MAKING CENTS — The More Things Change…
"I see no hope for the future of our people if they are dependent on frivolous youth of today, for certainly all youth are reckless beyond words … When I was young, we were taught to be discreet and respectful of elders, but the present youth are exceedingly disrespectful and impatient of restraint."
You might think this is a member of the silent generation or boomer taking about a Gen Xer or millennial, but you'd be wrong. This is a quote from the early Greek poet, Hesiod, around eighth century BCE.
Despite their differences, boomers, Gen Xers and Gen Yers share a rebellious youth, a rough entry into the workforce and a huge impact on corporate culture. Looking at the trends, all three have pushed for a meaningful, collaborative work environment, a want to provide for themselves and their families, and to have the time to spend with their friends doing what they love.
At the Big Grower Executive Summit two years ago, demographer Ken Gronbach wrote about the differences in generations in his book The Age Curve. What I took away from his talk was the methods, approaches, tools, strategies and even terminologies used by each generation might be different, but at the end of the day we are all more similar than we might believe. Instead of focusing so heavily on our differences, perhaps we should acknowledge them, move beyond them and learn from each other.
Staying up to date on the latest demographic trends is important because it helps firms more clearly identify existing and emerging markets for their products and services. By evaluating customers' and prospects' demographic trends, managers and other decision-makers can identify changing needs in the marketplace and adjust to them.
Demographic trends can also help organizations spot future spending patterns. For example, the spending trends of baby boomers (who have been so critical to green industry's growth) will likely change as they age out of their peak earning years and head into retirement.
Hitting the Target
When combined with behavioral and attitudinal data, demographics can be used to improve marketing effectiveness by helping businesses target new customer segments with the right messages at the right time. When done well, businesses can increase consumer awareness, improve customer acquisition efforts and bolster customer retention rates.
I am often asked for sources of demographic insights, so I thought I'd take this opportunity to list my favorite books on the subject:
1. The Age Curve: How to Profit from the Coming Demographic Storm by Kenneth W. Gronbach
2. The Age of Aging: How Demographics are Changing the Global Economy and Our World by George Magnus
3. Boom, Bust & Echo: How to Profit from the Coming Demographic Shift by David K. Foot and Daniel Stoffman
4. The Leisure Economy: How Changing Demographics, Economics, and Generational Attitudes Will Reshape Our Lives and Our Industries by Linda Nazareth
5. State and Local Population Projections: Methodology and Analysis (The Springer Series on Demographic Methods and Population Analysis) by Stanley K. Smith, Jeff Tayman, and David A. Swanson
6. Boomer Selling – Helping the wealthiest generation in history own your premium products and services by Steve Howard
7. Almanac of American Demographics by Colin Nagengast
If you elect to take on the task of reading these resources, be forewarned — how each author defines demographic age segments varies! Why is that, you ask? To differentiate their line of thinking and sell their books, of course!
While some of the demographers define generations by historical and cultural events, the U.S. Census Bureau uses a statistically measurable approach that determines generational cohorts by annual birthrates, using 4 million as the watermark that identifies the beginning and end of a generation. When birthrates average above or below 4 million per year for an extended period of time, it represents a generational cohort that is only changed when the average birthrate crosses that benchmark again.
For example, from 1946 to 1964, the average annual U.S. birthrate remained above 4,000,000, which according to the U.S. Census Bureau, marks the entire period of the baby boomer generation. From 1965 to 1976, the average annual U.S birthrate remained below 4,000,000, which represents the generation known as baby bust (II) or Generation X. Below is a list of generations determined by the U.S. Census Bureau of generations:
- • Baby bust (I) (born from 1921 to 1945)
- – early cohort (born from 1921 to 1933)
- – late cohort (born from 1934 to 1946)
- • Baby boomers (born from 1946 to 1964)
- – Boomer Cohort #1 (born from 1946 to 1957)
- – Boomer Cohort #2 (born from 1957 to 1964)
- • Gen X/Baby bust (II) (born from 1964 to 1976)
- • Gen Y/millennials/echo boomers (born from 1976 to 1994)
- – Leading Edge (born from 1977 to 1990)
- – Trailing Edge (born from 1990 to 1994)
- • Generation Z/Generation I (born from 1995 to 2009?)
The Census Bureau hasn't yet categorized the generation that follows Generation Y. Many experts are already dubbing it "Generation Z" or "Generation I." However, little information is available about this young generation, except that the first members of this generation were born around 1995. What's particularly interesting about Generation Z or Generation I is that every member of this generation was born after the Internet became popularized, which will likely affect this generation's experiences, attitudes and opinions.
Demographic segmentation has been around since the 1920s but we have to make sure and understand the limitations of segmenting by demographics as well. Grouping people by age range, gender, education and income can actually be a very weak way to develop true target markets. This is one of the many fallacies of using demographics in modern marketing; especially considering social media, which has completely rewired the way we communicate and thereby eliminating geographic and media outlet boundaries.
Connecting to Values: Each of us has a built-in set of filters that's developed through three significant periods including the Imprint years (birth to 7 years old), the Modeling period (8 to 14 years old) and finally Socialization (15 to 21 years old). These formative periods set up our core set of values and help us distinguish good from bad, valuable from wasteful, and so forth. For example, you already know that people who primarily place value on the environment have a very different psychological makeup then those who primarily place value on material goods and money.
So, why would you talk to them the same way? We must consider that fact when aiming to build relationships in the marketplace. Your brand values and customer values should be aligned. I would almost consider segmenting by values a push marketing effort. To do it successfully, you have to reach in and discover what your brand's core values REALLY are and if you're comfortable with them. Start your next marketing strategy by focusing on values in addition to age, gender, income levels or any other demographic variable by which you choose to segment.
Finding Meaning: This aspect of advanced segmentation involves understanding who we are and who we wish to be. One of the best examples over the years has been Harley Davidson. They created meaning around their brand and their customers. They created a gravitational pull for those who want to feel like a bit of an outlaw. To own a Harley means something. It's why we don't see many Honda motorcycle gangs. It's a meaning, a construct that consumers can buy into. So, you'll have a dentist who lives a nice, cushy life (who he is) and buys a Harley to connect to the outlaw inside (who he wishes to be).
So, how do you use this? You create meaning through the tone and style of your branding and marketing. Make absolutely sure each marketing piece connects to the meaning you wish to convey. From a segmentation aspect, think about who your customers ASPIRE to be and connect to that. Once you know that, you'll see a clearer path to finding your ideal customers.
If you want to create genuine relationships in the marketplace and substantially enhance your marketing strategy, consider connecting to psychographic variables such as values and meaning in addition to demographic variables such as age, gender and income level.