Five Magic Markets

Learn tricks for getting in tune with today's five hottest consumer markets, and watch your profits soar.

By Chris Penttila • Apr 14, 2005

Opinions expressed by Entrepreneur contributors are their own.

So you want to start your own business. But do you know whichmarket you want to target? Finding a lucrative market can be tough.Be Your Own Boss has taken the guesswork out of the ideahunt by exploring five markets that are hip, hot and happening. Whoknows? Combining statistics with some creative thinking couldgenerate the business idea that finally sparks your new path inlife. So without further ado, here are our top picks fortoday's five hottest markets.

Hot Market No. 1: Parents/Kids

They say "Mom knows best." Well, moms also control 80percent of U.S. household spending, plunking down an estimated $1.6trillion annually on products and services for their families.

There are many ways to tap into today's parenting market,says Maria Bailey, author of Marketing to Moms: Getting YourShare of the Trillion-Dollar Market. She sees a wealth ofopportunity in financial services that let parents set up "kidaccounts" to teach money management and secure Web sites thatoffer parents instant test results and reports from schools. Anestimated 2 million American families are home schooling, creatinga new and untapped product and service niche. To generate ideas,look at how parents might use your product or service ideadifferently, Bailey says. For example, a video-productionentrepreneur could consolidate baby videos into video "babybooks" and create a profitable business in the process.

Children's fashion is another hot area. Carolina Zapf isfounder of Baby CZ, a New York City company that sells a luxuryline of cashmere clothing for infants up to 24 months. Zapf, 35,who spent 14 years in the fashion industry, invested $15,000 tostart the company and got $40,000 in orders at her first tradeshow. "It was far beyond our expectations," she says.Baby CZ's sales now near $1 million annually, and its productsare sold through www.babycz.com and at 80 stores nationwide, includingBergdorf Goodman and mall boutiques. The company is expanding intoshoes, clothing for 3- and 4-year-olds, and high-end baby lotionsand powders.

Tweens-kids ages 7 to 12-and teens are another hot market. U.S.kids ages 12 to 19 spent $175 billion in 2003 on everything fromfashion and sports to technology, and the population of U.S.teenagers will reach 35 million by 2010, says Michael Wood, vicepresident of Teenage Research Unlimited, a Chicago market researchfirm. Tweens and teens are personalizing jeans, lockers, shoes-youname it-creating new business opportunities, too. "The productor service has to be tied to a need they have," Wood says.First among teen needs are rebellion, fitting in and conqueringawkwardness. Remember being 14? Ponder it, and you could profitfrom it.

Plus-Size and Pets

Hot Market No. 2: Plus-Size

Americans are big and getting bigger. In fact, two-thirds of usare now overweight, according to the Centers for Disease Control.The women's plus-size clothing market alone generates $22billion in sales every year, according to market research companyNPD Group. And the overall plus-size market will grow 15 percentover the next four to five years, says Marshal Cohen, chiefindustry analyst at NPD Group.

Celebrities from Mary-Kate and Ashley Olsen to Queen Latifah andGeorge Foreman are responding with plus-size clothing lines, andOld Navy launched a plus-size line in July. At least 800 Web sitesnow offer plus-size items, ranging from lingerie and pantyhose topromwear and wet suits up to size 4X. Torrid, a mall chain thatcarries plus-size clothing aimed at women aged 15 to 29, has grownto 52 stores nationwide.

Today's plus-size person wants to be just as fashionable asanyone else, says Lisa Alpern, founder and creative director ofBeautyPlus Power, a New York City online style magazine focusedon twentysomething women wearing sizes 12 to 24. The real growth"is in junior-plus merchandise," she says."They're starting to make the clothes younger, hipper[and] with a more body-conscious silhouette."

Kim Camarella-Khanbeigi, 30, is co-founder of Kiyonna, an upscaleclothing company with five employees that caters to women sizes 10to 32. Based in Huntington Beach, California, Kiyonna just launcheda lingerie line, and sales are expected to grow from $1.2 millionlast year to $1.8 million this year. Eighty percent of thecompany's business is generated online, with the other 20percent coming from sales to 120 boutiques across the nation andoverseas. "Our main focus is on selling directly to theconsumer," Camarella-Khanbeigi says.

Of course, this market is more than clothing. Bearsville, NewYork, company Amplestuff sells plus-size products, including fannypacks and airline seat belt extenders. Freedom Paradise Resort inRiviera Maya, Mexico, is the world's first getaway forplus-size people. And there are opportunities in everything fromplus-size furniture to wider shoes, says Schuyler Brown, a trendspotter with ad agency Euro RSCG MVBMS Partners in New YorkCity.

Kids and teens are another emerging plus-size market. A DukeUniversity/Foundation for Child Development study found that nearly16 percent of kids aged 12 to 19 were obese in 2002, making roomfor fitness and nutrition programs and electronic gadgets aimed atplus-size youth. Says Cohen, "If you build it, they willcome."

Hot Market No. 3: Pets

The U.S. pet market is projected to generate $34 billion insales this year, according to 2004 figures compiled by the AmericanPet Products Manufacturers Association (APPMA). Compare this figureto 1994, when the U.S. pet market was worth $17 billion.

Reasons for the explosive growth include empty-nest boomersdoting on their pets as well as a wide array of products-from timedfeeders to automatic water dishes-that make it convenient foranyone to have a pet. The pet industry "is growing and gettingstronger," says Bob Vetere, APPMA's COO and managingdirector, who gets calls from VC firms seeking investmentopportunities in the pet market.

Harley-Davidson touts a line of leather dog jackets, PaulMitchell has a line of pet shampoos, hotels such as StarwoodResorts offer pet-friendly rooms, and Japanese pet-toy companyTakara has introduced Bow-Lingual, a device that translates dogbarks. Anything that makes Fido feel like family is hot, and pricesin the pet category range from bargain to go-all-out luxury.Emerging products and services range from the luxurious (pet spas,massage services, toys and grooming) to the offbeat (pettherapists, acupuncture treatments, liposuction, full-scalefunerals and urns).

Doug Grabe is barking up the right tree. Grabe, 38, launchedAtomicProducts two years ago with Alan Curtis, 53. The company'sgrowing pet products division, Atomic Pet, carries a line ofbattery-powered Glowtronix products, including glow-in-the-darksafety collars and leashes for dogs that retail for $15 and $20,respectively.

Grabe projects $3 million in sales this year for Atomic Pet. Hisadvice? Define your market, and attend events like the APPMA tradeshow, which featured 604 pet companies and nearly 600 new petproducts at its most recent trade show in March. "You'llfind people who have made the jump," Grabe says."It's a great way to prove your idea can bedone."

Seniors and Hispanics

Hot Market No. 4: Seniors

America is turning gray. In 2003, 35.8 million Americans wereolder than 65; this year, 36.1 million will be older than 65. By2022, the number will reach 57.5 million, says MarketResearch.com,an aggregator of published market research.

"This market is going to be the fastest-growing populationin the country over the next 20 years," says Don Montuori,editor of Packaged Facts, the Rockville, Maryland, consumer goodsand demographics publishing division owned by MarketResearch.com.In 2002, MarketResearch.com estimated U.S. consumers older than 65had $713 billion in buying power. By 2007, their buying power isexpected to increase to $974 billion. With child rearing and housepayments a distant memory, "[seniors] spend more of theirincome than other age groups," Montuori says. An added bonus:Senior citizens are more receptive to ads and fliers. "Theyhave more time to read," Montuori says.

The older-than-65 demographic, however, is overlooked in ouryouth-obsessed marketing culture, leaving money to be made forcompanies that target it. Consider TV network CBS, which has goneagainst the grain to target an older demographic with shows such asJoan of Arcadia and consistently has programs ranked inNielsen's top 10.

Medical services is another hot area of this market. Two yearsago, Laura Berry invested $10,000 and won an SBA loan to startSoundviewMedical Supply, a company that sells home health-careproducts-from incontinence items to nutritional supplements-aimedat seniors. The Seattle company grew 36 percent per quarter lastyear and 2004 sales are expected to exceed $1 million. "We hadastronomical growth in 2003," Berry, 42, says. "Andwe're still growing."

Today's grandparents like to spend money on theirgrandkids-according to sales and marketing information firm NPDGroup, grandparents' purchases accounted for 16 percent of the$21 billion-per-year toy industry-and companies such asGrandtravel, a Washington, DC, company that provides exotic travelopportunities for grandparents and their grandchildren, are tappingnew market opportunities. For some older Americans, however, timewith the grandkids isn't limited to Sunday visits: Nearly400,000 grandparents over age 65 now have the primaryresponsibility for grandchildren who live with them, according togovernment statistics. Think creatively, and you could have a"senior moment" that turns into a lucrative business.

Hot Market No. 5: Hispanics

Hispanics have become an economic force: Thirteen and a halfpercent of the U.S. population is now Hispanic, according to theU.S. Census Bureau, and 1 in 5 new births in the United States areto Hispanic families. By 2020, 1 in 4 Americans will beHispanic.

U.S. Hispanic purchasing power in 2004 will hit $700 billion,according to HispanTelligence, the research arm of HispanicBusiness magazine. "If this number is reached, the Hispanicmarket will surpass the African-American market in purchasingpower," says Rosanna M. Fiske, principal of Rise Strategies, aMiami marketing and communications company focused on the U.S.Hispanic marketplace. By 2010, Hispanic spending could reach $1trillion.

National department store chain Kohl's carries clothing bycelebrity Daisy Fuentes, while Kmart hawks a line by Mexicansinger-actress Thalia. In April, Perry Ellis International launchedtwo Latin-inspired lines, Cubavera and Havanera, the latter to bemanufactured for J.C. Penney. Hispanics "are making moremoney, and they're spending it. This has the attention of thebig companies," says John Terry, who recently researched theHispanic market as an adjunct professor at Southern MethodistUniversity's Caruth Institute for Entrepreneurship and partnerwith management consulting firm Churchill Terry, both inDallas.

Rafael Jimenez is founder of RepublicaTrading Co., a New York City company that producesLatino-inspired shirts, hats and denim sold at Bloomingdale's,Fred Segal, hip boutiques nationwide, and through the company'sweb site. Jimenez, 36, projects his company will hit $1 million insales in 2004. "You can't get around the numbers [in thismarket]," he says. "It's only going to getbigger."

Financial services, technology, translation and wireservices-even college camps that help young Hispanics assimilatefrom a tightknit family culture into college life-present hotopportunities. "Twenty years ago, the Hispanic market was aproduct-driven market," Fiske says. "It's turned intoa services-geared market." It's also a youngdemographic-67 percent of U.S. Hispanics are less than 34 yearsold, Terry says.

Although Cubans, Mexicans, Puerto Ricans and many other Hispanicnationalities speak a common language, they have differentcultures. A blanket marketing approach won't attract Hispanics,who become very loyal customers once they find products andservices they like. "It's a complex market because of itsdiversity," Fiske says. "[But] this is going to be themarket to watch."

For more information on how to reach today's 5 hottestconsumer markets, Try these helpful resources:

Parents/Kids:

  • The Great Tween Buying Machine by David Siegel, TimCoffey and Greg Livingston
  • Kidfluence: The Marketer's Guide to Understanding andReaching Generation Y-Kids, Tweens and Teens by Anne Sutherlandand Beth Thompson
  • TeenResearch Unlimited

Plus-Size:

  • Beauty Plus Power
  • Real Fitness for Real Women by Rochelle Rice
  • Sewing for Plus Sizes by Barbara Deckert

Pets:

Seniors:

Hispanics:

  • Hispanic Business magazine
  • Hispanic PR Wire
  • The Hispanic Way by Judith Noble and Jaime Lacasa
  • The Latino Holiday Book by Valerie Menard
  • Latinos Inc. by Arlene M. Davila
  • The Rise of the Hispanic Market in the United States byLouis E.V. Nevaer
Chris Penttila

Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.

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