millenials as consumers
Post on 13-Sep-2014
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June 2012 Marian Salzman presentation on how Millenials are reshaping the world one (cautious) purchase at a time.TRANSCRIPT
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Millennialsreshaping the world one (cautious) purchase at a tiMe
Marian SalzmanJUNE 2012
who areMillennials?
•Millennials are today’s young adults. •The “millennials” handle—used because this group was in itsformative years when the new millennium struck—wasestablished by American generational experts Neil Howe andWilliam Strauss in a book called Millennials Rising: The NextGreat Generation.
•They are also called echo boomers (it’s a big cohort),Generation Next and Generation Me.
•Unlike other much-discussed generations such as boomers andGen Xers, though, millennials are much more than an Americanphenomenon; they’re truly global.
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Millennialsby the nuMbers
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deMographics
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Age: Definitions varyby source, but 18 to 34works well, as the U.S.Census Bureau usesgroups 18-19, 20-24,25-29 and 30-34.
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deMographics
Cohort size: In the U.S.,it’s about 70 million to 80 million—roughly 22 percent to 25 percentof the population (Censusfigures estimate 18-34sat 70.3 million).
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deMographicsEthnic mix: The group is highly diverse. According to Pew,it’s 61 percent white, 19 percent Hispanic, 13 percentblack, 4 percent Asian, and 2 percent mixed race or other.
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deMographicsMarital status: In the2010 census, 28 percentof 18- to 34-year-old malesand 36 percent of femaleswere married; 67 percentof males and 57 percentof females were nevermarried. In the 25-to-29cohort, 31 percent ofmales and 42 percent offemales were married.
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deMographics
Life-stage delays: Therecession is cited as animportant factor by 15 percentof 18-34s who postponedgetting married, 14 percentwho postponed having a baby,12 percent who moved in witha roommate and 10 percentwho moved back with parents.
deMographicsretail iMplications•A big market: Their shopping needs and preferences will makeor break retailers currently focused on young adults.
•Diversity: Not just discrete ethnic niche markets but alsoethnic cross-influencing of tastes and willingness to experimentwith different flavors and styles.
•Life-stage minuses: Delayed household and family formationmean less demand for new home and baby-related products.
•Life-stage pluses: Extended adolescence means more demandfor entertainment and leisure products—also influencing thepurchasing of their parents.
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work and Money
Income: Recent Bureau ofLabor data shows percapita income in the 21-to-29 range at $27,267 forsingles and $34,046 formarried couples.
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work and Money
Employment: Only 48percent of 18-24s in theworkforce have a full-timejob; only 55 percent of peopleaged 16 to 29 have a job.
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work and Money
Buying power: ComScoreestimates U.S. millennials’buying power at $170 billionper year. People under age35, however, are now worth68 percent less than theywere 25 years ago.
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work and Money
Debt: A 20-somethings’ total debt averages $45,000,ranging from $12,000 for ages 20-21 up to $78,000for 28- to 29-year-olds who have debt.
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work and Money
Education debt: Total outstandingstudent loan debt—federal andprivate—exceeds $1 trillion.
work and Moneyretail iMplications•Seasoned consumers: They’ve grown up with consumerhyperabundance as the norm, so they’re familiar with easyspending and retail therapy.
•Net less well-off now: Spending longer in education, big debtsand struggling to find decent jobs means they’re less able tofund their own retail spending and less willing or able tofinance it with debt.
•Less well-off long-term: Unemployment means lower startingincomes for graduates and lower incomes in the future—10 percentlower even after 17 years, according to a Yale study. That meansthat as a cohort, millennials will have relatively less to spend.
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deMographics
TV advertising: Fewermillennials than non-millennials watch morethan 20 hours of TV aweek (26 percent vs. 49 percent). But 57 percentof millennials say that TV is the first way theyhear about products.
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deMographics
Automobiles: The percentage of Americans under19 with a driver’s license declined from 64 in 1998to 46 in 2008.
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deMographics
Groceries: Fewermillennials than over-35sprefer grocery chainstores such as Safeway(34 percent vs. 44 percent).Millennials skew more tomass retailers such asWalmart Supercenter (32 percent vs. 27 percent).
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deMographics
Beer: More than aquarter (28 percent) oftheir beer spending is onimported products, vs.15 percent for othercohorts. Mexican beersaccount for 46 percent ofmillennials’ importpurchases, comparedwith 35 percent for oldercohorts.
in the Marketretail iMplications•TV advertising: To influence millennials, it must entertain andengage to build awareness. Forget the hard sell unless it’s fun.
•Big-ticket items: With less ready cash, millennials will thinkharder about which pricey products they buy and the valuethey get from them.
•Cheap on necessities: Managing with less cash/credit makesmillennials more inclined to patronize retailers and brands thatmake their dollars go further.
•Affordable luxuries: This group has grown up with cool stuffand high consumer expectations, so they will splurge on somefeel-good premium products that don’t break the bank.
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Influence and loyalty
Brand choice influences:Almost two-thirds (61 percent)of U.S. 18-25s prefer to buyfrom companies with a reputationfor having a purpose otherthan just profits, according toa Euro RSCG social mediasurvey in 2010.
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influence and loyalty
Consulting mobile: Far moremillennials than non-millennialsuse a mobile device to readuser reviews and to researchproducts while shopping (50 percent versus 21 percent).
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influence and loyalty
Retail loyalty programs:Seventy-seven percent of U.S.millennials participate in loyaltyprograms, and 78 percent aremore likely to choose a brandthat offers one over a brandthat doesn’t.
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influence and loyalty
Location-based promotions:Thirteen percent of millennialshave responded to location-based offers delivered bysmartphone; 26 percent wouldlike their smartphone toreplace plastic loyalty cards.
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influence and loyalty
retail iMplications•More trade-offs: It’s harder for millennials to choose—theywant not only good prices but also a good retail experience anda good conscience. They need help.
•Mobile help: Solutions and answers (information, reviews,recommendations, promotions, payments) come to millennialsthrough their mobile device, so retailers must think, act andlive mobile to connect.
•Good-enough brands: To get into millennials’ consideration set,a brand doesn’t need to be impossibly virtuous, just be knownto have its heart in the right place.
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attitudes
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brands are personal
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“Millennials are tending to define themselves by the productsthey buy.… they tend to see their
stuff as extensions of who they are,ways that they define themselves.”
—Paul Kelly, Smallyouthgroup.com
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“Millennials are highlysophisticated brand managers; theycan detect bullshit. brands have to
act with transparency, accountabilityand honesty. (h/t @cajunjen)”
—Viacom’s Scratch blog
•Throughout millennials’ lives, brands have been presentingthemselves as a means of self-expression and self-definition.
•Millennials are open-minded, so they accept that brands canplay this role—but they’re also demanding, so they want toknow a lot about the brands that want to represent them.
•Tooled up with social media and multiple viewpoints,millennials are adept at looking through the marketing movesand getting a sense of what the brand is really about, its truth.
•This matters to them because they use brands to identify,express and support what they find personally important.Using brands that embody their values makes them feel goodabout themselves.
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brands are personal1.
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•Not all brands need to have a deeper meaning. In commoditycategories, millennials don’t feel their brand choice is animportant personal statement.
•But brands that particularly want to connect with millennialsand identify with them must understand the importance ofbeing authentic, real.
•This doesn’t mean being goody-two-shoes, holier-than-thou.There’s plenty of range for being dark, subversive, ironic orwhatever, provided it’s authentic and self-aware.
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brands are personal1.
retail iMplications
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optiMistic andrealistic
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“the Millennial generation will entirely recast the image of
youth from downbeat and alienatedto upbeat and engaged—with
potentially seismic consequencesfor america.”
—Neil Howe and William Strauss, Millennials Rising: The Next Great Generation
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“boomers have given them the confidence to be optimistic
about their ability to make thingshappen, and Xers have given them
just enough skepticism to becautious…. if you want to remember
just one key word to describemillennials, it’s realistic”
—Lynne C. Lancaster and David Stillman, When Generations Collide
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•This generation is acutely aware of the real and potentialproblems facing them and the world.
•The message that things need to change has reached them loudand clear: Very large numbers think they have a duty tochange the world—84 percent of them in a 2011 five-countrysurvey carried out for Euro RSCG.
•They have no illusions about the scale of the problems, butthey believe they can tackle the challenges with education,collaboration, technology and smarts.
•General can-do optimism stands out as one of the signatureattitudes of the millennial generation.
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optiMistic and realistic2.
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•Optimistic plus realistic is a smart way to communicate with millennials.
•An upbeat tone chimes in with their own optimistic feelingsabout their prospects in the world. They feel in tune withbrands that mirror their can-do confidence.
•But they shy away from hype and inflated claims. Going overthe top risks insulting their intelligence and marketing savvy.
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optiMistic and realistic2.
retail iMplications
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buy Value to last
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“when i purchase something,i want to know that it’s going to last for
a while. i don’t know, maybe it’s just the nostalgia of getting things handed
down to me from my parents andgrandparents and the history they
had, but it makes me sad to think thatour generation’s purchases won’t go
through the same ordeal—everything’s‘insta-use’ and once it’s used, it’s gone.”
—Brittney, 21, Seattle, on Millennial Inc. by Mr Youth and Intrepid
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•As children and adolescents, they’ve lived through the longconsumer boom with its cycles of upsizing homes in thesuburbs to accommodate more purchases.
•Either personally or nationally, they’ve seen the trauma ofoverextended credit, families facing foreclosure and desperateyard sales of possessions.
•Now as young adults, they’re drawn to more urban settingswhere the living spaces are smaller.
•They don’t have the money or the space or the need for a lot of possessions; they buy versatile essentials and make them last.
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buy Value to last3.
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•Product lines and retailers that depend on impulse purchasesare going to struggle with millennials; compared with oldergenerations, they’ll buy less often and spend less when they do.
•Millennials shop cautiously online for important products, checkingout the options to make sure they understand the essentials of thecategory: brands, price range, performance criteria.
•Armed with the fruits of their tech savvy, they check out thegoods offline, in the store, looking for immediate value in theirlife and the likelihood of lasting usefulness.
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buy Value to last3.
retail iMplications
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need to know why4.
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“although they are better educated, more techno-savvy and
quicker to adapt than those who havecome before them, they refuse to
blindly conform to traditional standardsand time-honored institutions. instead,
they boldly ask, ‘why?’”
—Eric Chester, Employing Generation Why?
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•Pop culture has stereotyped young people as wild, rebellioustroublemakers intent on confronting older generations. ThinkBlackboard Jungle, The Wild One, 1960s counterculture, 1970spunks, goths and cynical Gen Xers.
•Millennials buck those stereotypes. They are more respectfulthan resentful toward older generations, and they tend to getalong with their parents and seek their guidance and approval.
•They don’t automatically reject the opinions and claims ofother people, but they don’t automatically accept them either.They need solid arguments to convince them.
•A lifetime of exposure to hyperactive media and marketing hasmade them skilled at deep-reading the messages to find out“Why should this matter to me?”
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need to know why4.
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•Brands and retailers who want millennials as customers mustbe prepared with several levels of convincing reasons thatanswer millennials’ needs and concerns.
— It might be a great deal in terms of value for money and long-termusefulness ...
— It might be really smart ...
— It might have a great backstory ...
— It might be doing great things in corporate social responsibility ...
•Whatever it offers, millennials need to know why they shouldtake notice of what you’re selling.
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need to know why4.
retail iMplications
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generation we5.
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“in order for brands to be relevant and loved by millennials,
brands must be platforms forcollaboration and bringing their
young audiences together.companies have to begin seeingthemselves as more than sellers,but enablers. (h/t Moosylvania)”
—Viacom’s Scratch blog
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•To outsiders, millennials might seem to take youthful self-absorption and self-centeredness to new levels, but comparedwith previous young generations they also bring a newsensibility to the mix.
•With their intense use of social media and texting and constantinteraction, millennials have a sense of connectedness, aninstinctive sense of “we.”
•Millennials value teamwork and inclusiveness; they’ve learnedthe value of reaching beyond their immediate social circle andconnecting far and wide.
•All their social media connections aren’t necessarily friends inthe traditional sense, but they interact and contribute to eachother’s sense of group.
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generation we5.
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•Whether online or in the store, millennials like to shop with friends and family, sharing the experience.
•More than any other generation, millennials tend to canvass the opinion of their peers before, during and aftertheir purchasing.
•More than with any other generation, brands and retailersshould engage with millennials both as individuals and as part of a wider group.
•Even if they’re on their own, you’re never selling to just one millennial.
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generation we5.
retail iMplications
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eXpecting tohaVe their say
6.
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“they’re driving co-creation —they want involvement in new
products, but not necessarily alwaysfrom the ground up; they’re also happyto leave it to someone else to designas long as their input is considered.(h/t @cajunjen & @alleyesonjenny)”
—Viacom’s Scratch blog
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“a generation raised on ‘children should be seen and
heard’ simply will not be a passiveconsumer of anything.”
—Nick Shore, senior vice president for strategic insights and research, MTV Networks
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•At home, at school and in the market, millennials have beenbrought up to believe that their opinion is valuable, that it matters.
•With social media, they’ve become used to sounding off inpublic to one another and to the brands that increasinglycultivate interaction with them.
•With their votes and interaction, they’ve become accustomed toshaping the outcome of talent and reality TV shows andcreating different endings for games.
•They’re used to media and brands that offer them mechanismsto get involved with co-creating the product.
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eXpecting to haVe their say6.
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•Brands dealing with millennial consumers need a lot more thanoccasional focus groups and customer surveys.
•They need to develop channels that enable consumers to givefeedback in real time and see that their feedback is heard andhas an impact.
•This has the double benefit of engaging those millennials whoare motivated enough to contribute and signaling to the restthat this a brand that takes them seriously.
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retail iMplications
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eXpecting to haVe their say6.
so what?•Millennials probably aren’t the sort of consumers that manybrands and retailers would have wished for—they’ve got lessmoney to spend, are less willing to spend, are more fickle,more demanding, more questioning …
•Even so, millennials are already an important part of the marketand will increasingly shape it as they move through adulthood.
•The quicker brands and retailers figure out how to work withmillennial consumers, the better placed they will be to surviveand thrive in a millennial world.
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so whatwill you doto reach
Millennials?
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