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Marketing to Millennials TECHNOLOGY INSIGHTS FOR BUSINESS LEADERS MARKETING TO MILLENNIALS 2016-2020 DANIEL NEWMAN SHELLY KRAMER OLIVIER BLANCHARD Principal Analyst Principal Analyst Senior Analyst Published: 01/17/2016 TABLE OF CONTENTS 3 Executive Summary 4 Introduction: Marketing to the Millennial Customer 7 Marketing to Millennials: Key Insights 7 Millennials’ digital fluency journey 9 Millennials’ shopping ecosystem 12 Millennials and brand partisanship, loyalty, and lifetime customer value 13 Millennials’ interest in nostalgia and authenticity 14 Millennials, economics, and chore verticals 16 Millennials and social business 18 The inherent danger of stereotyping Millennials 20 Navigating the Millennial media ecosystem 22 Mobile first: Shifting the center of experience design for a new breed of consumer 24 Conclusion TECHNOLOGY INSIGHTS FUTURUM PREMIUM REPORT | 2 FOR BUSINESS LEADERS EXECUTIVE SUMMARY Futurum Research provides research, insights, and analysis that tie leading and emerg- ing technology solutions to strategic business needs. The purpose of each of our re- ports is to help business executives and decision makers gain a better understanding of the technologies driving digital transformation; connect the dots between the practical business requirements of digital transformation and the forces that affect employees, customers, markets, and experiences; and take appropriate action regarding critical digital transformation opportunities. Executive Summary This report explores the new realities of marke- should be aware. We have structured this report ting to Millennial consumers, outlines market around nine key insights that are vital for busi- trends relating to Millennials, and identifies key nesses to recognize and quickly incorporate into Millennial-related opportunities of which bu- their business strategy, if they have not done so sinesses, particularly retailers and advertisers, already. TECHNOLOGY INSIGHTS FUTURUM PREMIUM REPORT | 3 FOR BUSINESS LEADERS INTRODUCTION: MARKETING TO THE MILLENNIAL CUSTOMER The term Millennial refers to the portion of the used to describe the same general age group, as world’s population that reached adulthood be- Generation Y was Generation X’s natural successor. tween the years 2000 and 2010. The term is be- But over time, Millennial, not Generation Y, won the lieved to have been coined by authors Neil Howe hearts and minds of journalists, writers, and media and William Strauss in 1987 to describe the gradua- buyers. Alternate names for Millennials occasiona- ting class of 2000. For a time, the term Generation lly come up; Echo Boomers and Generation Me are Y, coined by popular magazine AdAge, was also the two most common. Defining a generation is not an exact science, llennials is no trivial matter. The sense by indivi- and it has proven particularly complex with the duals born between 1980 and 1985 that they Millennial demographic. For starters, there is no belong to both generations or neither has given precise, agreed-upon cutoff date between Ge- rise to a number of lesser-known demographic neration X and Millennials. Ask most sociologists nomenclatures that may come in handy when and advertisers, and the generally accepted start marketing to the older Millennial segments. Make of the Millennial generation falls somewhere be- note that the most popular of these terms are tween 1980 and 1985, and usually ranges to 1995. Xennials, and the Oregon Trail Generation (after the Thus, Millennials are generally considered to have iconic MECC video game). been born between 1980 and 1995, and are cu- rrently in their mid-20s to mid-30s. The upper In terms of numbers, Millennials are a massive de- date range often finds itself extended to 2000 mographic. In the United States, they comprise from 1995, with Howe and Strauss placing the roughly 92 million people (using the 1980-2000 range between 1982 and 2004. Bottom line: The birth date range), or nearly 30 percent of the U.S. line between Gen Xers and Millennials is blurred population. Compare Millennials’ population vo- on the low end of the date spectrum, while the lume to Generation X’s 61 million and the 77 mi- line between Millennials and Generation Z (the llion Baby Boomers, and it becomes clear that as post-Millennial generation) is similarly blurred on a demographic, Millennials are a force to be rec- the high end. koned with. In 2020, one in three Americans will be a Millennial. Their combined purchasing power As a footnote, the overlap between Xers and Mi- amounts to $600 billion per year. TECHNOLOGY INSIGHTS FUTURUM PREMIUM REPORT | 4 FOR BUSINESS LEADERS There are roughly 1.8 billion Millennials worldwi- also tell you the Millennial demographic on the de (out of 7.4 billion people), and Millennials are whole is a construct, a sham, an imagined gene- expected to comprise half the world’s workforce rational identity dreamed up by media companies by 2020. and marketing professionals to help advertisers feel better about the ROI of their marketing and We now come to a fork in the road: We could advertising budgets. Neither path would be fair continue to cite statistics that help sell a conve- or even accurate, but it is important to note that nient, preconceived notion about Millennials and both critiques bear some degree of truth. On the one hand, Millennials do tend to exhibit clusters of behaviors common enough to their demogra- Millennial behaviors are affected by phic that advertisers can reasonably anticipate thousands of other factors, ranging a certain degree of homogeneity. On the other from gender identity, income level, hand, no one is just a Millennial. Millennial beha- and education, to geography, political viors are affected by thousands of other factors, affiliations, and religion. ranging from gender identity, income level, and education, to geography, political affiliations, and religion. Millennials, like all people, are infinitely their habits, and pretend their personalities, tastes, complex, and companies should be careful not to and behaviors are so alike that if you follow cer- stereotype them or make generalized assumptions tain rules, you will be able to market to them ea- about them using just this demographic identity as sily and with a high degree of success. We could a compass. TECHNOLOGY INSIGHTS FUTURUM PREMIUM REPORT | 5 FOR BUSINESS LEADERS Our first order of business is to bewareconfirma - enough among Millennial consumers that we feel tion bias—where cherry-picked data is used selecti- comfortable bringing them forward and digging vely to confirm and support preconceived notions into them. Moreover, in analyzing these traits and rather than answer real questions. The problem how they can be leveraged, we will challenge se- we face whenever we approach the topic of Mi- llennials, Xers, or Boomers—or any broadly defi- ned demographic—lies in finding the right balan- We have identified a short list of ce between what we know and what we think we traits and behaviors common among know, between confirming our own assumptions Millennial consumers. and challenging them, and between perpetuating myths supported by carefully selected data points and using a broader range of data, as granular and veral assumptions generally associated with these from as many sources as possible, to move beyond traits, and buck against conventional thinking when popular business mythologies and identify opportu- we find it easy to challenge or lazy in its analysis. nities and insights that are both real and actionable. As always, our aim is not to perpetuate myths and blindly follow popular market narratives, but to pro- For the purposes of this report, we have iden- vide readers with accurate and actionable insights tified a short list of traits and behaviors common they may not find elsewhere. TECHNOLOGY INSIGHTS FUTURUM PREMIUM REPORT | 6 FOR BUSINESS LEADERS MARKETING TO MILLENNIALS: KEY INSIGHTS 1. Millennials’ digital fluency journey is driven by purpose. Unlike Generation Z, which we might classify as the we note that Millennials, for their enthusiasm and world’s first generation of truedigital natives, Millen- generally positive relationship with technology, take nials are not necessarily digital natives. Many are, a more functional and purpose-based approach to especially among those born between 1995 and adoption than the somewhat slower and occasio- 2003, but for Millennials born between 1980 and nally reluctant Xers, and the relatively less culturally 1994, digital fluency didn’t come about in exactly encumbered members of Generation Z. the same way. The internet was relatively new in 1995. Cell phones were still mostly utilitarian when For Millennials, the value of digital technology lies Xennials and early Millennials were in their early in what it can produce for them—cheaper prices, for instance, or free delivery. More custom options, Most Millennials didn’t grow up faster checkout, and smoother user experience are all examples of the sorts of benefits that drive Mi- with Netflix, Amazon, Facebook, llennials to not only download an app, but move YouTube, and Twitter. it to their home screen, check it more than once per day, or engage with it on social channels. Note that for technology to provide an advantage, it must teens. They grew up listening to CDs and renting solve a pre-existing problem. Millennials instinctively movies from video stores. Many were already in gauge the value and advantages of new technolo- their 20s when the iPod, iPod Touch, and iPhone gies based on the alternatives. Unlike digital natives,
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