Millennials to outnumber baby boomers

screenshot_1586-resizedAccording to the Boston Consulting Group Millennials are going to be a critical market segment across product and service categories.  In the U.S., by 2030, Millennials will likely outnumber baby boomers 78 to 56 million.  Millennials expect a two-way mutual relationship with brands and companies must make marketing to Millennials a priority now.

Millennials expect a two-way, mutual relationship with companies and their brands. Through the feedback they express both offline and online, Millennials influence the purchases of other customers and potential customers. They also help define the brand itself. The Internet, social media, and mobile devices greatly amplify Millennials’ opinions and accelerate their impact. Companies can expect that a positive brand experience will prompt Millennials to take favorable public action on behalf of their brand. A bad—or even just disappointing—experience can turn a Millennial into a vocal critic who will spread the negative word through social media, reviews, and blogs. And that criticism can go viral.

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The conventional framework that most companies have used to approach marketing is often depicted as a funnel, with the company at one end and the customer who has made a purchase at the other. A company starts by defining the positioning, benefits, and personality of its brand. It then pushes that image down to consumers in an attempt to build awareness and, eventually, customer loyalty.

This simple description of a linear relationship between investment in brand awareness and marketing outcomes may have been valid in the past, but this framework is outdated. Instead of being a process that is led and pushed by companies, modern marketing is an ecosystem that is influenced by some factors that a company can control and some that are beyond its control. It is a system in which marketers, customers, and potential customers perpetually exchange experiences, reactions, emotions, and buzz.

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Reaching Millennials. It is not surprising that U.S. Millennials are considerably more engaged with digital technology and social media than older generations. In fact, 37 percent of younger Millennials said that they feel as if they are “missing something” if they are not on Facebook or Twitter every day, compared with 23 percent of non-Millennials.

Moreover, Millennials, as heavy users of portable devices, are also connected to brands wherever they go: 67 percent of Millennials reported that they use smartphones to access the Internet. That compares with 40 percent of baby boomers and just 20 percent of silents. Furthermore, 82 percent said that they access the Internet with laptop computers and 47 percent with tablets (up from 26 percent in 2012), both significantly higher than older generations.

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Establishing Relevance. It is more difficult through traditional marketing to convince a U.S. Millennial than an older U.S. consumer that a brand is relevant to him or her. Millennials turn to much wider networks for advice, for example. The Millennials we surveyed reported that, on average, their purchasing decisions are influenced by five people, compared with three for boomers.

U.S. Millennials reported that they are most influenced by family, friends, and strangers.

Asked to name the type of people who influence their purchasing decisions, 59 percent of Millennials listed friends—compared with less than half of non-Millennials. Of the Millennials, 52 percent cited spouses and partners, and 51 percent cited parents; 33 percent, roughly twice as many as non-Millennials, listed strangers, and 23 percent cited celebrities. Millennials were twice as likely as Gen-Xers to say that they are influenced by celebrities, four times more likely than boomers, and ten times more likely than silents. Indeed, the influence of celebrities on Millennials appears to have increased since our 2012 survey, especially when it comes to apparel, lifestyle, and luxury categories and brands.

The Internet is a more influential source of consumer information for U.S. Millennials than for older generations: 50 percent of younger Millennials and 47 percent of older Millennials said that they trust retailer websites, compared with 33 percent and 36 percent of Gen-Xers and boomers, respectively. Millennials also expressed significantly greater trust in company social media as well as digital advertising.

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Burnishing Brand Reputation. Millennials identify with brands more personally and emotionally than do older generations. Fifty percent of U.S. Millennials ages 18 to 24 and 38 percent of those ages 25 to 34 agree that brands “say something about who I am, my values, and where I fit in.”

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Cultivating Relationships. To sustain Millennial loyalty to their brands, companies must engage Millennials individually and in small groups through direct, two-way communications. More than other generations, Millennials desire opportunities to interact with brands, to be listened to anywhere and anytime, and to have personal, timely, and straightforward communication about their concerns and experiences.

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Keeping the Message Relevant. To engage and win over Millennial consumers, it is critical to make sure that marketing messages, brand communications, and tone resonate. Millennials’ response to the same visual images differs from that of their parents, for example. Companies should strive for messages that speak authentically to the attitudes, beliefs, preferences, and personalities of U.S. Millennials. Because Millennials are such a diverse generation, moreover, communications should also be tailored to appeal to Millennial segments.

Implications for Marketers

Companies targeting the Millennial generation should align their strategies, initiatives, and investments around the reciprocity principle. To make well-informed investment and business decisions and position the company to target consumer segments, executives and marketers need an integrated, comprehensive view of consumers across channels and in terms of their lifetime value as customers.

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If they haven’t already begun to do so, companies must transform their marketing organizations in at least three ways. First, there should be fewer organizational silos separating such functions as digital marketing, private-brand organizations, public relations, analytics, and pricing. Second, they must build the new organizational capabilities and partnerships required to succeed in a reciprocal ecosystem. Third, companies should shift marketing investment from traditional media to more innovative media and tools that can measure short- and longer-term returns from marketing.