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Contents
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A Introduction - laying the ground work
An understanding of our times and their ever-changing trends are essential for today’s
marketers and business leaders. It is no longer enough to rely on technical skills and
industry knowledge. In a disparate world of fragmented markets and diversity it is critical
to understand the people and not just the processes.
A quick survey of our times shows that people in the twenty-first century are very different
to those in times past. An excellent tool which can be used to better understand, engage
with and market to the various cohorts within our society is that of generational analysis.
Rarely a week goes by without media interest in ‘Generation Y’, and people use the terms
‘Boomer’ and ‘Xer’ with great familiarity. Superficially, generational cohorts and the labels
applied to them seem to be accepted without question – they are permanently embedded
in the modern lexicon.
Yet separating the generational hype and conjecture from the serious, usable research
and analysis is a challenge. At McCrindle Research we see an increasing number of
organisations identifying generation gaps as the cause of failed communication, ineffective
marketing and even workplace conflict. Yet some commentators are beginning to question
This research is the practical applicability of generational segments.
not about giving
neat answers – it In response, we set out to research the generational segments and to explore a number
is about raising of unresolved questions.
challenging
questions and 1. How does generational segmentation fit into more traditional market segmentation
providing models?
enlightening
insights. 2. How can marketers apply generational analysis without including sweeping
generalisations that could render their marketing communications invalid and ineffective?
As with all social sciences, marketing research does not rely on mathematical proof but
behavioural analysis. It requires empirical evidence along with social observation, so this
paper is based on both quantitative data and qualitative findings.
This white paper provides a big-picture analysis of our changing times and generational
shifts, and points to some of the drivers of the generational debate. In the process it delivers
insights into both marketing strategy and the marketing and communication tactics that will
result in deeper engagement with the diverse generations.
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B Surveying the social terrain
we saw the beginnings of a generational Before setting out to analyse the generational
nomenclature. It was inevitable, therefore, segments, here are a few foundational points:
that commentators would look for terms to • Think unity, not just diversity: As humans, let
describe subsequent generations, and in alone Australians, we have more in common
his twenties, published his book Generation • Think segmentation, not just generation:
continued with Generations Y and Z, it descriptors are indicative and were never
It’s not about
intended to be definitive.
transmitting a took a while for these generational labels
• Think life stage, not just label: Today’s
message, it’s about to reach widespread acceptance. In his
twentysomething Generation Ys will one day
translating the 1997 work Generations, eminent Australian be sixtysomething – and it’s safe to say they’ll
message - we have social researcher Hugh Mackay labelled look and act a little differently then, even
to translate the Generation X as the ‘Options Generation’ though they’ll still be called Generation Y. So
and, in the years just after 2000, they don’t confuse the current age or life stage
message.
(which will change) with the label (which
were regularly referred to as ‘Millennials’.
won’t).
However, consensus has been reached
• Think resembling, not creating: It is a fallacy
by most researchers regarding the labels, that a generation creates their times – it is
definitions and the broad characteristics more that they resemble, and sometimes
pertaining to today’s generations. react to, their times. For example, Generation
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C Defining the generations
Foundational facts
As mentioned above, the traditional (and justifiable. Figure 1 shows the number
biological) definition of a generation is ‘the of children born in each year from 1925
average interval of time between the birth to 2005. We have marked the widely
of parents and the birth of their offspring’. 2 accepted generational divisions and noted
Historically, this places a generation at the age range and their percentage of the
20–25 years in span, which matches the Australian population. The figure shows the
generations up to and including the baby clear ‘booms’ in the birth rate, notably the
boomers. While in the past this has served post-World War II boom and the ‘spike’ in
sociologists well in analysing generations, births amongst the Generation X years.
it is irrelevant today.
Builders
First, because cohorts are changing so
quickly in response to new technologies, Referred to as the ‘Lucky Generation’
changing career and study options, and by social researcher Hugh Mackay, the
because of shifting societal values, two Builders were born in the period 1920 to
decades is far too broad a time span to 1945 and are largely the parents of the
contain all the people born within it. baby boomers. The dominant life-shapers
for this cohort were the Great Depression
Second, the time between birth of parents and World War II, events which they lived
and birth of offspring has stretched out from through and, more particularly, were
two decades to more than three. In 1976 shaped by through the experiences and
the median age of a woman having her first stories of their parents. These tough early
3
baby was 24, while today it is almost 31. experiences and the years of austerity they
So, today, a generation refers to a cohort brought influenced an entire culture – and
of people born and shaped by a particular forged a generation. Their label gives
span of time – and that span of time has insight into their response to their times:
contracted significantly. they became builders of the infrastructure,
the economy, the institutions and the
As shown in Figure 1, below, a generation is
a demographical, historical and sociological
reality.
Older and more fickle?
Our definition of a generation includes three
factors – it is a group of people who: The concept of lifetime value of customer (LTV)
for the period (or life) that the customer has been
• share the same life stage
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retained by the firm. Therefore the younger
• live through the same economic,
generations have a far higher lifetime value than
educational and technological times
the older generations for two reasons: they will
• were shaped by the same social live longer, and the bulk of their purchasing lies
markers and events. ahead of them. However, despite their higher
values which dominated. The results of financial future, terrorism, whether they will
the rest of us have been building on ever with the fact that they are the most educated
Keep in mind that while many of the Pragmatism, authenticity and transparency are
Builders are now ‘seniors’, this is not how required when communicating to this generation.
they necessarily perceive themselves. The focus needs to be on experiencing rather
They are living longer, and often are than explaining, and on timeless needs not trendy
novelty.
physically younger than their chronological
years might suggest. Yes, these Builders
pride themselves on their ability to deal with
hardship; they are politically and socially Generation X
conservative, patriotic, and have a strong
work ethic. Yet their self-image is one of Generation X is also clearly demographically
A key social marker in the western world of dropping back to another low in 1979.
the twentieth century was the end of World Just to show how solid this definition of
War II. Rarely in history is there an event Generation X is in Australia, in 1965 there
that so shapes a culture. The years after were 223,000 births; after a rise and fall
the war were the mirror opposite of the there were also 223,000 births in 1979.6
war years: the Depression and war period The peak year was 1972 when there were
were replaced by economic growth and full 268,711 births – the highest number of
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results of the decline in Australia’s fertility
rates over the last few decades. However,
Biggest winner?
the total fertility rate may have bottomed
Bridging a gap to a new generation is often as out at 1.77 (children per woman) as there
challenging as bridging divides between diverse were more births recorded in 2006 than for
cultural and ethnic groups. Gaps can be wide
any year in the past decade, and the fertility
and miscommunication often the result.
rate has now increased to 1.81 nationally.
Indeed the fertility rates in some states,
Recently an Australian bank released a student
banking product with the advertising slogan like Tasmania, have risen to once again
‘You’ll be on a real winner’. For Generation Y reach replacement rates (2.10 children per
and Z the meaning of the word ‘winner’ is often woman).10
contrarian, or opposite to its connotations. So
Generation Y
Generation Z
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Figure 1 – Generational segments
Generation X “bell
curve” demographic
300000
War babies
250000
200000
Births
150000
100000
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50000 aged 61-82 aged 43-61 aged 28-42 aged 13-27 under 13
14% 25% 21% 19% 18%
BUILDERS
GENERATION X
GENERATION Y
GENERATION Z
BOOMERS
0
1925 1946 1965 1980 1995
Source: McCrindle Research and the ABS.
9
Source: McCrindle Research & ABS, Australian Historical Population Statistics, Australian Bureau of Statistics, cat. no. 3105.0.65.001, Canberra.
D Marketing versus the generations
It is evident that unless we can understand and meet the needs of each new cohort of
customers, we will edge towards irrelevancy. The desire of consumers to have their
needs satisfied has changed little over the centuries – needs and desires are timeless. In
marketing there are no new principles, only old principles happening to new people.
The principles
The central premise of marketing – that firms are more likely to be successful if they orient
their resources and capabilities to the present and future needs of customers – is arguably
In marketing the most common way firms manage the marketing process. This has changed little over
there are no new the past 60 years.
principles, only
old principles Even a cursory look at the historical development of marketing will show that the marketing
happening to new concept, and the theories it embodies – market segmentation, the marketing mix (the ‘4
people Ps’), relationship management and customer orientation – are not new. Rather, they can
be observed to have been in practice back in the late 1800s, and eventually were given
formalised definitions by academia during the 1950s.
The purpose
The purpose of marketing is not simply to satisfy customers; it is also to deliver value to the
owners of the firm. In other words, shareholder value is derived from increased sales, profit
and market share – and it is the marketer’s job to deliver these results while simultaneously
meeting and/or exceeding the needs and expectations of customers.
PRINCIPLES
? Cable/Pay TV
Experiential Marketing
Marketing-PR
PURPOSE
SHAREHOLDER VALUE
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The practice
So, armed with the principles and the purpose above, what practical tools does the
marketer need, and how does this relate to demographic (generational) change?
The practical tools are the marketing mix elements (the 4 Ps – product, price, promotion
and place). These have changed significantly over the centuries in two key dimensions:
1. Demographic change: The people walking through the marketing terrain have
changed. The demographic upheavals caused by such social markers as the post-
World War II baby boom cannot be denied. It is imperative that marketers respond to
demographic change by altering marketing mixes to suit the morphing expectations of
consumers.
Yes, it is true that marketing has changed, but only in a tactical sense. Yes,
media, communication and distribution channels have changed significantly over the
post-World War II period, but these are constituent (tactical) elements of strategic
media points out that marketing has changed, what they may in fact mean is that
advertising, media and promotions have changed, not the core function of marketing
– needs satisfaction.
It is also true that the media landscape has changed. Information technology
Consider how the ancient philosopher Plato established the ground rules of modern marketing theory.
• Because people are not self-sufficient, societies evolve to satisfy human need.
• Since people have different skills, their comparative advantage leads to division of labour.
• Exchange takes time and opportunity cost, so marketing intermediaries are necessary who rent profits
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from exchange.
Plato could not have envisioned wireless computing, 3G networks and virtual communities, but his
observations on trade (as marketing was then known) are directly translatable to the twenty-first century.
Marketing is based on the timeless principle that satisfying the expectations of those in need will result in
increasing shareholder returns. While the principles and purpose of marketing haven’t changed, the marketing terrain
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E Why generational segments are important
Before answering this question, it is The key point is that generational segments
important that we establish what we mean are too generalised to be the sole means
by ‘segments’, and the process of market by which a firm segments a market. The
segmentation based upon them. reason is that they were never meant to
offer firms a simple one-size-fits-all option.
What is segmentation?
Marketing theory taught from high school
Market segmentation is the process business studies and beyond does not
of dividing mass markets into groups espouse that generational cohorts and
of consumers that exhibit common or market segmentation are interchangeable
homogenous buying behaviours. Segments concepts. Rather, the generations
are then offered arrays of products and (demographic segmentation) can be seen
services according to their identifiable as one possible first step in segmenting
needs. Firms targeting identifiable consumer markets.
segments can theoretically provide
consumers with more precise satisfaction Not everyone within a generation acts,
of their varying wants.12 thinks and spends in the same way. That
the media perhaps indivertibly propagates
In the business-to-consumer market, several the idea that generations are homogenous
variables can be used to define groups belies the fact that clever marketers
of consumers, including demographics, use generational labels but know their
psychographics, geography, behavioural limitations.
Clever marketers aspects and profitability. These provide a
use generational basis upon which to create segment profiles Why some generalisation is
labels but know that can be targeted with customised value necessary
their limitations. propositions (i.e. a marketing mix).
As Hughes and O’Rand state, ‘We all fall
Are generational segments too into talking about the baby boom as if it
generalised? were a homogeneous group, but it’s a very
heterogeneous group ... and it’s not just a
The generational labels are their own worst semantic issue. If we are worried about the
enemies. They make convenient ‘sound future as the Boomers age, we need to be
bites’ and perhaps – like daily horoscopes prepared for a very, very heterogeneous
– they are general enough to be partially group of people.’13
accurate for most people and are thus
given greater currency. Yet common sense It is not that generational segments are
tells use that we live in a diverse society the endgame in the segmentation process;
– how can one label accurately describe an rather, they are a logical first step. First, we
entire generation? generalise about a cohort, and then – as
Hughes and O’Rand suggest – prepare for
Thus, the more they are hyped, the more heterogeneity (variety) with a group.
suspicious we become of how generational
labels can be practically applied in If marketers were unable to generalise
organisational and marketing settings. about a population, they would need to
customise products based on the whims of
individual consumers. For all but the most
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Figure 3 – Generational segments as a first stage in segmenting consumer mass
markets
TARGET
MARKET
PSYCHOGRAPHICS
Values - Attitudes - Lifestyles - Personality
SOCIOGRAPHICS
Eductation - Economics - Employment - Expectations
DEMOGRAPHICS
Generational Segments
(Builders - Boomers - Gen X - Gen Y - Gen Z)
MASS MARKET
The entire population
groups we find that people increasingly relate Market segmentation is both a creative and
to and indeed embrace their generational label an individual process – if it was not, all firms
and characteristics: ‘I’m in Gen Y, so I’m into using the same segmentation strategy
multitasking’, or ‘I’m a boomer so don’t expect
would be unable to differentiate their
tradition from me’. It is much like identifying
products. Generational segments might be
with the term ‘Australian’. It does not mean that
an endless fascinating sociological topic,
20.5 million people who put their hand up as
being ‘Aussies’ are identical, but it is an identity but they should not be a firm’s default
which they claim. So generational marketers segmentation strategy.
need to understand that they are not just
common sense
Do you begin with generational
segments?
Fournier, Dobscha and Mick put it best when they write ‘Let’s put our relationship motives on the
table: no fluff, no faked sincerity, no obtuse language, no promises we don’t keep – just honesty about
commercial intent’.3 Regardless of which generational segment you target, enduring relationships
between consumers and business must not be one-sided. They must be based on consumer orientation,
rather than on the needs of the firm alone. Importantly, it is not just Generations X and Y which are
particularly suspicious of faked sincerity. After a lifetime of consumption, Builders and Baby Boomers
1. Creative Class: This segment is largely 3. Suburban Style: This segment includes
made up of tertiary-educated, higher higher educated, higher income, semi-
income, semi-professional/professional professional, professional and often
people. They are mainly singles and business-owning/entrepreneurial
couples living in the inner-city urban Generation Xers. They mainly include
centres in the major capital cities. They couples and families living in the
often own their residence but may rent suburbs in the major capital cities. They
for lifestyle and investment purposes, live in ‘aspirational housing’ in larger
and choose to live in the city/urban homes, and have chosen the suburbs
environment for café/cultural/lifestyle for the lifestyle provisions: shopping,
reasons. schools, children’s needs and so on.
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Figure 4 – Generation X urban-suburban segments
SOCIO -
DEMOGRAPHICS
INCOME
EDCUCATION
PROFESSION
>90
† Thrifty City Generation Tradition
URBAN SUBURBAN
GEO - DEMOGRAPHICS
LOCATION
Note: The figures <90 and >90 refer to the scores derived from calculating the socioeconomic
quintiles. The quintiles are calculated by assigning scores to an individual’s income and
education levels and occupation. Individuals with scores over 128 are considered to belong to
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the AB demographic.
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Figure 5 – Generational segmentation model
Homogenous subsets Creative Class Suburban Style Generation Tradition Thrifty City
Psychographics
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F How generational segments differ
important yet is merely one of the three was fortysomethings raising teenagers and, the
decisions.
shared experiences during one’s youth
unite and shape a generation.
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Colour TV
introduced to
Australia
Internet
Neil Armstrong boom
walks on the
Moon
Port Arthur
TV introduced Gough Whitlam massacre
Integrated
to Australia dismissed
circuit
Audio cassette invented DVD introduced
introduced
Vietnam War
Assassination
of President VHS VCRs Loss of space
Korean War shuttle Challenger
Kennedy introduced
The Great
Depression
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19
1925 1946 1965 1980 1995
3. Technology and trends
Writer Marc Prensky, in his much referenced paper ‘Digital Natives, Digital Immigrants’,19
points out that while anyone can send a text message or access a podcast, Generation Y
has been immersed in these new options almost from birth – thus the digital language and
technology is almost their first language. In our research we have built on Prensky’s findings
and analysed each generation’s response to the digital world. So Generations Y and Z are
technological ‘natives’, compared to, say, the baby boomer ‘digital immigrants’ who have
migrated to the latest technology later in life.
Generation X, on the other hand, remembers their formative years with the emergence, rather
than the omnipresence, of digital technology. We can refer to them as ‘digital adaptives’, as
they took on board the technological changes that they could see taking place around the
home, the school and the university and the workplace.
For much of the Builder generation the world of digital technology seems alien and perhaps
irrelevant. How many of us could say that our builder parents or grandparents are comfortable
with the Internet, ATM machines, wireless networks, telephone banking, podcasts and the
like?
The Builders were The Baby Boomers Digital The newer generations
atecomers to technology. are digital technologies have lived their entire
The internet, podcasts, immigrants who began to emerge
lives immersed in digital
SMS, online gaming and reached adulthood (in a mass sense)
technologies. For example,
wireless networks are without digital largely during
on a recent trip to a local
largely alien concepts technology. While the teen years
primary school, this Generation
to them many embrace new of Generation
technologies, some X – the 1980s. Xer (with a Generation Z
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SKIS – Spending the Kids’ Inheritance
In 1909, the Australian Government introduced the age pension, and set
the pension age for a male at 65. So, upon reaching 65 years of age, a
note that in 1909 life expectancy was just 58. Not much of a promise
– hardly anyone made it to pension age. Today the pension age still sits
at 65 for a male yet most Australians will live 20 years beyond this. This
respond to them.
So, what do the Builder and Baby Boomer generations do with the
sports cars, take local and overseas holidays and buy mobile homes;
they downsize their empty nest family home and seek coastal retirement
real estate; they seek continuing education, pilates classes, health care
The study of demography also includes several other variables in addition to age. Both social and consumer
behaviour researchers consider sex, household size, family life cycle, income, occupation and nationality
can be divided by sex into two roughly equal divisions. Fifty per
generation have most in common are family life cycle and household
family life cycle stage) while many Boomers are more likely to be
while it is true that Baby Boomers hold the majority of total private
wealth, they are not all rich. Despite media stereotypes, there are
Landscape or portrait?
A recent anecdote appearing in ‘Column 8’ of the Sydney Morning Herald emphasises the profound nature
‘During breakfast the other day,’ writes Paul Massey, of Northbridge, ‘our six-year-old son Lachlan, decided
to make himself some toast. Grabbing a piece of bread, and on the point of placing it in the toaster, he said
20
to his mother, “Mum, how do I put the bread in – landscape or portrait?”’
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GEN
G Decision hierarchy
For the twenty-first century generations, the educational and technological developments
have had psychological impacts. When comparing Generations Y and Z with previous
generations, it is clear that how decisions are made and how consumers are engaged
have indeed changed. We are dealing with consumers today who need to be engaged
more on the emotive scale than the cognitive scale. They have been influenced not just by
the scientific method but also by virtual reality. For them it is a world of experience – not
just evidence. These shifts are evidenced in various fields of study. In leadership we read
about the shift in focus from IQ (intellectual intelligence) to EQ (emotional intelligence). In
educational psychology we read not just about engaging students’ left brain hemisphere
(logical, analytical thinking) but also their right brain (creative, unstructured thinking). In the
same way marketers need to be not just engineers but also artists; they need to be social
observers, not the process managers.
Generation Y
Generation X
Emotional
Boomers
Builders
Rational
That Baby Boomers exhibit rational–emotional convergence in their decision-making is best illustrated
by their embrace of the ‘sea change’ and ‘tree change’ phenomena. While they lust after the freedom to
explore unrequited dreams through beautiful, idyllic coastal or rural surrounds, the said retreat must have
capital gain and taxation advantages. They are haunted by oft-stated urban myth: ‘You’ll never buy back
into the Sydney property market if you move up the coast!’ For them the sea change must have sea gain
(capital gain).
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Rational - Emotional Decision but an emotive self-projection. An insert
Making in the May 1996 issue of Rolling Stone,
for example, features the latest in Nike’s
Connecting with twenty-first century effective and iconic 1990s print campaign.
consumers requires an appreciation of the Under the image of an athlete was the copy
relationship between emotive and rational ‘I am not a target market. I am an athlete’.
approaches to decision-making. The And the tag line: ‘We don’t sell dreams. We
dynamic model of emotive marketing shows sell shoes. We sell shoes to athletes’. And
consumer behaviour as a linear transition so many thousands of shoes were sold to
that toggles between the emotional and the non-athletes who envisioned themselves,
rational, resulting in a converged purchase in an idealised way, as athletes.
decision, resulting in action. We find that
while this model applies in part to all Another example is the very effective
generational segments, it realised more in Sprite campaign of the same era: ‘Image is
younger generations. As mentioned earlier, nothing – thirst is everything’. So, if you are
the decisions of the Builder and Boomer cool and confident enough to see yourself
generations are largely tempered by as anti-image, you’ll prove that by buying a
rationalism, while the younger generations Sprite. It is counterlogical, it is postmodern,
have been shaped by emotionalism. While and it is irrational and entirely emotional.
decision-making has never been a matter We’re talking heart stuff, not head stuff.
purely of the head, as this model makes
clear it is increasingly a process that must Mission
engage the heart, connect with the head
but then re-engage the heart. Let’s look at This is how (practically) the consumer is
the stages in more detail: going to get their vision. To get what they
want they have to move from hype to hope
Vision to help. They move from fantasy to strategy
in an effort to move to reality. This is not
This is where consumers want to go based the what or the why but the how. It requires
on who they see themselves as – and how rational processing of emotional visioning.
they see their needs ideally being met. This When the heart is engaged it is only a
involves not an objective self-assessment matter of time before the head gets involved
Figure 8 – The dynamic model of emotive marketing – five facets to connect with
emotionally driven twenty-first century consumer
passion
vision mission
ACTION
compassion
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As a career-focused, self-absorbed
generation, the Ys have not taken up the
protest placards of their Boomer parents,
who in their teens drove social change
through civil action. Moreover, the protest
movement has been hijacked by marketing
and media who have left little for young
people to protest about – even if they
had the inclination. In short, the protest
movement has been corporatised.
have observed the trends and moved with In a case of teenage payback, the younger
these times. In the words of the Body Shop generations have grabbed a technology that was
(sold to multinational L’Oreal for A$1.57 being used against them and turned it into a bonus.
billion in March 2006) in their activism A few years ago, Welsh inventor Howard Stapleton
charities through the programs organised enabled young people to monitor their mobile phone
in their workplaces. Many companies calls and messages in classrooms, oblivious to the
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H The top five drivers of twenty-first century
consumers
1. Socially connected
The fact that public institutions Examples include many large multinational
traditionally responsible for maintaining coffee shop chains which aim to create
a sense of community (churches, virtual communities, camaraderie and
governments, clubs and so on) are less connection in their outlets. Reality TV also
popular than in the past does not mean plays to the detachment from community
we no longer seek community. It only that many television viewers experience.
means that we seek it from modern-day
alternatives.
goal for a substantial number of today’s absolutes on cool – is, as Fenton Bailey suggests,
tweens who want to be discovered and to attempt to colonise it through definition. Who
generation
perfect competition.
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Despite this, most consumers (Generations
X and Y included) are not able to articulate
Socially conscious or selfish and
what innovative products will meet their materialistic?
needs, and many marketing experts focus
on the larger trends rather than specific A commonly held perception is that Generation Y
products. How should firms innovate in are far more socially conscious than generations
The reason: the iPod case illustrates that believe in giving, participation in nonprofits, and
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Apple created unprecedented market in donations of time and resources’.
that was poorly marketed by others. With most educated generation in history, Generation Y
the iPod, Apple were at least fourth to are also the most materially endowed generation
attempts were design chic, a breakthrough career-focused, overly busy Generation Y to pick
music distribution model, synergy with up the protest placards of their Boomer parents
Confirming this strategy, Gerry Katz ending third world poverty. Compassion without
describes innovative incrementalism as action? Perhaps. It felt good to SMS the petition
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I Communication styles – distinctions across
generations
Generation Y responds to pathos and marketers, to their detriment, have been nervous
of anything spiritual and emotional. New generations are now responding to the pathos in
the message.
In recent years the explosion in both the volume and variety of media directed at consumers has resulted
in a marked decline in the effectiveness of many approaches to promotion. There is simply too much
media cluttering up people’s lives and message impact is declining. Also there is little point in reeling
off numerous detail in advertising as the short-term memory has a capacity to recall just five to nine
items (as pointed out by psychologist George Miller in 1956). Therefore, in communication remember the
Primacy Effect (points made in the first minute will be best remembered) and the Recency Effect (the
last or most recent things heard will be the second best remembered). When engaging them, incorporate
the Activity Effect – most people today are kinaesthetic learners (or a combination of kinaesthetic/
visual learners), meaning that they learn best through doing, experiencing or being involved.
Since Generations X and Y learn best by doing, experiencing or being involved, it should come as no
surprise that experiential marketing is popular and apparently successful. This is why experiential tactics
– stunt, guerrilla, viral and ambient marketing – are popular means of attempting to engage X and Y
consumers.
While marketers have for many decades recognised the value of word-of-mouth communication, where
consumers spread good reports about products and services they enjoy, experiential marketing goes a
step beyond this. Effective experiential marketing is authentic, not preachy, and seamless embedded into
the lives of consumers. The key is to market with them – not at them.
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RESEARCH CASE STUDY – YouTry HARD
By way of illustrating that the jury is still out on the effectiveness of online viral
marketing, we undertook a brief quantitative study of a viral advertisement placed
on the highly trafficked video-sharing website, YouTube.com.
The advertisement for a major car manufacturer was featured on the opening page
of YouTube.com, and although marked as advertising it was viral in nature. The
advertisement was produced in an ‘edgy’ style and was clearly designed to be
seen as ‘cool’ by the users of YouTube, principally Generation Y.
Attached to the advert (in a message board) were 170 comments posted by people
who had watched the advert. We read each comment, categorised them and
derived percentages for each. We have also directly quoted some of the posted
comments to demonstrate prevailing opinions of the advertisement.
Statistics
Posted comments
‘this is stupid. they are trying to make it look all ”you-tubey” but it reeks [of]
script, and arrogance’
‘this video had such potential as a good marketing campaign ... too bad it
obviously looks [like] an ad, and therefore ... i feel tricked’
‘Stupidest ad campaign I’ve ever seen. Completely annoying and has really
turned me off’
‘now that youtube was sold for 1.6 billion i guess i will be seeing these big
corporate adds on a daily basis’
www.mccrindle.com.au 31
‘Just a piece of viral marketing ... Kick out the corporates. YouTube is for the
people.’
‘I love when big companies try to be hip. They inevitably fail, as this video
demonstrates so well.’
‘It’s like movie companies starting up stupid groups on myspace ... no one
cares.’
‘Stupid Advertisement. Trying to make it look like a cool little YouTube experiment.
This is a commercial on TV for all of you who don’t know.’
‘the whole campaign stinks of some pseudo Gen-X guy, ”Oh gee isn’t he quirky
and NEAT?!”’
‘I would’ve accepted this if I saw this on TV, but seriously ... this can get the hell
off my youtube’
‘I realize at 35 I am not the target audience, it’s for a much younger set. But,
wow, what a stretch for a campaign’
Lessons learned
www.mccrindle.com.au 32
J The ever-changing consumer
Safety-net syndrome
We live in a post-structural, post- This is not to say that categories don’t (and
logical world. All generations are being shouldn’t) exist; the point is that younger
encouraged not to remember. Soon anyone generations don’t recognise the categories.
with a computer will have the entire written From their perspective, experiences,
record of history – every book ever written products, services and messages converge
– a mouse click away. Google and others into a rich tapestry that is their daily life.
are presently digitising entire libraries of Marketing messages themselves have
Experiences, books. People are required less and less become the experience. The prevalence
products, services to remember facts and figures when such of product placement in films, music, music
and messages data is so easily obtainable. videos and video games is testament to
converge into a rich this. The segmentation models created
tapestry that is their Messages, therefore, are perhaps even for them need of course to cater for the
daily life. more fleeting or redundant that the present and future needs with engaging
advertising industry presently concedes. experiential dimensions.
That consumers are engulfed in
advertising messages only encourages
the propagation of more messages. The
more messages that are created, the more
their effectiveness is reduced. Consider
the recent, controversial Tourism Australia
campaign that risked damaging the equity
of ‘brand Australia’. What choice did they
have? They needed to cut through the
media clutter. Must all firms therefore
resort to the use of expletives in advertising
in order to effectively reach their target
audience?
www.mccrindle.com.au 34
Research case study – product service convergence
In the past there have been significant differences in the approaches to branding
products versus offering services. Yet today we find that the majority of firms might
be termed hybrids, offering value propositions that are a blend of product, service and
experience – or, as we call them, converged value propositions.
Younger Motivated by a desire to differentiate through intangibility rather than utility, product
generations are managers traditionally attempt to transform their inanimate, ‘ugly duckling’ products
convergence into beautiful swans full of promise, purpose, philosophy and vision. These inherently
natives ‘human’ traits, while omnipresent in services, are arguably recent additions to the
world of products. Conversely, service managers have looked to the 7 Ps and the
inclusion of people, process and physical evidence33 in order to create more tangibility
for consumers. Ironically, while services are seeking greater tangibility, products
(principally through branding) are seeking the opposite. How does this impact branding
strategies and the generational segments?
Take the mobile phone, for example. It is not just a telephone, but is also a video phone,
a camera, an internet connection, a fashion accessory, an MP3 player, a status symbol
and a video game player. Yes, the phone is a physical product, but it is also a service
and an experience.
The following model demonstrates that while the historical product/service dichotomy
may efficiently delineate between pure services and pure products, it does not account
for increasing divergence. In the ‘grey zone’ are firms offering value propositions that
are blends of products and services – that is, converged value propositions.
In the post-linear, post-structural future, it the blended firms that are more likely to
capture the imagination of consumers, with blended experiences rather than plain old
products or services.
Source: Beard, M. 2005, Converged Value Propositions – An Alternative View on Separate Service Branding Models
Proposed by de Chernatony & Segal-Horn, research paper, University of NSW, Sydney.
www.mccrindle.com.au 35
K What are they looking for?
online for sharing music, photos or other interests. Gayle Troberman, Microsoft’s director of branded
entertainment and experiences, explains MySpace’s appeal: ‘This medium’s incredibly personal. Experience
is nonlinear and participatory. If you want an emotional connection, there’s no better way to do that than
by letting the consumer actually shape or be part of that experience. The powerful thing we’ve seen is the
36
idea of community. There’s me and my friends and my peer group’.
Brand communities
Brand communities are non-geographically bound communities, based on a structured set of social
relationships among admirers of a brand. They exhibit three traditional markers of community: shared
37
consciousness, rituals and traditions, and a sense of moral responsibility.
www.mccrindle.com.au 37
L Promotional messages that work today
Generational appeals
Illustrating the manifestation of this loyalty Consider the following appeals we believe
from a branding perspective, Clurman resonate with Boomers today.
and Walker-Smith point out that ‘Matures
(Builders) were content to let brands control • Ensure you have credibility.
... the good life of the American Dream was • Offer quality – with age comes wisdom,
41 and Boomers know the benefits of
tied to big brand names’.
quality and are willing to trade up to
It is commonly believed that Builders are products with a higher quality or price
‘rusted onto’ a narrow collection of brands if they can afford to.
that make up their consideration set. • Offer personalised service.
Accordingly the DDB/Accenture Lifestyle • Remember that Boomers place a high
Study (Figure 10) demonstrates that in value on personal recommendations
1975, 93 per cent of Americans in their (word of mouth).
seventies, and 86 per cent in their sixties, • Boomers hate being ripped off – they
said they ‘tried to stick to well-known brand love a ‘good deal’.
names’. In comparison, 66 per cent of • Emphasise choice.
those in their twenties stuck to well-known • Be sensitive to their declining physical
42 capacities – particularly sight and
brands.
hearing – when designing creative.
Boomers – the ‘selling it’ generation • Use spokespeople and opinion leaders
7–10 years younger than the specific
The Boomer generation was raised age segment you are targeting.
on a diet of passive media (television) • Use clear and concise messages.
advertising, with messages that largely • Emphasise the health care dimensions
presented factual, rational arguments. of the offering.
Appealing to their preference for formal, • Don’t be ageist – use sensitive words
monologue-style learning, advertisements like ‘seniors’ or ‘mature’.
often used product comparison and • Remember that Boomers might have
demonstration, with brand names used as grown up with the ‘hard sell’, but they
markers of trust. are over it.
www.mccrindle.com.au 38
Telling it Selling it Questioning it Protesting it
How messages Naive images and copy blending Product comparison Anti-ads Experiential marketing: viral, ambient, stunt
were/are executed emotive and rational appeals Demonstration Visual examples Web communities with user-generated
Pop culture references content. (i.e. YouTube, MySpace etc).
How they relate Digital Aliens Digital Immigrants Digital Adaptives Digital Natives
to technology
Figure 10 – Marketing communications and the generations
How they view brands Then & Now: Then - a marker of trust A philosophy A community
A product identifier and a marker of Now - diminishing loyalty
trust
“Freedom for the woman who “A Volkswagon is never changed “Don't insult our “Broadcast Yourself”
owns a Ford” to make it look different, only to intelligence. Tell us what
make it work better” it is, tell us what it does,
and don't play the national
anthem while you do it.”
www.mccrindle.com.au
BUILDERS
BOOMERS
GENERATION X
GENERATION Y
GENERATION Z
39
Generation X – the ‘questioning it’
generation
I’m a senior… but sssssh! Don’t tell anyone!
segment exhibits some homogenous traits, products and services claim the AB quintile
are ever-present within each generational element of the marketing mix which is
In response to the question of brand loyalty – ‘I try to stick with well-known names’
– respondents in the long-running DDB/Accenture Lifestyle Study shows that while older
generations tend to have great brand loyalty, over time brand loyalty among all groups
shows marked decline.
1975
100 2000
93%
90 86%
82%
80 77%
73% 73%
70 66%
60% 60%
60
Percentage
50
40
30
20
10
0
20-39 30-39 40-49 50-59 60-69 70-79
Age Groups
www.mccrindle.com.au 41
M A final word
A communication strategy is exactly that – a strategy which needs to rely on solid evidence,
valid research and current insights. In these postmodern times it must be sophisticated
enough to deal with the increasing complexity of the ever-changing customer. And in a
disparate marketplace it must deliver its message with relevance to each segment. Clearly
generational marketing is an essential tool in today’s times. However, as outlined here, it
has to go beyond the neat labels and stereotyped groupings. As we discussed earlier, even
though each generational segment exhibits some homogenous traits, there is significant
heterogeneity (variety) within each one.
While the generations are the most obvious segments, they are not the only segments. More
detailed market profiles should be developed based on the demographic, psychographic,
geographic and behavioural strata ever-present within each generation.
But for the final word on generational marketing, we can do no better than share some
marketing delivered by a Generation Y girl to her parents by way of a letter. It stands as a
piece of communication excellence because it understands the target audience, reframes
the issues, and influences effectively.
Dear Mum an
d Dad,
It has now be
en three mont
you up to date hs since I left
with everythin for uni. I’m go
g, but before ing to bring
I do, please sit
down!
Well then, I’m
going OK now.
of my window Th e head injury I
when my room got when I jum
caught fire ha ped out
I do get regular s ne arly healed, alt
migraines. hough
Fortunately th
e fire, and my
the road. He ca jump, were wi
lled the ambu tnessed by a
lance, and he worker over
since I had no visited me in hosp
where else to ital. And
was kind enou live because
gh to invite me of my burned
-out room he
fallen deeply to move in with
in love and we him. Anyway
’re planning to we’ve
set the exact get married.
date yet but we We haven’t
begins to show ’ll ma ke sure we do
. before my preg
nancy
However, it
is true that
in Statistics, I failed Chem
and I wanted istry, and I’m
you to see th doing badly
perspective! ose marks in
the proper
Your loving da
ughter.
www.mccrindle.com.au 42
N Endnotes
www.mccrindle.com.au 43
29 Katz, G. 2005, ‘In Defense of Incrementalism’, PDMA Visions, vol. 29, no. 3, July,
<www.pdma.org/visions/july05/viewpoint.html>, accessed 23 November 2006.
30 Katz 2005, ‘In Defense of Incrementalism’.
31 Quoted in Krotz, J.L. 2006, ‘Tough Customers: How to Reach Gen Y’, Microsoft, Redmond,
<www.microsoft.com/smallbusiness/resources/marketing/market_research/tough_customers_
how_to_reach_gen_y.mspx>, accessed 23 November 2006.
32 Mackay, H. 1997, Generations, Pan Macmillan, Sydney, p.146.
33 Brooms, B.H. & Bitner, M.J. 1981, ‘Marketing Services and Organization Structures
for Service Firms’, in J. Donelly & W.R. George (eds), Marketing Services, American
Marketing Association, Chicago.
34 See Project for Public Spaces, Ray Oldenburg, PPS, New York, <www.pps.org/info/
placemakingtools/placemakers/roldenburg>, accessed 23 November 2006.
35 Reuters, ‘MySpace Gains Top Ranking of US Websites’, <www.usatoday.com/tech/
news/2006-07-11-myspace-tops_x.htm>, accessed 23 November 2006.
36 Quoted in Thompson, A. 2006, ‘MySpace Exploration is Marketer’s Dream’, Yahoo News, 8
June.
37 Muniz Jr, A.M. & O’Guinn, T.C. 2001, ‘Brand Community’, Journal of Consumer
Research, vol. 27, no. 4, pp. 412–32.
38 Jones, D.G. Brian & Shaw, E.H. 2003, ‘A History of Marketing Thought’.
39 Salzman, M. & Matathia, I. 1998, Next: Trends for the Future, Pan Macmillan,
Sydney.
40 Erickson, M. 1998, Postmodernizing the Faith, Baker Books, Grand Rapids, MI.
41 Walker-Smith, J. & Clurman, A.S. 1997, Rocking the Ages: The Yankelovich Report on
Generational Marketing, HarperCollins, New York.
42 ‘Pledge of Allegiance’, American Demographics, November 2000, <http:
//findarticles.com/p/articles/mi_m4021/is_2000_Nov/ai_67001196>, accessed 23
November 2006.
43 Lindstrom, M. 2003, BRANDchild, p. 202.
www.mccrindle.com.au 44
O About the authors
Some of his recent clients include: Toshiba, Westpac, AMP, Commonwealth Bank, David
Jones, Alcan, Cadbury Schweppes, Mercedes Benz, Toyota, Red Rooster, American
Express, State Street, Flight Centre, Scania, AXA, Mirvac, Wesfarmers, LG, St George
Bank, Fairfax, ANZ, Accor, MLC, Esanda, Komatsu, Woodside, ExxonMobil, Tyco,
BlueScope Steel, Hudson, Telstra, Optus and NAB.
www.mccrindle.com.au 45
P About this publication
While McCrindle Research asserts copyright ownership over this paper, it is made avaliable
in good faith to other organisations or individuals to use or distribute in part or whole with
proper attribution.
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R Notes
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