Partnership as important as R&D in cutting edge
November 18, 2016

The vast volume of data on consumer behaviour available today means that marketers now have more powerful tools at their disposal than at any time in the short history of the industry. It is baffling, then, that instead of segmenting their target markets down to the finest nuances of preference, demand and activity, they insist on creating the bluntest instruments possible.

The worst examples are to be found in generational theory, which originated with the so-called Baby Boom generation born after the Second World War. Next came Generation X, supposedly those born in the late 1970s and early 1980s, and Generation Y, which hogged the rest of the century.

The fundamental problem with Baby Boomers as a marketing category is the fact it is a purely Western construct, inspired by the increased birth rate in North America and Europe from 1946 to 1964. The boom was irrelevant to the African continent. As a result, we’ve been spared most of the excesses of the baby boomer marketing boom.

However, we are now being subjected to something even worse: the millennials. These, allegedly, are people born from 1980 to 2000. Once again, it is an American construct. But, since it is not linked to a specific population trend, it is readily appropriated wherever marketers go to market.

And here is where marketing strategy is truly baffling. The age curve of millennials runs from 16 to 36. Yet, they are all being lumped into one category, with one set of behavioural characteristics. They all, the 16- and 36-year-olds alike, have the same requirements of the work environment, smartphones, and social causes.

Even a cursory glance at data on narrower age groups in this segment reveals massive differences. Demand or usage for specific products and services rise and falls in direct proportion to age – and that refers to every single year, not every double-decade.

For example, with any given new social media network or service, the take-up curve tends to be indirectly proportional to age. Any online transactional activity, on the other hand, tends to rise up the curve, along with disposal income, into the 30s, and then descends steadily beyond retirement age. The fact that the curve rises from 16 to 36 means there is a vast difference between the transactional activity of the 16-year-old and the 36-year-old.

It also means one cannot take a 10- or 20-year range as being representative of a group, or providing insight into how to market to different age groups. In many cases, closer analysis will show that the best level of accuracy one can achieve is within a 2-3-year cohort. This means that one would need to compare, say, the groups 20-22, 23-25, 26-28, and 28-30. Even within those groups, one would need to segment by education, income and even opportunity levels.

It is astonishing, then, that the fiction of the millennial still exists. How a marketer imagines that a 16-year-old exhibits the same spending or digital usage characteristics as a 36-year-old is as baffling as it is revealing. Revealing of the importance attached to labels and stereotypes in the world of traditional marketing.

It is little wonder that many traditional marketers cannot get to grips with the nuances of social media, where a five year age gap can make all the difference between who uses SnapChat and who doesn’t, and who uses HouseParty and who hasn’t even heard of it.

  • This column first appeared in Business Times in the Sunday Times on 20 November 2016. Arthur is available for talks, presentations and keynote on this topic and broader social media, digital and technology trends.

1 Comment

  1. Dasia says:

    Firstly, I think we should absolutely ban “millennials” as a marketing category, because that word is way too hard to spell. It stresses me out every time.

    Secondly: this is an interesting perspective, Arthur. I see it a bit differently: rather than dismissing the generational market segmentation approach altogether, we should start seeing it as a much smaller part of how to interpret and group consumers – much like your culture, your generation will inform your values and world-view, but not necessarily dictate them. For example, I’d wager that most 16-year-olds and most 36-year-olds think owning a start-up is better than working at a large corporate – but if you’re trying to sell e-commerce solutions to tech entrepreneurs, that information is way too broad to be useful, and you end up excluding potential customers, such as tech-savvy people in their mid-fifties exploring start-up partnerships as a secondary source of income.

    The real issue is that we’ve got so much more information at our fingertips, but we haven’t changed the principles and structures of how we deal with it. This is basically the equivalent of marketers playing solitaire on their brand new Macbooks, and wondering why they’re not seeing exponentially better results than when they played it on Windows 95. We’re still stuck in a demographic-driven model of targeting consumers, and we need to switch to a value-driven model.

    A value-driven model (or an interest-driven model, to make it a little less synergy-speak) would put the most important information at the forefront of targeting: what does this consumer actually want? Instead of trying to decode their deepest desires from an algorithm including their age, gender, race, location, education level and whether or not they have a freestanding radio in their house (that LSM question still kills me). Consumers are now actively telling marketers what they want: they Google it, they like it on Facebook, they tweet about it, they write long detailed reviews about every product and service they come into contact with. But this precious information is still seen as second-class – for now at least.

    Thirdly: Damn it. I had to google what HouseParty is, and now I feel old.

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