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4-3d: Generation Y

Generation Y, also called the millennial generation, is made up of people born between 1979

and 1994. Initially, Generation Y was a smaller cohort than baby boomers (discussed below).

However, due to immigration and the aging of the boomer generation, Gen Y passed the

boomers in total population in 2010. Millennials are currently in two different stages of the

life cycle. The youngest members of Gen Y, born in 1994, are in their late teens and fit the

cohort group above. In contrast, the oldest Gen Yers, born in 1979, were thirty-four years old

in 2013. They have started their careers, and many have become parents for the first time,

leading to dramatic lifestyle changes. They care for their babies rather than go out, and they

spend money on baby products. Gen Yers already spend more than $200 billion annually

and over their lifetimes will likely spend about $10 trillion. No group was hit harder by the

recent Great Recession than the Millennials. Many found their newly launched careers

stalled or their jobs eliminated. An estimated 24 percent had to move home with their

parents at least once. The lucky ones have been able to keep their jobs during the difficult

economic times and are making major purchasing decisions such as cars and homes; at the

very least, they are buying computers, MP3 players, Smartphones, tablet computers, and

sneakers.

Generation Y

people born between 1979 and 1994

Millennials may be the tech-savviest generation yet, spending more time surfing the Web

and on social media than they do watching television, listening to radio, or reading

newspapers, but they still use and value traditional media. Gen Yers expect brands to be on

social media. Two-thirds say a brand being on social media shows it cares about their

generation, and 56 percent think social media are a great way to find out what’s new with

brands they like. That may be why 64 percent have “liked” a brand on Facebook and follow

an average of ten brands or companies.

4-3e: Generation X

Generation X—people born between 1965 and 1978—consists of 40 million consumers. It

was the first generation of latchkey children—products of dual-career households or, in

roughly half of the cases, of divorced or separated parents. Gen Xers often spent more time

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without adult support and guidance than any other age cohort. This experience made them

independent, resilient, adaptable, cautious, and skeptical.

Generation X

people born between 1965 and 1978

Marketing to Gen Xers has often been described as difficult. Yet understanding their needs,

wants, and attitudes can make the task much easier. Gen Xers, now in their thirties and

forties, are reaching the age when they are planning to send their kids off to college.

Seventy-one percent of Gen Xers still have children under the age of eighteen. Gen Xers,

like the Millennials, have also been hit hard by the Great Recession. As one Gen Xer noted, “I

don’t know anyone in my age group who’s ‘quote’ where they want to be ‘unquote’ from a

financial perspective.” Around 18 percent of Gen Xers carry credit card debt exceeding 20

percent of their annual salary. Difficult financial times have made Gen Xers big spenders

at discounters such as Walmart.

4-3f: Baby Boomers

In 2012, there were approximately 75 million baby boomers (persons born between 1946

and 1964). Today, their ages range from the late-forties to the mid-sixties. With average life

expectancy at an all-time high of 77.4 years, more and more Americans over fifty consider

middle age a new start on life. Boomers purchase iPads, redecorate, go on vacation, and

postpone retirement. They control about 80 percent of personal wealth in the United

States and spend about $50 billion on their grandchildren alone. Boomers spend $1.8

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trillion annually on food, cars, personal care, and other personal products. In addition, they

are willing to change brands and try new things, making them an ideal group—affluent,

experienced, and flexible. Clearly, boomers and seniors are still a huge market with

significant needs. In fact, many advertisers are homing in on the boomer market. For

example, Procter & Gamble teamed up with NBCUniversal to launch a group of Web sites

targeted at boomers using the phrase “life goes strong.” The sites cover topics such as

technology and health, and hope to catch boomers’ fancy as well as some of their $1 trillion

in spending power.

baby boomers

people born between 1946 and 1964

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4-4: GROWING ETHNIC MARKETS

In 2015, it is estimated that Hispanics will wield $1.5 trillion in purchasing power. In the

same year, African Americans will have $1.2 trillion, followed by Asian Americans at $775

billion. Native American spending is expected to increase more than 30 percent to $90.4

billion.

The minority population of the United States reached 110 million in 2011. About one in

three U.S. residents is a member of a minority group. By 2050, about one in three U.S.

residents will be Hispanic. Currently, nonwhite minorities account for 49 percent of the

children born in the United States. Hawaii (75 percent), the District of Columbia (68

percent), New Mexico (58 percent), California (58 percent), and Texas (53 percent) are all

majority-minority areas in the United States. The United States will flip to “majority

minority” in 2041, meaning whites of European ancestry will make up less than 50 percent

of the population. Ten states are already there; in six of them—Arizona, Florida, Georgia,

Maryland, Mississippi and Nevada—whites became a minority in the last decade. Today

there are more Hispanics living in the United States than there are Canadians in Canada.

Hispanics accounted for most of the population growth in the 2010 census. Without

Hispanics, America’s under-eighteen population would have actually declined.

As you’ll see in the following sections, minority populations embrace other cultures while

continuing to patronize companies that understand their native cultural preferences.

Smart marketers are reaching out and tapping these dynamic, growing markets with a wide

range of products and targeted advertising. For example, JCPenney spent 16.4 percent of its

media advertising budget on the Hispanic market.

4-4a: Marketing to Hispanic Americans

The term Hispanic encompasses people of many different backgrounds. Nearly 60 percent

of Hispanic Americans are of Mexican descent. Puerto Ricans, the next largest group, make

up just under 10 percent of Hispanics. Other groups, including Central Americans,

Dominicans, South Americans, and Cubans, each account for less than 5 percent of all

Hispanics.

The diversity of the Hispanic population and the language differences create many

challenges for those trying to target this market. Hispanics, especially recent immigrants,

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often prefer products from their native country. Therefore, many retailers along the

southern U.S. border

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import goods from Mexico. If the brands found in their homeland are not available,

Hispanics will choose brands that reflect their native values and culture.

THE CHANGING HISPANIC MARKET

For many years, broadcast media have assumed that immigrants, as they settled into the

United States, would move away from Hispanic channels to mainstream media. However,

there are key changes in the Hispanic market that are challenging that assumption. Over

the last decade, the largest growth in the Hispanic population has come from births, not

immigration. With such a large number of children being raised inside the United States, it

should come as little surprise to researchers that 80 percent of the Latino population

prefers English or bilingual programming. Univision and Telemundo, the largest Hispanic

broadcast television networks, both have English subtitles on their prime-time telenovelas,

and Univision broke with its all-Spanish programming by interviewing Republican

presidential hopefuls in English with a Spanish translation. The new assumption seems to

be that Hispanics have acculturated and are maintaining the best parts of their cultures

while adapting some aspects of American culture.

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Source: Greg Allen, “Media Outlets Adapt to Growing Hispanic Audience,” NPR, April 3,

2012, www.npr.org/2012/04/03/149845056/media-outlets-adapt-to-growing-hispanic-

audience (Accessed April 10, 2012).

Procter & Gamble has increasingly targeted Hispanic Americans, and as the Hispanic

population continues to gain market share, additional companies are hoping to grab these

consumers.

4-4b: Marketing to African Americans

African Americans are nearly six years younger on average than all consumers; 47 percent

are between eighteen and forty-nine years old, which is considered the top-spending age

demographic by marketers. Although their population is smaller, there are more African

American households in the United States than Hispanic households because the latter tend

to have larger families. Nearly 30 percent of African American households are headed by

single women.

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Several companies owned by African Americans—such as SoftSheen-Carson and Pro-Line—

target the African American market for health and beauty aids. Huge corporations like

Revlon, Gillette, and Alberto Culver have either divisions or major product lines for this

market as well. The promotional dollars spent on African Americans continue to rise, as

does the number of black media choices. BET, the Black Entertainment Television network,

has over 80 million viewers. The forty-five-year-old Essence magazine reaches one-third of

all black females aged eighteen to forty-nine. African Americans spend considerable time

with radio (an astounding 4 hours a day versus 2.8 hours for other groups), and urban

audiences have an intensely personal relationship with the medium. ABC Radio Networks’

Tom Joyner reaches an audience of more than 8 million in 115 markets, and Doug Banks is

heard by 1.5 million listeners in 36 markets. Recent research shows that more African

Americans than ever before are achieving the American dream. In 2012, there were 2.8

million African Americans earning more than $75,000 annually.

4-4c: Marketing to Asian Americans

Asian Americans, who represent only 5 percent of the U.S. population, have the highest

average family income of all groups. At $68,780, it exceeds the average U.S. household

income by roughly $15,000. Fifty percent of all Asian Americans have at least a bachelor’s

degree. Because Asian Americans are younger (the average age is 34), better educated, and

have higher incomes than average, they are sometimes called a “marketer’s dream.” Asian

Americans are heavy users of technology. Moreover, they are early adopters of the latest

digital gadgets. A staggering 95 percent of Asian Americans own PCs.

A number of products have been developed specifically for the Asian American market. For

example, the Kayla Beverly Hills salon draws Asian American consumers because the firm

offers cosmetics formulated for them. Cultural diversity within the Asian American market

complicates promotional efforts, however, and marketers must understand the differences

among the Chinese, Filipino, Japanese, Vietnamese, Korean, Indian, and Pakistani markets.

4-5: ECONOMIC FACTORS

In addition to social and demographic factors, marketing managers must understand and

react to the economic environment. The three economic areas of greatest concern to most

marketers are consumers’ incomes, inflation, and recession.

4-5a: Consumers’ Incomes

As disposable (or after-tax) incomes rise, more families and individuals can afford the “good

life.” In recent years, however, U.S. incomes have risen at a rather slow pace. The annual

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median household income in the United States in 2012 was approximately $50,000, though

the median household income varies widely from state to state. This means half of all U.S.

households earned less, and the other half earned more. Two percent of the U.S.

population earns $250,000 a year or more.

Education is the primary determinant of a person’s earning potential. For example, only 1

percent of those with only a high school education earn over $100,000 annually. By

comparison, 13 percent of college-educated workers earn six figures or more. People with a

bachelor’s degree take home an average of 38 percent more than those with just a high

school diploma. Over a lifetime, an individual with a bachelor’s degree will earn twice as

much total income as a nondegree holder. Along with “willingness to buy,” or “ability to

buy,” income is a key determinant

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