Marketers can make a lot of assumptions about you depending on the year when you were born. But Louise Druce asks is generational marketing too general when talking about individuals - especially when marketers disagree on exactly when each generation starts and ends?
The generation you were born into will say a lot to a marketer about who you are but can you market on assumptions? For instance, if you were born in the 60s then you could be among the baby boomers who are market-savvy, consumerist and happy to ‘brand hop’. Then again, if your birth year drops into generation X, you're in the multimedia age, although not a natural technophile and difficult to cater to too. The snag is, not all marketers agree when exactly the categories begin and end, especially as they creep into the noughties. And then there is the whole question of whether you can band together individuals under one, generic label.
“Age is a blunt way of segmenting consumers,” says Dick Stroud, founder of 20plus30, a marketing strategy consultancy specialising in the 50+ market. “For example, why should we think that a 60-year-old graduate with a £100k salary, in good health, will exhibit the same consumer behaviour as a person of the same age, unemployed and living on social benefits? Also, a 55-year-old person in the AB socio economic group will have a higher use of the internet than a 30-year-old in a lower socio economic group. Yet, marketers still keep using the term ‘silver surfer’ even though a large number of older people are far more web literate than young people.”
“Age is a poor proxy for behaviour. Just because you know a person’s age it doesn’t tell you that much about their behaviour as a consumer.”
Sales and marketing analyst and consultant Jon Dean agrees that any marketing should be based on in-depth customer data analysis and other types of segmentation, of which age could be a part. “The more you can find out about what type of customer you’ve got - who they are, how old they are, what things they’re into, what their objectives are, what their patterns are, what they’ve bought, what they’ve shown interest in before etc, then you can start to make some very interesting correlations between that data “, he says.
“It doesn’t matter whether you’re looking at age groups or something else, until you can analyse data, you can only make generalisations based on your own experiences or what you think is right.”
Comparing apples with apples
However, for Ken Gronbach, futurist, generational marketer and author of The Age Curve and Common Census: The Counter-Intuitive Guide to Generational Marketing, the generation you were born into has significant implications for marketers. Where he takes issue is with the current category breakdowns, which he believes are based on misleading information fed through the media. His work is based on government census data around fertility rates, GDP and other statistics. He also divides the generations into 20-year gaps to “compare apples with apples”.
“The definition of a generation is a population that reaches an age when it can begin to breed and repopulate, so it’s nonsense from our perspective to talk about generations being 10 or 12-years-old,” he says. “Fertility has everything to do with new markets. Where the shortfall is in peoples’ thinking is that generation size is market size. Generations rise and fall. What you want to do as a marketer is position yourself in front of a market that is growing in size.”
For most firms, this has meant chasing the baby boomers (born 1945-1964), who have remained at a record size for 50 years. But Gronbach argues that they are no longer a growing market but a difficult and competitive one.
“The baby boomers are the first generation to have grown up with a full and comprehensive range of household goods, with supermarket choice developing at the same time. They have some of their parents’ brand loyalty characteristics, they like novelty and innovation, but they also look for value and cost-benefit ratios for their family,” explains Mike Nolan
, CEO of Product of the Year
So if this generation is stagnating from a marketing point of view, it would surely make sense to move on the next: generation X (born1965-1984). Not so, says Gronbach. Nolan explains why: “In many ways, this is the most complex generation. They are the first genuine multimedia generation but they are not natural technophiles, so trying any one strategy won’t work. Like their parents they have benefitted from improved education and will test products but they can be led by fashion or novelty, along with what is perceived to be the right or best thing.”
Why generation Y?
If marketers want to position themselves in front of a growing market, they need to start targeting the eclipse that is generation Y
(born 1985-2004). Not only is technology their first language, Nolan says they have almost a herd mentality – get one and you get them all.
“Marketers still chasing old markets are going to find themselves caught flat-footed by this brand new generation that has the capacity to consume far more. We see that all the time,” says Gronbach. “The unfortunate reason is that most business planning is done three months at a time. The quarterly report is the enemy of sound strategic marketing planning.”
He cites retail giant Wal-Mart
in the US as a potential victim of not changing with the times. “Wal-Mart is in very deep trouble. They built their business in the last 20 years on the baby boomers with the marketing philosophy ‘cheap and deep’ - they have very limited selection but what they have they have in depth and they have it all the time at a very low price. Generation Y will demand selection. Wal-Mart, under their business model, cannot provide selection and maintain low prices; it’s impossible.”
The problem with generation Y is how to reach out to them. According to Gronbach, their use of television is fragmented and they have no need for radio or newspapers, unlike their parents. You’re more likely to find them on the web. “When generation Y enters the workforce and starts to consume, we’re going to see a consumer that will rock the world,” he adds.
“In the US, it’s playing havoc with Coke and Pepsi. Coke used to have the natural advantage of having the best marketing and they branded kids very young. When they became Coke drinkers, they became Coke drinkers for life. Today, even with excellent marketing and creative, they can’t reach generation Y and, as a result, we’re seeing an almost parody between Coke and Pepsi – it’s now about the brand that is on sale in the supermarket as opposed to brand preference. That’s the real danger.”
The future generations
So how should marketers go about tackling generation Y? Nolan says that because the net generation is synonymous with Google and YouTube, the challenge will be how to put more of this recognition out in the instant media age. They also need to better manage online comment and reputation to ensure brand value is not neutralised or completely destroyed by blogging and endless search engine references.
And if that sounds like a challenge, think on 10 years when generation Z (2005-2024) starts to thrive. They will be all about technology, predicts Gronbach, some of which we didn’t even think possible.
But back to the present day, how does Gronbach feel about the importance of segmentation and analytics
versus generational marketing? “The key in any kind of marketing is the language you use, how you speak to people, how you reach them and whether you are going after them with the right product,” he offers. “When you market to groups, the amount of money that you spend doesn’t decrease if you’re chasing a smaller market so your money will be spent much more efficiently if you find a large group. Go fishing where the fish are.”
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We have built dozens of predictive models for a wide range of companies and there are three pieces of information that are the most powerfully predictive:- the first is address - where you live to a very large extent determines what your choices are likely to be; the second is age; the third is gender. Combine these three factors together properly and you end up with a model that is MASSIVELY predictive. Of the three, age turns out to be the most powerful because what we have lived through does have a very significant effect on attitude and therefore behaviour. Where you live is highly predictive of your income and lifestyle and therefore the availability of disposable income. While gender defines the type of product you are most likely to be interested in.
So age tells you that someone is/is not comfortable on-line; address tells you they can afford M&S but not Jaeger and gender tells you they prefer womens to mens clothing! The interplay between the three for a given product or service does of course vary enormously. But age, gender and postcode are the "holy trinity" of datapoints for marketing!