Rapaport Magazine

Millennial Mindset

Technology, immediate access to information and the economy have shaped how Millennials view the world. And their attitudes are impacting other generations.

By Shuan Sim

Defining the Millennial generation can be tricky — every study uses its own metrics to demarcate who is and who isn’t a Millennial. One method is by age, using the general range of 1980 to 2000 as a guideline. The U.S. Census Bureau defines Millennials as those born between 1982 and 2000, while the Pew Research Center defines the age range as those born from 1981 through 1996. The parameters can skew as early as 1977 — according to FutureCast, a Barkley division researching Millennials — to as late as 2004 — as defined by Forrester Research, a research and advisory firm. Whatever the method of calculation, one thing is clear: The Millennial generation has surpassesd the Baby Boomers — a generation defined as being born from approximately 1946 to 1964 — to become the largest age demographic in the U.S., according to the U.S. Census Bureau (see “U.S. Millennials by the Numbers,” page 43). As a result, brands and companies are paying special attention to this group.
   Analysts agree, however, that simply using age to define and understand Millennials as consumers is inadequate. “The Millennial consumers have changed so much over the past few years and we’re still compartmentalizing them by age. We need to look at them by their mind-sets and life stages,” says Marshal Cohen, chief industry analyst at the NPD Group, a market research company with multiple offices across the U.S. “If we talk about a ‘Millennial shopper’ and simply go by age, the younger Millennial doesn’t have kids but the older Millennial might,” Cohen explains. “The moment Millennials have kids, their lifestyle changes. Looking at Millennials by age is antiquated and so is looking at consumers by generation segments.”

Mind-sets, Not Age Sets
   Examining what constitutes the Millennial mind-set, or psychographics, provides a better way to market to Millennials, since the impact of the Millennial mind-set does not end at those who are in their early 30s, notes Jeff Fromm, president of FutureCast in Kansas City, Missouri. Older consumers who do not fall within that age bracket are invariably affected by Millennials, and some could even qualify as being one. “A lot of Gen X, and even Boomers, are starting to converge with Millennials on a lot of topics,” says Fromm. “Many Gen X people, born from approximately 1965 to 1979,” continues Fromm, “are on their smart phones using peer networks, embracing brands about fairness. They’re starting to resemble Millennials more and more, but with some differences,” he elaborates. “Those aged 40 to 55 might not be the first to adopt these new developments, but when they see how easy it is, they will try it, too.”
   Ben Smithee, chief executive officer (CEO) of The Smithee Group, a Millennial consumer consultancy in New York City, attributes this convergence as due to the generational dispersion of information. “This is the first generation where impact is both up- and downstream,” Smithee says. Millennials are not only influencing their peers, but also their parents and grandparents. The older generation is exposed not only to new technology but to new concepts and ideas, such as the idea of relying on online reviews to make purchase decisions, or even making online purchases in the first place. “These are the same people who had said, ‘Never will I ever put my credit card information on the internet,’ and now they’re doing ‘one-click’ shopping from their smart phones,” Smithee points out.
   Older generations are having difficulty understanding who qualifies as a Millennial because by the time they think they have it figured out, Millennials have already moved on from that definition, Cohen says. “Even Millennials are trying to figure out who they are, and they’re part of the group,” he adds.

What Do Millennials Care About?
Experiences: Owning material goods has become less appealing to Millennials as they seek experiences instead, such as travel and dining. Part of it is due to Millennials having entered the workforce during the 2008 recession with more debt and the fact that the group as a whole has less discretionary income. More Millennials are delaying starting families and moving back with their parents after graduating from college. According to Pew Research Center data, 36.6 percent of young adults ages 18 to 34 were living in their parents homes in 2014 (see “U.S. Millennials by the Numbers,” page 43). “Many young people would rather have the money to spend on a trip and live with parents than lead independent lives. They’re fine with it, as there’s not as much stigma to it anymore since everyone else is doing it,” Cohen says. Millennials’ existing family ties grow stronger, interestingly, as they are increasingly moving back with their parents, Fromm points out. Millennials have closer relationships with their parents than their parents’ and grandparents’ generations, he notes, adding that it increases the amount of communication and dissemination of information.
   Purchases that are typically seen as investments upon getting married and having kids, such as houses and bridal jewelry, are relegated in favor of purchases more common to single young folk. “If I am not married and don’t have children, I can drop everything and go away for the weekend, or invest in some really cool equipment,” Fromm explains.

Social Credibility: A bigger reason why Millennials prefer experiences over material goods is the bigger social cachet experiences afford. Like previous generations, Millennials seek affirmation from peers. But what gets the stamp of approval and how it is achieved has changed. “It’s about accessible luxury — things like access to a unique experience like the music festivals Coachella and Lollapalooza. They’re willing to spend thousands of dollars on these experiences,” Smithee says. To the Millennials, social credibility is not only the desire to spread influence, but also to be influenced through social media networks. “When I follow your content and you’re curating the right content that’s relevant to me personally, that’s what influence means,” Smithee explains.

Me versus We: Millennials realize caring about oneself is not sufficient anymore, but rather they place importance on caring for the larger community. With greater access to information from around the world, the Millennial generation is more globally aware. “The younger generation has always been spearheading political change. That hasn’t changed. But in the old days, you had to take a bus to go to Washington and protest,” Cohen says. Now, they can mobilize over social media and other online mediums. Millennials care about issues like social justice and responsibility and environmental friendliness and are more empowered to act on them. Brands have to engage them on that level if they are to appeal to this group, Cohen notes.
   According to Smithee, it is not just sufficient for brands to do the right thing, but also to get the message out that they are doing it. “For example, with the diamond industry, so much work has been done on sustainability. But there’s no money going into campaigns to combat the last taste in the mouth of consumers about diamonds. People are still talking about the ‘Blood Diamond’ movie that came out in 2006 when they talk about diamonds,” Smithee observes.

Luxury: Millennials still desire and demand luxury as they have been exposed to a taste of it growing up. Smithee points out that some of the most successful Instagram users are about them living the prestige lifestyle. However, Cohen notes that luxury must be affordable to Millennials for them to strive to make a purchase, otherwise they would rather it be a gift.
   Millennials would splurge on an exclusive members-only shopping service, a music festival pass or an overseas trip. For traditional luxury, including jewelry, clothing and accessories and fine dining, Millennials have no qualms requesting these items as gifts from their parents or friends. “If you look at engagement rings, Millennials are still romancing the stone but in a more affordable way. They’re looking at diamond rings where the stone is made to look bigger by being set around other stones. The previous generation would just spend every penny they had for the big solitaire ring,” Cohen explains.

Personalization: “Ultimately, luxury is going to be more about the customization and less about the price point,” Fromm speculates. Smithee agrees that selling luxury will be more about making that personal story connection, but warns that a botched personalization attempt can often be worse than no personalization at all. “The last thing a Millennial would want to receive is a mass email from a brand that says, ‘Dear Customer.’” Customization is one of the few ways in which Millennials can express not just their individuality, but also what it says about them and their beliefs, Smithee points out.

What Shapes the Mind-set
   Connectivity is what determines and shapes the Millennial mind-set, starting from when a truly connected internet took off, says Smithee. The Millennials’ desire to connect with peers remains unchanged from previous generations, but what is different is the speed and frequency of communication. “This is what really sets this generation apart from previous generations. If you think of the older Millennials — those born in the early 1980s — as being the epicenter of the Millennial mind-set, who have experienced life before the connected web and life after, they know what it is like to have the inconvenience of not having the internet.” According to Smithee, older Millennials had the knowledge of connecting with their peers by old-fashioned means via phone or mail, but also had their formative years steeped in email, and eventually early social networks in the 1990s. Older Millennials began their interconnected lives with online bulletin boards, leaving messages on public forums such as Bulletin Board System (BBS). Over time, early social networking sites such as Friendster and MySpace popped up, allowing users to pick and choose whom they wanted to connect with. Today, social media connectivity — aided by smartphones — is not just about instant communication, but about sharing through video, images and text with apps such as Instagram and Snapchat.
   The fact that younger Millennials are born into a generation where instant gratification is the norm and that they cannot understand certain inconveniences stratifies the Millennial generation. Younger Millennials are used to a barrage of instant messaging these days. “If
I were to send a young Millennial five text messages, they might think, ‘Oh, this could be important.’ However, if I were to send a Boomer five text messages, they might say, ‘Please stop harassing me!’” Cohen remarks. He speculates that this resistance to being reached out to increases the older the group gets. “Every generation has been able to multitask at a higher level than the previous generation, even within the Millennials. We’re requiring so much more to entertain and stimulate us and captivate our interests,” Cohen adds. “Accessibility has changed the pace and place where we connect.”
   Accessibility is also what allows older consumers to buy into the Millennial mind-set as they move forward into the age of the connected internet. “In the past, if I wanted to buy a car, I had to go to the dealer. Now, I can just go to my peers or look it up online,” notes Fromm, highlighting how older consumers have changed their consumption habits. Smithee points out, “You could be a 50-year-old Millennial because the Millennial impact is so big. For the first time, consumers know more about brands than brands know about consumers.”

Marketing to Millennials
   While Millennials previously had resented being singled out as a demographic mostly for marketing purposes, the generation now is increasingly embracing the elevated attention lavished upon them. “They’re going, ‘It’s not so bad, we’re getting a lot of good offers,’” Cohen elaborates. There are so many more deals catering to them — in fact, they’re probably the most sought-after customers in the past three to five years, he states.
   Moreover, Cohen says, so much attention has been placed on the Millennials that sometimes brands and companies forget there are other segments of the market. However, it is still important to engage other segments with Millennials in mind, Fromm says. “Even if you’re trying to sell to a 50-year-old, you still have to think about the Millennial mind-set. They will get their input from their children and grandchildren, and if you ignore the Millennials as a channel for information, you’re ignoring the sale,” he cautions.

The Future of Millennials
   It is true that older Millennials are raising their families differently from how the previous generations raised their own families, primarily marked by their propensity to share everything on social media. “Parents of today live vicariously through their kids. We’ve gotten to the point where the success of a parent is only as successful as their kids,” Cohen notes. However, young Millennials are still expected to transition into older Millennials and consume in the same way, just purchasing different products. Each generation group, be it Gen X or Boomers, did not drastically change the way they consumed, even as they got older.
   “The big shift will be how Millennials will handle the world being a smaller place. Things are going to travel at lightning speed,” Cohen comments on the spread of information and trends.
   For the diamond industry, Smithee believes the biggest opportunity is educating the consumers and rebuilding the diamond culture that was once there back in the 1940s and 1950s. “Brands have to change the experience that consumers have from jewelry. People are still talking about the 4Cs, but nobody knows what makes jewelry worth what it is worth. Nobody knows the craftsmanship that goes into it,” Smithee comments. “We’ve been so used to being transactional and guarding this luxury image. People have to show what’s going on behind the scenes because Millennials are going to search for the best person who can tell that story.” That is why people look for bad reviews on Amazon, because people want to know the dirt behind the facade, Smithee says. “Diamonds can’t just be about beauty and adornment anymore,” he points out.
   “Right now, Millennials aren’t at a stage where they can make investment purchases like real estate and jewelry. Their short-term consumption will be things like trips, experiences and documenting them all. However, as with any population boom, when their spending power matures — and we’re looking at being in their 40s for the Millennials — you’re going to get a bump in the economy. And if you aren’t prepared for them when they’re ready, you will be left behind,” concludes Cohen.

Article from the Rapaport Magazine - May 2016. To subscribe click here.

Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
Tags: Shuan Sim