Welcome to Throwback Thursday, in which we dig into the Marketing archives to find the most intriguing pieces of content. The purpose here is not to poke fun, but to see just how much some things have changed – and just how much some things have stayed the same.

In this edition of #TBT we go back to February 2007 – and a still-very-current topic – for an article by Richard Batterley, who believes we should put the concept of Generation Y in the trash.

Has there ever been so much hype? Have so many people ever focused on a single concept? Right now what’s the easiest way to get a supposedly learned article published in professional journals? The answer is one phrase… Generation Y.

That mass of 4.2 million Australians aged between 11 and 25 years of age. As part of the 2006 Orion Academic Congress, a journal called Orion Observatory was published. In his editorial preamble in this journal Professor Peter Jones from Thames Valley University in the UK said: “Generation Y, Generation M or ‘netgeners’ – amongst many other tags – is a somewhat arbitrary academic distinction.” And frankly I couldn’t agree with him more. But maybe I would put it somewhat less tactfully.

In recent years marketers have been trying to reduce the size of markets they attack, to reduce the scale of their marketing campaigns, to fragment their messages and more accurately target them to smaller markets. Why? Because hard earned experience has shown them this type of approach to their markets delivers better ROI, more cost-effective outcomes. So when social research comes up with a concept that provides us with a single homogenised market of 4.2 million young Australians, it is not surprising experienced marketers view it with some scepticism. From a practical marketing perspective the question has to be asked: where does the Generation Y concept belong, on a pedestal or in the trash? There are two sides to the question marketers need to consider.

The first aspect of the concept to question is whether or not marketing can cost-effectively reach out to 4.2 million individuals. If we accept that those in the 11- to 25-year age range really are a single homogenised market who have the same needs and wants, can any organisation truly afford the huge costs associated with reaching them all, frequently enough to have any impact? Let’s put the little matter of cost-effective results and acceptable ROI to one side for the time being.

And if we accept Generation Y as a market that we can communicate with cost-effectively, can business meet the demand for products such a huge single market will generate? Can they produce the millions of mp3 players, the tens of millions of CDs etc. a market this scale will consume?

The second thing we must ask is if those 4.2 million young Australians really are a single market, do they all have the same character traits (indeed do they have the character traits ascribed to them by the social researchers who have defined Generation Y?), the same demands, the same tastes, the same needs? Or are they in fact many different, highly segmented and differentiated markets?

Common sense would give us the answers to both those questions. But with all the hype, attention and coverage Generation Y (and before it, Generation X) has received perhaps we need to review it and apply some rigorous testing as opposed to plain simple common sense.

‘Gen Y’ under the spotlight

One group of social researchers who have propagated the Generation Y theory have ascribed  nine character traits to our 4.2 million young Australians:

• street smart,
• aware,
• lifestyle centred,
• independently dependent,
• informal,
• tech savvy,
• stimulus junkies,
• sceptical, and
• impatient.
• Another view of them is that they are:
• apathetic and conservative,
• inclined to attend demonstrations,
• cynical of both sides of politics,
• totally into religion and marriage,
• ambitious and materialistic,
• demanding of employers,
• focused on personal goals,
• totally in love with their mobile phones, and
• inclined to move from the corporate arena to an early sea change.

Hmm, is there no consistency, no clear picture of what this amorphous mass of 4.2 million young Australians are really like? Can’t anyone paint a clear, simple and singular picture of them? Understandably, no!

Understandably, 4.2 million people are far too great a mass to manage and market to as a single entity. We need to break it down into smaller, more manageable groups – grind the massive boulder into easily moved buckets of sand.

The theory is that the 11- to 25-year age group have a common set of character traits; therefore, as marketers, we should be able to talk to them in the same tone and manner, make the same offers to them, use the same media to reach them.

Why? Well if you extend the theory it suggests they have the same interests, disposable income, educational achievements (and capabilities), lifestyle, occupation, ethnicity, taste, technology availability and capability etc. All that means marketers can treat them all the same.

Clearly not the case. You see, young Australians aged between 11 and 25 are not a stereotyped homogenous mass; they are clearly a mass of unique and quite different individuals, an ever-changing and flexible mass of evolving stars.

It’s interesting that the social researchers, those propagating the Gen Y concept, talk all about what this massive group of people think and feel… whereas practical marketers are much more interested in what their prospects have the ability to do.

We believe we can influence what you think and do. Let me give you an example.

Most of us would love a luxury car – Rolls Royce, Ferrari, Porsche. We think about having one. But we don’t have the ability (in this case disposable income) to buy one, so it’s irrelevant to the marketers of those vehicles what we think, what our approach is. They focus their activities on those who have the ability to buy one and then try and influence what they think about the vehicle and owning one.

So step one is ability, and only when we have the ability should marketers think about step two, which is think, feel and approach – all those things that apparently identify Generation Yers. In an era of precision bombing, pinpoint targeting in marketing, why are we being encouraged to use highly wasteful target definition methods?

Consider the wastage ‘over mass marketing’ will (and does) cause. The theory of diminishing marginal returns is simple when applied to the results achieved from marketing activities. We have to spend more than double our initial budget to increase sales by as little as 15%; cutting spend by 50% might only reduce achieved sales by 20%.

So maybe the approach for marketers is halve the spend in one area, achieve 80% of sales there, spend the other half of your budget elsewhere and achieve another 80%… making 160% in all. Marginal increases on sales are a lot less cost-effective to achieve than first sales.

How do we break down these ‘over mass markets’ into smaller, more cost-effective segments? We simply use the many pieces of information we can gather from multiple sources about our prospects to segment a previously over mass market into several niche markets and constantly increase the ROI achieved from our marketing efforts. And considering all of Gen Y as one market is a massive mass market, too big, too many different niche markets – a truly ‘over mass market’.

Once we have clearly established our target markets by ability to purchase a product or service, only then do we try and reach into their mind with all ‘the rights’ (right product, right price, right message, right offer, right media, right channels etc.) to try and influence them to act on their ability and buy.

We asked three marketers what they thought of using the Generation Y concept as the basis for their targeting and segmentation:The marketing manager at a major bank said “for us to consider all of the so-called Gen Y as one market would be wasteful and inefficient… at 11 or 12 someone’s financial and banking needs are very different from someone of 25… and at 25 there are many different groups with different needs for us to consider. So Gen Y doesn’t work for us.”

The record company product manager: “Wow! The difference in musical taste varies with every few years… so at 11 it’s one thing, at 15 another and at 25 something else. We’d never think of this Gen Y thing as a single market… just wouldn’t happen for us.”

The telecommunications sector manager: “While we think everyone in Generation Y is totally into their mobile, their demands change as they grow older… from parent-driven security blanket used for emergency calls and so simple products, through must-have status symbol using a lot of text messaging on pre-paid to an essential communications tool using full services including even television. So Generation Y is not one, but many different markets for us.”

Exposing the myths

One of the ‘great symbols’ of this so-called generation is the mp3 player. But when you dig into the statistics of mp3 and ‘podcasting’ it rather dispels the myth:

• 30% of all mp3 players are bought by people over 40 years of age
• 40- to 54-year-olds account for more podcast downloads than any other group
• 81% of ABC downloads are done by males
• BMW has now included a direct mp3 player jack plug in its new vehicles (how many Gen Yers are buying new BMWs?), and
• more than 50 percent of mp3 player owners are no longer students.

So, Generation Y… the big users of mp3 and podcasting? Hardly! And some of the other ‘symbols of generation Y’ are not new; they’ve been around since the baby boomers were teenagers:

• small portable personal music players – today it’s the mp3, in the 60s it was the transistor radio
• trendy, efficient two-wheeled transport for inner city living – today it’s the Vespa motor scooter; in the 60s it was the Vespa motor scooter, and
• media covering special interests such as the music of the age – today it’s New Musical Express delivered online; in the 60s it was New Musical Express delivered on paper.

 

So nothing has really changed in the approach of teenagers and young adults, maybe the technology of the communication, but not the feeling and thinking (which is, after all, what we are told makes Generation Y different from the rest of us).

Embracing change 

One thing is certain about today’s world: change is inevitable. This is something marketers must take account of. Jack Welch once said, “Once the rate of change outside an organisation is quicker than the rate of change inside, then the end is in sight.” Progressive businesses change and evolve themselves every three to five years. Russia, at its monolithic height of communism, had a series of five-year plans, each promoting change.

Today’s geo-demographic market segmentation tools (such as MOSAIC) change and refresh every three years. And even the Australian Government gathers new data about us all in its census every five years.

But we are expected to accept a 15-year age span, where more changes occur than during any other period of a person’s life, as a single homogenous group. It’s a period of differences and change, and marketers get better outcomes, better ROI, when they market to the differences that make us individuals, rather than the similarities that categorise us into groups.

Let’s look at just two of the transitions we might go through as we progress from 11 to 25.

Where the money comes from:

• under 13 years of age, 89% comes from the parents and only four percent from a person’s own efforts,
• 13 to 16 years of age, 61% comes from the parents and 32% from earned efforts
• 17 to 20 we have 37% coming from parents and 56% from earned efforts, and
• 21 to 25 gives us 7% from the parents and now 87% from an individual’s own earned efforts.

Educational changes:

• at 11 or 12 we move from primary school to high school – and, once there, there are many different options available too,
• at about 18 we possibly move into higher education (university or TAFE), and
• at 21 or so we move from our place of further education into the workforce – maybe continuing with studies there.

Other major changes in those formative years might include our attitude to our family, the computer games we buy, our means of transport (bicycle to public transport to car) etc. Even (or maybe obviously) the products we purchase vary as we progress through the 11- to 25-year age range.

With those and many other changes happening, at different stages in different people’s lives, how can we possibly consider all the 11- to 25-year-olds as a single group?

Answer: We almost certainly can’t… so the Gen Y concept is closer to the trash than on a pedestal. The myth is almost busted.

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This article is based on a presentation made by Richard Batterley at the 2006 Orion International Hotel Schools’ Annual Congress. It was published in the February 2007 issue of Marketing.

Richard Batterley was, and still is, chairman of The Relationship Alliance and author of Leading through Relationship Marketing (McGraw-Hill).