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2 Target Markets / Page 2.5 Segmenting by Demographics: Age On this page: 3 of 3 attempted (100%) | 3 of 3 correct (100%)

Segmenting by Demographics: Age

At this point in your life, you are probably more likely to buy a car than a funeral plot. Marketing professionals know this. That’s why they try to segment consumers by their ages. You’re probably familiar with some of the age groups most commonly segmented in the United States. Into which category do you fall?

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U.S. Generations and Characteristics

Generation Birth Years Characteristics

Seniors (aka “The Silent Generation,” “Matures,” “Veterans,” and “Traditionalists”)

1945 and prior

• Experienced very limited credit growing up • Tend to live within their means • Spend more on health care than any other age group • Internet usage rates increasing faster than any other group

Baby Boomers 1946–1964

• Second-largest generation in the United States • Grew up in prosperous times before the widespread use of credit • Account for 50 percent of U.S. consumer spending • Willing to use new technologies as they see fit

Generation X 1965–1979

• Comfortable but cautious about borrowing • Buying habits characterized by their life stages • Embrace technology and multitasking

Millennials (aka “Generation Y” and “Echo Boomers”)

1980–2000

• Largest U.S. generation • Grew up with credit cards • Adept at multitasking; technology use is innate • Ignore media irrelevant to them

Generation Z (aka “Generation i,” “Pluralists”; includes “Tweens”)

2001–

• Most digitally attuned generation • Use social media to validate themselves and gain acceptance • Are practical, ambitious, and desire independence

Data from U.S. Census Bureau, http://www.census.gov/population/www/popdata.html; Richard K. Miller and Kelli Washington, The 2009 Entertainment, Media & Advertising Market Research Handbook, 10th ed. (Loganville, GA: Richard K. Miller & Associates, 2009), 157–66; Sydney Jones and Susannah

Fox, “Generations Online in 2009,” Pew Research Center, http://www.pewinternet.org/Reports/2009/Generations-Online-in-2009.aspx; Maria Paniritas, “Generation Gap: Boomers, Xers Are Reining in Spending,” Philadelphia Inquirer, August 2, 2009, http://articles.philly.com/2009-08-02/business

/25275378_1_spending-habits-boomers-consumer-economy; Anthony Turner, “Generation Z: Technology and Social Interest,” Journal of Individual Psychology, Summer 2015, pp 101–113.

MULTIPLE-CHOICE QUESTION

According to the table, which generation uses social media for self-validation and acceptance?

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Millennials compose the largest generation. Millennials have come to embrace renting over owning products, even clothes. Le Tote is a company that rents everyday clothing, while Rent the Runway rents fancy evening gowns. Millennials are three times more likely to have rented a product online than non-millennials.10

The baby boomer generation is the second largest, and over the course of the last thirty years or so, has been a very attractive market for sellers due to their buying power. Retro brands—old brands or products that companies “bring back” for a period of time—are often aimed at baby boomers. Pepsi Throwback and Mountain Dew Throwback, which are made with cane sugar—like they were “back in the good old days”—instead of corn syrup, are examples of retro brand products.11

However, baby boomers are aging, and the size of the group will eventually decline. By contrast, members of Generation Z have a lifetime of buying still ahead of them, which translates to a lot of potential customer lifetime value (CLV). CLV is the amount a customer will spend on a particular brand over their lifetime.

MULTIPLE-CHOICE QUESTION

Correct. According to the table, Generation Z is the most digitally connected generation.

Members of Generation Z use social media to validate themselves and find acceptance.

Saved moments ago.

Generation X

Generation Y

Generation Z

Segmenting customers by age helps companies do what?

Correct. Segmenting by age gives insight into consumers’ purchasing habits, which helps

marketers to effectively market products to people of different ages.

Saved moments ago.

understand how individuals use technology based on their age

gain perspective on the target market’s social status

understand the purchasing habits of people from different age groups

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So which group or groups should your firm target? Although it’s hard to be all things to all people, many companies try to broaden their customer bases by appealing to multiple generations so they don’t lose market share when demographics change. General Motors has sought to revamp the century-old company by hiring a new, younger group of managers—managers who understand how these consumers are wired and what they want. “If you’re going to appeal to my daughter, you’re going to have to be in the digital world,” explained one GM vice president.

Many companies try to broaden their customer bases by appealing to multiple generations. Spa and salon services used to be marketed only to adults but are now also marketed to teens, who will be spending for decades to come.

ZUMA Press/Alamy

Similarly, products and services in the spa market used to be aimed squarely at adults, but not anymore. Parents are now paying for their tweens to get facials, pedicures, and other pampering in numbers no one in years past could have imagined. Likewise, golf course communities used to be geared toward older, wealthier people who like to golf. But the number of golfers in the United States is declining. So, golf course developers are including amenities such as fishing ponds, climbing walls, horse stables, and zip lines in the communities to help attract a broader market.

Other companies have introduced lower-cost brands targeting Generations X and Y, who have less spending power than boomers. Whole Foods opened 365, a spin-off chain of smaller, less-expensive stores to attract this demographic and other customers on tighter budgets. The Starwood hotel chain’s W hotels, which feature contemporary designs and hip bars, are aimed at Generation Xers. And for backpacking millennial types, a number of investors are opening designer youth hostels with vibrant bars, rooftop yoga classes, and private baths in the United States, which is a trend that has been growing in Europe.

Businesses are also having to find new ways to reach the members of these generations. Not only do they tend to ignore traditional advertising—they can be downright annoyed by it. For Generation Z, nothing beats the word-of-mouth the members of this group provide on social media, says one marketing executive. “Get a Gen Z on your side and you’ve got someone who is willing to share your content and recruit their peers.”12

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Online events such as the fashion shows broadcast over the web are also more likely to get the attention of younger consumers, as are text, email, and Twitter messages they can sign up to receive to get coupons, cash, and free merchandise. Advergames are also being used to appeal to the two demographic groups. Advergames are electronic games sellers create to promote a product or service.

MULTIPLE-CHOICE QUESTION

10 Alejandra Reyes-Vallarde (December 20, 2017), “As Millennials Embrace Renting over Owning — even Clothes — Stores Are Taking Notice,” Los Angeles Times, http://www.latimes.com/business/la-fi-retail-rentals-20171220-story.html.

11 Barry Schlacter (April 22, 2009), “Sugar-Sweetened Soda Is Back in the Mainstream,” Fort Worth Star-Telegram, 1C, 5C.

12 Suzanne Bearne (May 5, 2015), “Forget Millennials. Brands need to win over Generation Z,” Marketing Magazine, http://www.marketingmagazine.co.uk.

close

Which generation is known for ignoring traditional advertising?

Correct. Members of Generation Z are more likely to ignore traditional advertising and

consume new kinds of advertising.

Saved moments ago.

baby boomers

Generation Z

Generation X

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