Segmenting to target investors

Segmenting to target investors

Morton, Linda P

This is the eighth in a series on segmenting publics. Earlier issues have considered segmenting publics by generations, life development stages, social classes, lifestyles and gender. The last issue applied this segmentation information to psychiatric health care workers to illustrate how practitioners can use the segmentation process. This issue provides demographic information on investors so you can practice using the segmentation process.

For you to practice using the segmentation process, pretend that you work for a health care organization that went public a year ago. You are to design the company’s first annual report, but first you need to learn all you can about your company’s stockholders and investors in general. You find the following information from your literature search, and know you can learn even more by applying segmentation information to the demographic information provided below.

The wealthiest Americans buy most of the stock, with the wealthiest one percent owning 60 percent of all corporate stock. For those making a half million to a million annually, corporate stock makes up the largest percentage of their assets.

Almost 5 million Americans have a net worth of $1 to $5 million. Federal Reserve statistics note that 3.5 million Americans had a net worth of $1 million in 1995; 500,000 Americans were worth $2.5 million, and another 500,000 were worth $5 million or more. This later group averaged a net worth of $11.3 million.

American millionaires consume expensive things, have discretionary income, and spend and save liberally. Although some researchers have called this affluent public so small “that it is almost invisible”, it is growing quickly with the number of households worth a net of $5 million or more quadrupling between 1992 and 1996. They live throughout the United States with many living in rural areas where they are best reached by direct mail.

Wealthy investors base investment decisions on long-term gain and consider current income and intermediate gain less important. Investors older than age 55 are more cautious and consider current and intermediate gain more important than younger investors.

Many of these wealthy Americans (44%) make their own investment decisions. Fewer wealthy Americans (27%) consult financial advisers while most middle class Americans use financial advisers. Females consult financial advisers more than males. Financial advisers include portfolio managers, stock brokers and bankers.

Middle class Americans own less stock (19.5%) than the wealthy Americans, but rely more on financial advisers. Many middle class investors invest through employer pension plans with 59% of men and 51% of women covered by such plans. Portfolio managers control investments for most middle class investors. Bankers control investments for another 25%. Thus, to get middle class investors, you must communicate with portfolio managers and bankers.

Most middle class investors are between ages 45 and 65. As people become wealthier, they invest more to maintain their incomes during retirement. Roper contends that the people most likely to save for retirement are between ages 45 and 59, union members, college graduates, executives, dualincome families and those with annual incomes of $50,000 or more.

Statistics reveal that investors aged 35 to 50 save more of their incomes than their parents did at the same age. Merrill Lynch reported in 1993 that 65% (of the then 30 to 45 age group) noted “having enough money to retire on” as a major concern. This group of investors expect the same of their investment services as they do of other services. They want them to be convenient and to provide good service and value for their money. They also demand simplicity and straight talk about investments. Messages that stress variety of choices and one-stop shopping are effective.

Most (75-80%) of financial advisers consult annual reports when investing client’s money. They rely “on annual reports to convey specific and broad messages about the health and mission of American companies.” They are most likely to read financial statements, followed by operational reviews, and then shareholder letters.

Almost two-thirds of individual investors with portfolios of $5,000 or more consult annual reports when making investments. Financial advisers say that “annual reports are the most important document a public company can produce.”

However, financial advisers don’t make decisions based entirely on annual reports. Most (73%) prefer annual reports, but many consider other forms of communication equally important. The majority (61%) also want to read quarterly reports; 12% want to read the legally required report of publicly-held companies (Form 10-K); 25% want to hear speeches by company officials, and 36% want to read important press releases. Thus, investor relations requires a combination of communications.


Jonathan E. Robbin, “Affluent Consumers: Beyond the Stereotypes,” American Demographics 14 (1992): 18.

Harry S. Dent, Jr., The Roaring 2000s Investor: Strategies for the Life You Want (New York: Simon & Schuster, 1999), p. 148. Robbin.

Dent, p. 148.

Joseph J. Graves, Jr. “The Individual Investor,” Managing Investor Relations: Strategies and Techniques, New York: Dow Jones Irwin, 1982, pp. 40-67.

Ibid., p. 28.

Cheryl Russell, “Boomer Nest Eggs.” American Demographics, 17:7 (1995): 8 & 59.

Graves, p. 53.

Roper Poll in Susan Mitchell, “How Boomers Save,” American Demographics,” 16:9 (1994): 25.

Russell, pp. 26-28. Ibid., p. 26.


Fulkerson, p. 59. Graves, p. 53.

Jennfer Fulkerson, “How Investors Use Annual REports,” AMerican Demographics 18:5 (1996): p. 16.



Linda P. Morton is associate professor at the University of Oklahoma’s H.H. Herbert School of Journalism and Mass Communication. She teaches graduate and undergraduate courses in public relations and mass communication. Her major research interest involves studies of news releases. She has 24 publications and 24 presentations on gatekeeping and other topics.

H.H. Herbert School of Journalism and Mass Communication, The University of Oklahoma, 860 Van Vleet Oval, #101, Norman, OK 73019, 405-325-2721.

Copyright Public Relations Quarterly Summer 2000

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