus price debate. Half (50%) of lower-income households say they favor the lowest price regardless of brand, while just 28% of higher-income ones say the same. Likewise, higher-income households (52%) are more likely to say they are willing to pay extra for the brand they prefer compared with lower-income ones (29%). Brand loyalty remains a luxury that many lower-income households cannot afford. This is reflected in technology purchases where premium brands, like Apple, are used in greater numbers by higher-income households.
How Consumers Feel About Autonomous Vehicles
Want insights on smart car technology and automotive industry trends delivered to your inbox? Join the 451 Alliance.
