|
|
|
You are here: Home > Current Topics > Mind your Business > 05 December 2005 |
|
|
|
|
Image: Those bridesmaids' dresses don't come cheap and when you add on the cost of the wedding dress itself, not to mention the groom's outfit, the pageboys', dad's gear, the best man... It all adds up! Copyright: Noelle Franzen Many of you reading this article will be in no doubt that you must save for your future. When you get older you will incur costs which have to be paid and now is the time to begin saving. You might think that we are talking pensions here - which are, of course, a very important topic for young people to consider - but no, we are talking weddings. For many school, college and higher education students, a wedding, like getting old, is probably not at the top of your list of priorities. You know that is it something that is likely to happen in the future but it is generally a case of crossing that bridge when you come to it! It may be time to re-think your priorities, however. As with the case with pensions, the necessity of putting funds aside now to secure the future is becoming increasingly important. This is because the cost of a wedding is now estimated at anything between £16,000 and £25,000! The planning that goes into a wedding these days is fairly daunting. There are basic requirements, of course - booking the church (often this needs to be done at least a year in advance), a venue for the reception, cars, flowers, checking the legal requirements and so on - oh and the rings! Increasingly we seem to have been moving towards more and more extravagant weddings. This might seem strange given the chances that a wedding will end in failure. The Office for National Statistics (ONS) reported that in 2004, the number of divorces granted in the UK increased for the fourth year running and stood at 167,116. The ONS also report that in 2003, 306,200 weddings took place in the UK. Crudely therefore, putting the two together, the chance of the wedding ending in divorce works out at 54.6%! The cost of a wedding has risen for a number of reasons. In particular we might look to the reasons for having a wedding - is it just to celebrate the union of a couple or a chance to show off to friends and relatives for a day? The increasing sophistication of many weddings these days is certainly one factor in adding to the cost. For example:
None of this includes the cost of other extravagances such as balloon trips, the stag and hen night, accommodation costs for some guests, evening entertainment, wedding invitations, hiring a marquee, hats, a chocolate fountain and so the list goes on. The wedding industry is certainly big business and despite the fact that since the early 1970s the number of people getting married has fallen from nearly 500,000 to just over 300,000 the average cost per wedding has continued to rise. Someone must be rubbing their hands as a result! |
Image: Will couples be able to bridge the gap between what they would like for their special day and the escalating cost of meeting their desires? Copyright: John De Boer
The theory behind this phenomenon is not that difficult to understand. There is a market for weddings and businesses will provide goods and services that meet those needs. If a couple feel that their special day will be made that extra little bit special by hiring a classic car then there will be businesses that will provide that service.
If you need insurance in case the wedding is called off for some reason (including a change of mind of one or both parties, or the fact that the groom has been put in the hold of a boat sailing to the Gambia without any clothes or passport by exuberant mates at the stag party) then there will be a firm ready to provide you with that service.
All these things however come at a price and if there is a demand for such services then the price will gradually rise.
Businesses looking to find the gaps in the market will look to see what else could be provided to add that extra bit of sparkle. The more widespread use of fireworks to celebrate more than just bonfire night is a case in point. Providing a professional firework display might make a perfect end to the evening - it is something everyone can be involved in and enjoy and can be spectacular.
Image: Providing added value is just one of the ways in which gaps in the market are identified and met and is a normal part of the way businesses function. Copyright: Ni Rocha
Equally, providing a balloon ride for the newlyweds is also something that bit different. What many couples are looking for is something that is different. The days of a church wedding followed by sandwiches and sausage rolls and a disco in the local pub function room are fast disappearing as the increasing sophistication of the market leads to the expansion of that market.
Businesses therefore will adapt and develop to changing market needs. If there is any blame to be attached to the rising price of a wedding it is purely our fault! Ultimately, we have a choice and we do not need to go down the route of having a very expensive wedding. Pressure by family and friends might be a factor, however, but whether we choose to have bottles of blow bubbles on the tables at the reception is, ultimately, down to us - it is called consumer choice!
The way the market develops however might also be linked to the general performance of the economy as a whole. Looking at the figures for divorce, for example, reveal a sharp rise in the figures for the early 1990s. The number of divorces per thousand of the married population in 1989 was 12.7; this rose to 14.2 by 1993. (Source: Office for National Statistics(http://www.statistics.gov.uk/STATBASE/Expodata/Spreadsheets/D4140.xls)) Of course, there could be lots of factors explaining this but it did coincide with a severe recession in the UK. The difficult economic conditions put a strain on the finances of many families. Many houses were repossessed due to the persistent high levels of the interest rate as the UK remained in the Exchange Rate Mechanism (ERM). Unemployment had also risen and these factors put additional strain on marriages.
Equally, we could look at the relationship between economic growth and the number of marriages. Given that the number of marriages has been decreasing, there may be trends in the rate of growth of marriages in different time periods that provide some clues. The chart below compares GDP in the UK with the number of marriages.
The data is also available in a spreadsheet.
The hypothesis would be that the number of marriages would be likely to slow down during times when economic growth is slowing down also. People may decide to put off getting married because they are unsure of the cost and of their financial position.
It is likely therefore that there will be a number of factors that explain the increasing amount that we are spending on weddings. A recent survey commissioned by Brewin Dolphin Securities suggested we spend an average of £16,000 on a wedding - a 50% increase compared to 1998 - and that the total expenditure on weddings in the UK was £4.2 billion. That is some business!
The first two questions are focused on economics and the third one more suited to those studying business studies. Remember, however, that external influences are a major part of any study of business and might well give important information to any business about trends in the coming months and years.
