Posted by Brian Berg Google+
Each generation experiences and understands the world around them in a very different way to either the generation that went before, or that which will go after. These patterns and behaviors naturally affect spending habits, which affects economies, which affects all of us. Capturing this data to be used in consumer mailing lists has become vital for big data warehouses. Many argue for instance, that the current economic crisis is the direct result of the baby boomer’s taste for high spending, low saving and little or no aversion to debt. Generation Y, might turn the global economy back around with their high savings tendency and aversion to advertising and excessive consumerism.
There are presently three relevant generations to compare when we look at spending habits. There is a lot of deviation in terms of exact dates to differentiate the generations, to avoid getting bogged down in the details this article will refer to time periods rather than dates.
Baby Boomers
Baby Boomers are post WWII generation. The term refers to the population boom that occurred after WWII when the men returned from the war front, married their sweethearts and nine months later a remarkably high number of babies were born. The baby boomers are presently in their late ’50s and early ’60s and contemplating retirement. What really differentiates the baby boomers was that they lived in a time when the world was getting better every day. The Great Depression and WWII were both behind them. Theirs was a time of fast growing economies, infrastructure and technology as well as increased rights for women and minority groups. They were cutting edge, life was exciting and they had nothing to fear.
The baby boomers were not cautious, they did not save and they did not fear debt. Today the spending habits of the baby boomers has shifted substantially, as they approach retirement the reality of spending more than saving has hit. The baby boomers are now tending to be more frugal, paying off debt and saving for the years ahead.
Generation X
Generation X are the children of the baby boomers, they are mid-way through their careers and referred to as the middle generation with kids on one side and elderly parents on the other. This generation knew that their world would be a more difficult place to live in than that of their parents. Generation X’ers are earning comparatively less than their parents did at the same age. This group avoided the conspicuous expenditure of their parents, they tended to be much more cynical and wary of advertising.
Generation X is the first of the information generations. Currently they are the family generation, their focus is much more on leisure time activities and quality of life than flashy spending and concern for keeping up appearances. They are generally described as the more savvier, street smart group, with a strong entrepreneurial streak.
Generation Y
The Generation Y group is the group graduating college and entering the job market. If we must put a date to it, this group was born from the early 1980′s to a year or two into the new millennium, which is why they are also referred to as the millennials. This generation is the information overload generation, growing up in the time of mass media, internet and social media. This is a brand conscious group, very aware of what is going on around them. This group is also heavily influenced by the culture of ‘self-esteem’ and tends to be very confident with a strong sense of entitlement.
The 2007 economic crash, high unemployment and continued global recession has had a heavy impact on this group. The days of unreserved spending are gone and generation Y’s tend to have a higher savings culture than the baby boomers did. A survey from Bankrate.com found that 24% of Y’s have more debt than they do savings, while 31% of baby boomers have higher debt. The generation Y’s also tend to be less taken in by advertising as they are fairly immune, but are very eager to have a cause and to feel that they are contributing to making the world a better place. They are more likely to support a store with environmentally sustainable practices for example.
The Generation Y’s are also postponing their youth for as long as possible, with poor job prospects, your average Y is more likely to spend a few years backpacking around South East Asia than working their way up the corporate ladder, getting married and buying a house. A number of theories have been put forward to explain this, one is the economic crisis; second is that the Y’s have seen their parents unhappy in their jobs and marriages; and a third is possibly the sense of entitlement and high ego of the Y generation which makes them too impatient to start at the bottom and take a lifetime to struggle to the top.
Understanding generational theory and how that affects spending habits and consumer mailing list data is very important for marketers to know how to market their products and to whom. This information is relevant to more than just marketers though. Ultimately the secret to not repeating our parents’ and grandparents’ mistakes is to understand not only what they did wrong, but why they did it too. As every generation has a distinct spending pattern, so too does every generation have a specific effect on the long term economy. Noting these patterns could give you a key advantage in marketing and many other aspects of business.