If there's anything Millennials hate more than being lumped together into one generalized group, it's being told what to do or buy. So when it comes to targeting these consumers, a marketer's job sure isn't easy. There's certainly a wide variety of personality types and behaviors present in every demographic, but there are also those common traits marketers can pick up on to help them do their jobs better. In the case of Millennials, a fair amount of data on spending behavior is available, and this information can provide valuable insights to inform ad campaigns and overall marketing strategy.
It's no secret that Millennials have spending power that can't be ignored. And with their distaste for being targeted by advertisers, Millennials are making creatives work extra hard to capture their attention. But what's just as crucial as thinking about how to reach this important demographic, is to think about what to market to them.
With this generation, some of the largest trends provide useful clues. For instance, we know today's young people are delaying marriage and starting families, renting rather than buying homes, and cutting the cord on cable TV and landlines. And despite the expanded access provided by the Affordable Care Act, Millennials have still been slow to adopt health insurance coverage.
This gives marketers a lot to think about. One of the biggest takeaways is that Millennials are often conservative with their money. They came into adulthood during an economic recession, and it taught them a few things. They are cautious about making large purchases, relying on customer reviews and proven quality over gimmicks. That's part of the reason it's important to them to have seamless, digital experiences. Time is money, so these young consumers want to make an informed decision quickly. And that means they often tune out the advertising.
The ads these consumers will pay attention to are the ones that address their specific needs and interests while cutting through the fluff. Even when marketers get that right, there is still the matter of Millennials not wanting to buy things -- at all.
Factors like the economic climate and mounting student loan debt are logical deterrents to making large purchases, but that doesn't mean Millennials don't spend their money. When they do spend, they prefer allocating funds to experiences rather than physical things. This may be another unique Millennial value to keep in mind, or perhaps, as an article in Fast Company posited, this generational preference actually signals a larger cultural shift away from the perceived value of owning things. Either way, remember you'll be working extra hard to convince Millennials to add more stuff to their closets.
And as marketers well know, it's not just Millennials that dislike irrelevant advertising. No one likes being inundated with a sales pitch about something that doesn't even apply to them. So let's take a look, more specifically, at what kinds of products Millennials just won't spend their money on -- and what it means for marketers and advertisers.
Cheap, mass-market beer options like Miller and Coors are becoming less popular with Millennials, while craft beer sales are on the rise. According to the Brewer's Association, craft beer consumption has grown steadily over the past five years, jumping 11 percent in 2014. Based on Mintel research from 2013, 43 percent of Millennials think craft beer tastes better than mainstream beer, but only 32 percent of baby boomers agree. About 50 percent of Millennials surveyed had tried craft brews, versus just 35 percent of the overall population.
These young consumers may tend to watch their wallets, but they also know quality when they taste it. Many Millennials also prefer to support smaller businesses, like microbreweries, that keep money in local economies.
The increasing popularity of craft breweries has, of course, hurt beer giants like Anheuser-Busch InBev and Miller Coors. A Budweiser ad that ran at the 2015 Super Bowl went so far as to lash out by mocking craft brewing, calling Budweiser "proudly a macro beer" that isn't "fussed over" or "dissected" and remarking, "let them sip their pumpkin peach ale." The backlash was swift. This was not the way to boost sales, and many called the ad bizarre and hypocritical since AB inBev has bought up plenty of craft brewing companies to keep itself in the game.
The ad's message just comes off as jealous, desperate, and painfully misguided -- a tantrum from a company that has a near-monopoly on the global beer market. One article in Paste Magazine ripped the ad apart claiming AB inBev mocked customers of companies it actually owns, implying they are pretentious hipsters. The article concludes, "What it boils down to is this: For this ad to be successful, Budweiser needs for you to be oblivious. Are you?"
When it comes to beer, Millennials are looking for quality, and they are smart enough to know the difference. Embrace it or go home, advertisers.
Looking at apparel, the numbers tell us that Millennials are spending less in this product category than generations prior. A Morgan Stanley report found that Millennials spend more today on expenses like rent, cell phones, and personal services than young people 10 years ago, leaving less money for buying clothes. Macy's CFO Karen Hoguet has claimed that slow sales are a result of electronics and online subscriptions taking market share away from apparel. And when Millennials do buy clothes, they are often unwilling to pay full price.
When it comes to style choices, spending behavior suggests that the image of the always-hip Millennial could be a myth. These consumers are favoring retailers like Walmart for many of their clothing needs, perhaps suggesting a preference for the basics rather than the latest trends. These shoppers also turn to longer-lasting options, such as well-made Patagonia items that will outlast passing trends and even have resale value.
Millennials are also more likely to look for casual clothing options than other generations, with "athleisure," or "leisurewear," positioned as one of the few segments of clothing seeing increases in sales from this demographic. “When I look at athleisure bottom business -- the yoga pant, sweat pant, sweat short -- it has displaced the jean business one to one,” said NPD Group retail analyst Marshal Cohen. According to the market research firm, sales of items like these rose 13 percent during a recent 12-month span, and they now represent about 17 percent of the entire clothing market.
With yoga pants now gaining acceptance as legitimate office attire, marketers would be wise to focus on casual, comfortable choices and classic styles rather than passing trends. Highlighting long-term durability and socially responsible manufacturing will turn Millennials' heads even more.
Everybody has to eat, but today's consumers have more options than ever. As a result, Millennials have set themselves apart a bit when it comes to their distaste for low-quality fast food. This is also a symptom of a larger wake-up call going on in America. Poor eating habits are catching up to us, and as a result, sometimes the best food marketing has little to do with taste, and everything to do with nutritional value.
And it's not just the restaurant franchises that are seeing hits. Food giants like General Mills are suffering from sales slumps that they largely attribute to Millennial shopping habits. These shoppers are helping to lead the charge when it comes to sustainable, organic, and healthy food choices. According to Nielsen's Global Health and Wellness Survey, Generation Z is actually the most concerned with health, with 41 percent saying they would willingly pay a premium for "healthier" products. About 32 percent of Millennials and 21 percent of Baby Boomers agree.
McDonald's is suffering more than most from the healthy food movement as more and more options crop up for hungry, on-the-go Millennials. As evidenced by the surge in Millennial sales of convenient store foods, these consumers still want to be able to pick up food fast as they go about their busy days. However, they are also flocking to fast-casual restaurants like Chipotle and Panera, where they are willing to pay up for healthier, more customizable options.
Marketers are wise to focus on nutrients, freshness, and quality when it comes to food, since Millennials are willing to pay up for better choices. Just make sure all health and quality claims are genuine and well-supported, otherwise your efforts are likely to backfire. Based on the Nielsen study, 63 percent of consumers globally are skeptical about food health claims, so marketers need to prioritize transparency, no matter what products they are selling.
And as for greasy fast food joints like McDonald's? They will either need to drastically change their offerings or change who they market to -- because Millennials just aren't buying it.
Chloe Della Costa is a contributing writer for iMedia Connection.
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"Stressful shopping" image via iStock.