According to Nielsen, there are 77 million Millennials (aged 18-36) in the US. This generation accounts for 24% of the U.S. population. The aging demographic represents a significant opportunity for brands that understand their lifestyle, consumer behavior, and their generational values to connect with and create a life-long relationship beneficial with them.
The digital revolution has had a significant impact on every feature of the consumer purchasing decision process. Specific details, reviews and information about any product or service is widely shared and easily accessible for anyone interested. The amount of reviews and first-hand experiences, advice and guidance available has made many consumers increasingly distrustful of traditional advertisements and resulted in a constant search for the most effective methods to make smarter purchasing decisions.
Generation Z, widely known as Millennials, are leading this consumer behavior trend. In order to stay relevant, brands must adapt and accommodate the ways of the millennials, as the trend will only evolve as technological advances continue to change lifestyles and consumer habits.
Among the most important to things to keep in mind is the frugal spending of the millennial generation. They grew up in a financial crisis and the economic difficulties have shaped their habits, particularly for those who are starting families.
The younger millennials (those aged 18-27) have a median income of 25K, and only 21% are married compared to 42% of Boomers at the same age. They make up 20% of same sex couples, 36% have children and they are the most educated generation with 23% holding a bachelor’s degree or higher. They are also the most racially/ethnically diverse generation representing 19% Hispanic, 14% African American and 5% Asian.
According to a report from Accenture millennials spend approximately $600 billion each year. While originally typecast as financially dependent teens, today’s Millennials include young adults in their 20s and 30s. Many have careers, are raising kids and live in their own homes. While Millennials are already a potent force, they will truly come into their own by 2020, and in the United States their spending is projected to grow to $1.4 trillion annually and represent 30 percent of total retail sales.
Millennials are know to invest in popular brand names, and according to a study by Barkley advertising millennial parents tend to be more traditional and shop more frugally than their non-parent counterparts. In fact, millennials value deals and discounts more than any other generation and brands will benefit from “value for your money” messages. They dislike blatant and actively avoid traditional advertising. It is important for a marketer to focus on developing more targeted and engaging means in the promotion of their brands. They will only advocate products they truly love and trust and to gain that trust, a brand needs to be go beyond traditional billboard and online ads. It is important to offer incentives, special deals and trials periods for purchases, product reviews and recommendations.
Eighty percent of consumers consider themselves “promotion sensitive” or “price conscious”. According to data from Ipsos, nearly three-quarters of consumers go looking for deals after having heard about them on social media. Millennials are far more likely to be coupon users, particularly when using their smartphones. 79% use paperless coupons from retailers versus 64% of the total. 40% of Millennials report that their coupon usage has increased over the past year, and ¼ say they use their use their smartphone to get deals has increased. Hispanic consumers, who will comprise about 19% of the population by 20/20 are even more likely than the general population to combine print and digital offers. About 95% of hispanic Internet users download coupons from retailer web sites or mobile apps before shopping. This generation are more likely to live from paycheck to paycheck. However, they want the latest best products and are not hesitant to make impulse purchases if the product fits their purchasing capacity. The way millennials live their life has a major impact on how we do business. If brands can leverage the power and positive effect that millennials can generate for a brand and help shape them to become brand advocates, they will be successful in their marketing strategies moving forward.
According to Nielsen, they make fewer shopping trips than older generations, but spend on average $8 dollars more per trip. They also spend more than Boomers in warehouse clubs, supercenters and mass merchandisers. They also spend more on baby food, carbonated beverages and cereal than other generations.
As opposed to the older generation, millennials do not collect coupons from newspapers, but are more focused on saving money. In fact, the top 20 apps used by millennials are either retail or discount focused, with Amazon Mobile and Groupon as the leading apps. Deals like these account for 31% of their purchasing.
The millennial generation are among the most tech-savvy and constantly connected consumers in the world. A brands future depends on being relevant and attracting this very large group of highly independent, empowered, influential and entrepreneurial thinkers. It is important to understand what motivates, drives and reinforces their habits and behaviors. It is no longer about marketing to millennials, but with them.
Tailoring ones product or location to the constantly connected habits of millennials has a positive impact on business as Millennials are most likely to visit restaurant chains with easy Wi-Fi. Among popular chains are Chipotle, Quiznos, Panera, Chick-Fil-A and Starbucks. Chipotle has been particularly successful in their marketing efforts to Millennials. They are actually 74% more likely to go to Chipotle as they also respond positively to their mission statement inlign with their commitment to corporate social responsibility; “food with integrity is our commitment to finding the very best ingredients raised with respect for the animals, the environment and the farmers”. Chipotle’s digital marketing strategy included a Youtube video featuring an animated story of how they produce their food showing the comparison to the controversial food processing industry. The way in which Chipotle utilized a simple, but compelling narrative as well as an engaging online campaign proved to be highly successful among millennials.
Another millennial favorite, Starbucks, has also done well with this consumer segment. The brand has completely tailored to millennials digital lifestyles by introducing an app that allows them to complete payment transactions with their iPhones, manage their rewards and discounts in addition to features like free games and weekly music downloads.
A common myth is that Millennials are the “Me Me Me-generation” and narcissistic. However, according to Nielsen, Millennials do care about self-expression, but aren’t completely self-absorbed. They value taking care of their parents in old age and making a social impact. 52% say being a good parent is one of their most important goals in life, while only 1 percent indicates that being famous is important, contrary to popular belief.
Despite their low salary and unsteady financial situations, they care about being philanthropic. Three-quarters of Millennials made a financial gift to a non-profit in 2011, even though the monetary value was typically less than $100. 71% raise money on behalf of a non-profit, and 57% volunteer regularly, more than any other generation. Education, poverty and the environment and when they care they make sure to spread awareness to their networks. 75% have shared information about events from a non-profit on Facebook and 69% have shared stats on their favorite causes.
Their need for self-expression is evident through the fact that more than one third of Millennials have chosen to make their bodies their canvas- 38% have a tattoo and 23% have body pirecings, compared with 15% and 1% respectively of Boomers. They have a desire to form a unique identity and love music, art and creativity. Rap, hip-hop, alternative and reggae music and fine art are among the most popular interests. They download and stream more music than any other generation. Millennials are influenced by celebrity endorsements and respond more favorably to marketing efforts that include celebrities, relatable characters or strong visual elements tied to their expressive, creative nature. 24% of young millennials will try a brand/product if they sponsor an event for a music artist they like. An endorsement campaign with a music artist has been shown to increase buy rates of a product by as much as 28% among the artist’s fans.
Millennials are the coming age in the most dire economic climate since the great depression which makes their families, communities and social networks even more valuable as they band together. Millennials are truly the social generation. They’re the founders of the social media movement and constantly connected to their social circles via Internet and smart phones. They wish to live in dense, diverse urban villages where social interaction is just outside their front doors. Millennials value authenticity and creativity, buy local goods made by members of their communities. Family, friends and philanthropic causes are important to them.
Millennials are heavier Internet users than their older counterparts. They view Facebook founder Mark Zuckerberg as the person who defines their generation. 72% of Millennials use social networking platforms. This may be due to their inclination of sharing most of their thoughts, pictures and videos with their online communities. 20% update their facebook status multiple times a day, and compared to Boomers they aren’t as concerned with privacy and security issues in sharing personal information online.
Key findings from Nielsen report that millennials typically embody the following characteristics:
Diverse, Expressive and Optimistic: As a group they are more racially and ethnically diverse than any previous generation. Self-expression and artistic pursuits are important values to them. Even though they have suffered a recent turbulence in the economy, their high education levels and optimism foreshadow their potential future success.
Millennials that have moved out from their parents homes want to move to urban city environments in which vibrant, creative energy is vital to their surroundings. 40% reports that they wish to live in an Urban Area in the future. In fact, this is the first time since the 1920s where growth in U.S. cities outpaces growth outside of the cities. The american dream of previous generations of owning a white picket fence in the suburbs is transitioning into owning a historic brownstone stoop in the heart of the city. The car culture defined by the boomers is less interesting to millennials who prefer to walk to local shops and offices.
As a result of the great recession, this generation is dealing with high unemployment, low income and high student loans as they try to establish themselves. However, necessity is the daughter of invention and many millennials have hit it big by investing in startups and following their own entrepreneurial pursuits.
The unemployment rate for young millennials (20-24) was 13% in July 2013, compred with 6% for Boomers. According to the Bureau of Labor Statistic’s Misery Index, a means for evaluating the economic well being of the country and various subgroups, calculated using a combination of the unemployment rate and the inflation rate, young millennials are miserable. This age group have suffered more from the economic conditions, and this misery should be taken into account when communicating with millennials during late-holiday season. Honesty and authenticity are proven to be the best policies when communicating with this group.
Despite the hard facts, millennials stay optimistic and ambitious. 69% are not satisfied with how they lead their current lifestyle, but 88% believe they will be able to earn enough in the future. The young millennials are particularly ambitious and express a strong desire to make it to the top of their professions.
Millennials have small pay-checks and are tempted by a good deal. They desire authentic, handmade, locally produced goods and are willing to pay a premium for products from companies with social impact programs. 60% are willing to pay more for a product if it is good for the environment. They wish to feel good about what they buy and will not compromise on quality, so making cause-marketing is appealing to this generation.
Millennials are driving the growth of websites like Etsy, in fact 57% are more likely than others to visit this site. Etsy is an e-commerce portal focused on handmade, vintage and craft items and supplies. This site also gives unemployed millennials the opportunity to earn some extra cash.
Not only is the desire for authenticity evident in localism and regional pride, but also in product packaging. Millennials desire transparency and want to know exactly where the products are produced- “made in America” is not sufficient anymore. They understand that buying foreign goods indicated higher carbon footprints, less sustainability and fewer jobs.
Millennials also value their health and well-being, despite the fact that a third of them are classified as obese and 28% smoke cigarettes. Millennials indicate that they’re interested in help to make healthier choices, including interest in programs like massage therapy (69%), health assessments (22%), weight management (59%), lifestyle (58%), food delivery (32%), smoking cessation (29%) and health assessments (22%) to help them lead a healthier lifestyle. They appreciate the personal touch in dealing with their health. Younger Millennials are more likely to enjoy check-in calls from their health providers reminding them about appointments are providing health advice. They are also 40% more likely to spend money on alternative medicine, and are more open to acupuncture, herbal remedies and massage therapies than they are prescription drugs compared to their older counterparts. This may be due to the racial and ethnic diversity of Millennials and the cultural traditions tied to alternative medicine.
Technology and connectedness is really what defines the millennials. They are constantly connected, sleep with their phones and nearly 32% of younger millennials use social networks while in the bathroom. They want to feel like they have personal, direct interaction when interacting with companies via social media and value authenticity. In return, they will advocate and endorse that brand.
Younger millennials spend slightly more time on social media on their laptops (11 hours per month) vs. mobile apps (10 hours per month) and have an average of 319 friends. They expect authentic experience when interacting with companies via social media. Brands need to provide a personal, direct, customized experience when interacting with them.
Millennials, aged 18-29, are history’s first “always connected” generation. 75% of this age group has a social networking profile, compared to just 50% of the Gen Xers. They are confident, self-expressive, liberal, upbeat and open to change. Three of four millennials own smartphones as of Q1 2013, and 83% report sleeping with their smart phones at arms reach. Research from ComScore found that ⅕ millennials do all their Internet browsing, emailing, Google searching, social networking and online news reading on a smartphone or tablet. These numbers will continue to grow exponentially aligned with current trends. 18% of 18-34 year-olds are currently mobile-only users. According to Barklay, millennials use their mobile device to compliment the buying decision process, by researching the product or service while shopping. They are also big Apple fans, and more than 1.5 times more likely than average to own an iPhone. 21% of younger millennials own tablets which they use to stream movies, TV shows, read news and stay connected.
Although the popular social network Facebook reports losing younger millennials to other social networking sites like Instagram, Snapchat and Twitter, the company’s app is is still on top of millennials apps chart in terms of both unique audience and time spent, followed by Twitter and Instagram. Pandora, Candy Crush Saga and Gmail are other popular apps.
37% of millennials are unemployed, which is the highest share among this age group in more than three decades. Two-thirds say “you can’t be too careful” when dealing with people, yet they are less skeptical than their elders of government. Millennials value parenthood and marriage as much as older generations, but are waiting longer to fulfill these needs. Only 21% are currently married compared to 50% of their parents generation at the same stage of life. They are also on the course to become the most educated generation in American history, a trend driven largely by demands of modern knowledge-based economy, but more likely accelerated in recent years by millions enrolling in graduate school in part because they are not able to find a job. Among 18-24 year olds a record share of 39,6% are enrolled in college.
Although this generation remain strong mobile and online shoppers, e-commerce accounted for only 6% of overall retail sales in 2012. Consumers are still drawn to malls and physical stores. According to Nielsen data, Lifestyle Centers that offer a mix of traditional retail tenants with upscale leisure uses, are gaining popularity giving millennials an experience and a place to gather.
Another common notion among this digitally capable generation is that they don’t read printed press. Millennials do not read newspapers, but are even stronger magazine readers than Boomers. Cosmopolitan, Marie Claire, Vogue, Rolling Stone, Wired and American Baby are particularly popular.
As mentioned, technology defines this generation. They are the first to grow up with cable TV, Internet and cell phones. Millennials rank “technology use” first followed by “music/pop culture”, “liberal/tolerant”, “smarter” and “clothes” when asked what makes their generation unique. In contrast, Baby Boomers rank “Work Ethic” as the most defining characteristic of their generation. Millennials also view the effect technology has on their lives more positively. 74% report that technology makes their lives easier, while 54% feel new technology facilities their close relationships with friends and family.
Millennials watch less television than older generations, 107 hours a month compared to 174 hours for Boomers. They are more inclined to watch event-related programming like live sports or cable programming on BET, Comedy Central or FX Network, while Boomers tend to watch the Prime time offerings from the broadcast networks. Millennials also engage with social media while they watch TV, commenting what they like/dislike about a TV storyline.
Millennials are also driving technology: Three-quarters (76%) of Millennials own a smartphone, 73 percent own a laptop and 68 percent own a game console. However, unlike their Boomer parents, Millennials are untethered—they are less likely to have ever had a land line, are more likely to have a laptop and they watch all types of content on their phones, laptops and tablets. Interestingly, the No. 1 TV show for Boomers isn’t even in the top 30 for Millennials.
Millennials are a huge generation and their behaviors vary drastically. Marketers that think all millennials act the same will fail to reach their target consumers. Considering their age span (18-34) they are experiencing different stages of life. Some live with their parents, some are in college and some are settling down with their partners and having kids. Some love social media, others refuse the social networking sites completely. However, according to media post there are certain core values that resonate across the generation.
1. Social responsibility matters. 61% of millennials are worried about the current state of the world and feel personally responsible for it. This feeling results in a want to contribute to a worthy cause when they make a purchase. In this case they are also more likely to want to share this purchase with their friends. The glass company Warby Parker has understood this and donates a pair of glasses to someone in need for every pair of glasses purchased.
2. Peer opinions are vital. Recommendation sites like Yelp have become popular due to millennials willingness to share their opinions and consult those of others. 48% report that word-of-mouth greatly influences their purchasing decisions, while 70% of millennials are more excited about a purchase when peers approve.
3. Keep it simple. Millennials have short attention spans and simplicity is vital when appealing to them. 45% of millennials associate their lives with simplicity according to Pew Research Studies. Millennials are bombarded with options to find information and entertainment and if a brand fails to capture their attention very early on (or ignite frustration with a product) the next option is only an app away.
See sources in this Google doc.