One State, Two State, Red State, Blue State MacroMonitor Marketing Report Vol. VII, No. 1 January 2005

The press has written, reported, and debated much about the "two countries"—Red states and Blue states—within the United States. (Blue states are Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, the District of Columbia, Michigan, Wisconsin, Minnesota, Illinois, California, Oregon, Washington, and Hawaii. All others are Red states.) However, a more in-depth analysis of voting in 2004 suggests that a more important distinction may be urban versus rural.

Maps of the United States

Figure: Geographic State and County Maps of the United States depicting 'red' and 'blue' areas.
Source: Michael Gastner, Cosma Shalizi, and Mark Newman at the University of Michigan

An analysis of the 2004–05 MacroMonitor data shows that although some differences exist between households in Red states and Blue states, the demographic differences between households in large metros, medium metros, and small towns and rural areas are more important for financial-services providers. The key question—given the demographic differences between households in large metros, medium metros, and small towns and rural areas—is whether financial institutions need a divided marketing strategy.

Red States and Blue States

No differences exist in age, Age Cohort, presence or age of children, Life Stages, and occupations between households in Red states and Blue states. Some subtle differences are evident in income, graduate-school experience, single households, Socioeconomic stratum, and the types of domiciles that households choose. The absence of major demographic differences suggests that financial-services marketers need not be concerned about whether consumers are in a Red state or a Blue state, but should be sensitive to the subtle differences above when marketing, for example, home equity lines and joint accounts.

Large Metros/Medium Metros/Small Towns and Rural Areas

Outside the demographic differences that strongly influence certain financial needs, the most significant outstanding characteristic of households in large metros is their sense of financial sophistication. Whether that sense manifests as greater comfort with nonpersonal forms of interactions or investing, households in these areas enjoy learning about investing and are more focused on managing their finances.

Medium-size metropolitan areas and suburbs are somewhat of a crossover area. Households in medium metros are not as sophisticated as households in large metros, but are far less (fiscally) conservative than households in small towns and rural areas. These households share many of the investment orientations of households in large metros, but not nearly to the same degree. At the same time, they are more receptive to personal interaction than households in large metros, and they share some of the financial pressures of households in small towns and rural areas.

Households in small towns and rural areas are much more conservative than households in either of the metro areas in terms of their financial attitudes. They have greater pressures of proportionately more debt and show less interest in taking risks. They prefer personal interactions. Their preference for local ownership of financial institutions fits nicely with their preference for banks, S&Ls, and credit unions, even as they move into investment activities.

These findings suggest that the pure do-it-yourselfer consumer is a much rarer and more endangered species than supporters of the Internet-only paradigm report. At the same time, the 2004–05 MacroMonitor data suggest that financial consumers are pulling back—both attitudinally and behaviorally—in their involvement with intermediaries as well. And although differences are clear and statistically significant, they are not black and white (or Red and Blue). Even in Silicon Valley are people who crave, want, and demand personal interaction for their financial services. And somewhere in the middle of Death Valley is a person day-trading stocks in pajamas. Regardless of how the schism between the Red states and Blue states plays out in the next four years, financial providers can expect to see some significant consumer shifts, especially among households in large metros, medium metros, and small towns and rural areas.