At first it was ‘a financial crisis’ but now everyone calls it a ‘recession’. With only 19.7% of new college grads who apply for jobs getting them and 65% moving into Mom’s basement, the reality of the ‘new frugality’ has finally settled in with Millennials. However, new research from JWT (see chart) shows, the recession hasn’t yet affected spending across the board. For adults 18-29, some things are indispensible (Internet), others less critical (dining out), and some are completely forgettable (magazines).
Marketing to Millennials™ now is not fundamentally different from any other time, because Gen Y has always considered itself cash strapped. (I am always amused to hear my students complain about how poor they are). Now, as they graduate and get jobs, Millennials continue to see themselves as careful shoppers, even as they outspend other generations on everything from cell phones to wine. They wouldn’t think of making a major purchase without careful and exhaustive research, online and via word of mouth. One of my favorite Gen Y blog posts declared that if you are not Gen Y, you probably overpaid.
With money dearer now, and the tools for discovering preferences of friends becoming ever more accessible and powerful, I expect they will become even more careful in the future.
Of course, it’s not just Millennials who are affected. According to new IRI research, the recession has created what they call the “Downturn Generation”, a “new generation of Americans adopting practices similar to Depression-era shoppers, implemented both to weather the recession and to keep a close eye on spending long after the recession ends.” The strategies characteristic of this ‘new generation’ sound a lot like practices Millennials have been implementing for years. Here’s a sample:
“Consumers are becoming more resourceful and strategic when planning their purchases for meals, wardrobe, home and automobile maintenance and personal care. New approaches identified include consumers turning to the plethora of information available on the Internet to help prepare for purchases, clip online coupons and research reviews, commentary and opinions on products and services before making a purchasing decision. In fact, more than 44 percent of shoppers are using online resources to find coupons today, and 55 percent of them plan to continue this practice into the future.”
How do we market to a generation of tight wads who are programmed to avoid impulse shopping? Very carefully.
According to the JWT study, “77 percent of young adults, people18-29, feel nervous and anxious about the impact of the recession.”
Extra reassurance is needed for each decision, and that reassurance will be trusted most if it comes from a friend or neutral party. The key is to make sure they find the right information, not necessarily make your brand per se the go to source for the information. In other words, it’s very important to allow them to market to each other. Information is a form of social currency. Give Millennials information they value and they will share it with their friends. According to the article mentioned above, authored by Northwestern Medill Journalism student, Inyoung Hwang, here’s how it could work in video games:
Morris Levy, senior at the University of New Hampshire, said even if a new product like a video game sparked his interest, he would hold off on purchasing it until he understood it better. “I’d look into it more – look at reviews online, ratings from different companies and news sources,” he said. Gary Rudman, the president of GTR Consulting, a market research firm, said video game companies will sometimes provide free clips of games to websites like IGN Entertainment. It’s a simple but successful word-of-mouth strategy that allows young people to feel like they’re finding things on their own and then talk to friends about it. “It doesn’t feel like a marketer is forcing something down your throat,” he said. “You’ve gone to a place to find it, you’ve discovered it, and you share it with the world.” Very successful brands understand there’s nothing better than having something “bubble up from the bottom,” according to Rudman.
Music and movie marketers have used this approach to reach Gen Y for years. If it is that effective for entertainment, imagine how powerful it could be for restaurants, wine, automobiles, financial services, higher education, and more.
