One Size Doesn’t Fit All for Millennials
CHICAGO — New research released by IRI has found that millennials will be responsible for a large piece of the nearly $290 billion in spending on consumer packaged goods (CPG) by 2020.
For marketers to truly understand just how powerful this generation’s buying power is, as well as the driving force behind it, IRI has categorized millennials into six distinct segments summarized as the “Rise of Millennials.”
“At 79 million strong, the millennial generation has a tremendous amount of spending power that is growing rapidly,” said Robert I. Tomei, president, consumer & shopper marketing, IRI. “This is the largest generation of young people since the baby boomers, and IRI has studied millennials extensively to provide a comprehensive look at their personalities, values, basic beliefs and actual purchase behavior.”
The segmentation IRI created allows marketers to better understand millennials, assess their current position and develop strategies and programs to more effectively target them, according to Tomei.
“Marketers have a tremendous opportunity to capture growth by directly connecting with this increasingly important segment of the population,” explained Tomei. “For instance, marketers can leverage a full understanding about millennials’ needs to drive their product innovation strategy, improve the allocation of their media spend and enhance the alignment of their marketing and sales programs.”
The Six Faces of Millennials
- Free Spirits: 13 percent of millennials are young, single, college-educated trendsetters who are impulsive and social.
- Struggling Wanderers: 21 percent of millennials are not highly educated, are struggling financially and are not strongly digitally connected.
- New Traditionalists: 22 percent are educated, affluent millennials who are married, value-driven and exhibit good financial habits.
- Concerned Aspirationalists: These social media devotees are moms (13 percent) who are both cash- and time-strapped and convenience- and price-driven.
- Conscious Naturalists: These eco-conscious moms (15 percent) desire minimally processed foods and prefer locally grown. They are also less digitally reliant and are fiscally cautious.
- Confident Connectors: 17 percent are ethnically diverse and socially conscious, and are digitally savvy and shop in specialty stores.
“Millennials are the most racially diverse, highly educated generation in history,” Tomei added. “Their path to purchase isn’t a straight line, so marketers need to keep this in mind and get creative. This means paying attention to their specific needs, ensuring they have the right product mix and customizing their media and messages to be relevant to those needs.”
IRI also cracked a few stereotypical myths surrounding Generation Y, so marketers can have a better perspective on their attitudes. The top five myths busted include:
- The “Me Me Me” Generation: More than 90 percent of millennials equate success with being a good friend, and 68 percent equate success with working for a cause they believe in (compared to 56 percent of Generation X and 58 percent of baby boomers). Additionally, 58 percent equate success with being of service or contributing to their community.
- The “Traditional” Path: Millennials are embracing “traditional” on their own terms and timeline, with 73 percent employed, 28 percent married, 37 percent own a home and 38 percent are parents.
- Tied to Technology: Gen Y is extremely comfortable with technology, however, not all are adopters or constantly connected. Forty-eight percent of millennials say they would be able to function without their smartphones, 45 percent say they’re early adopters of new technology and 29 percent say they regularly use a mobile app to pay for purchases.
- No Brand Loyalty: Millennials are loyal to brands that prove themselves worthy, but they also enjoy the hunt for a good deal. Forty-four percent say they are loyal to brands they buy and 52 percent will choose quality over price. However, two-thirds are working with limited grocery budgets, so a number of millennials are value conscious out of necessity.
- Traditional Marketing Doesn’t Work: While it is true millennials are strongly influenced by recommendations through social media, product reviews and other online resources, 66 percent of millennials respond to loyalty cards/discounts, 65 percent to couponing and 50 percent to store circulars — all traditional marketing tactics.
Chicago-based IRI delivers market, consumer and media exposure information, predictive analytics and foresight on CPG, retail and over-the-counter healthcare industries.