Motivating Gen Y to Buy: Trickier than It Looks
Not reaching the 13- to 25-year-old market? You might be trying too hard.
Unlike Generation X, Generation Y seems to be motivated by individuality and lifestyle.
American Demographics has aptly described this group's buying habits: "To understand Gen Y's spending priorities, think personal appearance and fun."
This group, whose ages span more than 13 years, is difficult to market to. They have been bombarded with marketing on every level. While they pay attention to the message, they also see through the veneer. What is important, marketers and researchers say, is to remove the spin and make your message consistent across all channels and easy to find on the Web.
Generation Y, which has been issued a variety of names, is typically considered to be composed of those born between 1977 and 1994. Most marketers, however, are only concerned with those 13 and older. While some dip as low as age 11, it is wise to be aware of COPPA (Childrens' Online Privacy Protection Act), which prohibits some types of online marketing to children under 13.
Who Are They?
The two most compelling aspects of this group are its size and its potential spending. According to retail Inc., Generation Y will represent 41 percent of the U.S. population by 2012. American Demographics estimated the entire group zero to 25 spent $187 billion in 2002. In online spending alone, Jupiter Communications estimated that Generation Y shoppers accounted for $1.3 billion in 2002.
Their tremendous purchase power is used on entertainment and lifestyle products and not in department stores. There is some debate among marketers and some conflicting studies about where this group shops. Some say teens are shunning department stores, others say they flock to malls.
What everyone agrees on is that this group knows a lot about electronics, computers, software and wireless communications, and that they get most of their information online, from magazines and the manufacturer. A 1998 New York Times/CBS poll of teenagers found that almost one-fifth of them had their own telephone numbers, a beeper or pager, and two-thirds owned a TV in their own bedrooms.
Many marketers originally thought this group, which has grown up in the longest economic boom in history, a kinder, gentler groupmore philanthropic and less materialistic than generations before them and less like their Boomer parents. But as this group reaches its early 20s, marketers now realize that the increase in volunteer work was a school requirement. While recent graduates are looking at non-profit and government work, they are doing so to expand their options in the slow job market.
There is less of a gap between this generation and their parents than the Boomers experienced in the 1960s. Because their parents have been forced to keep up with technology, and the changes taking place are less socially eruptive than those seen by Boomers, families are much tighter. This has led to more household purchases being influenced by kids. They impact buying decisions in the household from cars to computers to vacations.
The Wired Generation
According to Jupiter's most recent study, teens spend more than 10 hours a month online, and college age kids spend 11.1 hours. While most of this demographic can't buy because of a lack of a credit card, Jupiter reports that 67 percent of 13- to 18-year-olds and 37 percent of 5- to 12-year-olds have researched or bought products online.
According to a 2002 study by Jupiter, kids age zero to 11 are presently the largest, 15.8 million, and fastest-growing Gen Y group online, estimated to reach 25.5 million by 2006.
What They Buy
"Confidence in online shopping is growing, but most Gen Y shoppers still stick to product categories like entertainment software, books, and tickets that do not require trial or personal examination," said Irma Zandl, president of Zandl Group, which produces "The Hot Sheet," a bimonthly trend report of 8 to 24 year olds.
Electronics, lifestyle-related products, communications tools, software and computer games, music and clothes are what grab this group. Yankelovich studies show that just over 10 percent of teens 16 to 20 have and use PDAs already.
According to Kristen Harmeling, a partner with Yankelovich, a marketing research and consulting organization, 44 percent of 16- to 23-year-olds frequently or occasionally shop online, with only 35 percent of them purchasing. Most of what they do is pre-shop, she said. Online marketing, at a minimum an informational site, is very helpful.
American Demographics reported in a special July/August supplement "The Power of the Purse," that "When they're at home, the critical appliance is not a stove or a refrigerator but a home entertainment system. The older sect, 18 to 25, spends 31 percent more than the average consumer on televisions and radio and sound equipment."
As much as these kids buy online and off, there are still opportunities for more merchants to attract this group. Robert Lumpford, an account manager with The Millard Group, said while girls are being hit hard by apparel sellers (Express, Delia's, American Eagle Outfitters) even by sports catalogers, boys clothing remains untapped. He said the Sports Illustrated for Kids list sees some activity from outdoor apparel sellers, but little else. Everyday apparel doesn't even bother, he said, presumably because they view the boys as not interested.
Another category marketers should consider, based on the demographic of Teen People and its successful tests, is accessories, beauty products and diet aids for girls.
Lumpford said that many sports teams, camps and specialty events, such as the Harlem Globetrotters, have used the SI list with great success. That includes professional as well as training teams in hockey, basketball, football and baseball.
Another user who had shied away from this demographic is the music industry. But in recent months, Lumpford said, Columbia House and CDNow have both been mailing to Generation Y.
How to Get to Them
Whatever vehicle you use in attracting this consumer, make sure it is honest and accurate.
They are extremely interested in technology, particularly wireless communications and instant messaging, as well as e-mail.
What's nice about this group is they understand the give and take of direct marketing. They know the marketer is looking for something, but also that they, the consumer, will get something in return, says Harmeling. She explains that these consumers are less afraid and less annoyed at providing personal information to marketers.
Yankelovich has done extensive research for its clients on this group, which shows Generation Y is fed up with junk mail. It considers offers that have little value, are too slick, and not supported with quality service or products as junk mail. They seek an honest approach and a good value, says Harmeling.
Amazon, she says, is very successful with the youngsters. It offers an honest approach to marketing. It provides convenience, and, when it can, offers discounts, free shipping or wrapping.
What Generation Y likes more than Amazon's discounts is being catered to. The site stores shipping and purchase information, runs queries based on purchases to create suggested-buy lists and keeps an electronic wish list that is accessible by others.
For the younger market, Lumpford says Alloy, L.A. Girlfriends and Venus Swimwear are the few catalogers to break into the 10- to 16-year-old segment. They have successfully cultivated this fickle clientele. Lumpford implied that catalogers have a hard time pleasing the tween market because the girls move from trend to trend, which is not conducive to catalog marketing profit margins.
He emphasized that ages 11 to 13 is the best time to create brand awareness in girls. Neopets and its marketers are taking advantage of that fact.
Kids are strongly attracted to sites that allow them to personalize and customize the Web easily. While Nickelodeon, Lego and Disney, have successfully captured 6- to 12-year-olds online, Neopets is doing it better. The other sites have kids visit an average of twice a month, for 30 minutes. Kids visit Neopets almost five times a month, for 70 minutes at a time.
This highly interactive site features, stories, games, contests, news, shopping, chatting and a world in which youngsters and their created pets belong unto themselves. Neopets earns revenue though product placements; for example, encouraging children to feed their pet Capri Sun or other consumer packaged goods.
Things to Do
Online money: If you sell online, become a merchant on RocketCash. Kids use online accounts, which are provided by Chase Manhattan bank, and are filled by kids' parents or by the kids being rewarded for signing up their friends. It's the most popular way teenagers without credit cards shop. More than 100 merchants belong to the site.
Viral marketing: Kids this age are likely to pass along e-mails from which you can capture e-mail addresses to build a file.
Web site interactivity: The longer you keep people on your site and the more frequently they visit, the more opportunity for you to market.
Melissa Sepos is the former managing editor of Catalog Success magazine and a freelance writer in Philadelphia.