A recent study reveals the habits, wants, and needs of this vital consumer group.
In contrast to their reputation as a lazy, entitled generation, U.S. Millennials are actively engaged in consuming and influencing – and their habits are distinct from those of earlier generations in several important ways, according to a recent survey of 4,000 Millennials (ages 16 to 34) and 1,000 non-Millennials (ages 35 to 74) conducted by The Boston Consulting Group (BCG), Barkley, and Service Management Group (SMG).
First of all, Millennials are the next generation of home buyers. If they aren’t able to purchase a home right now, they are keenly interested in decorating the condos or apartments they are living in. This means that they are a lucrative target audience for stores offering lighting, furniture, and home accents. This demographic is different from the home buyers of the past.
“Don’t believe the hype that Millennials consume less than previous generations,” says Christine Barton, a partner at BCG, a leading management consulting firm. “On average, [American] Millennials already shell out and influence the spending of hundreds of billions of dollars annually – an amount that will only increase as they mature into their peak earning and spending years. Those companies that truly ‘get’ this generation will have an opportunity to differentiate themselves and forge profitable long-term relationships with Millennial consumers.”
The study’s findings are discussed in a new BCG report, The Millennial Consumer: Debunking Stereotypes (available at www.bcgperspectives.com). Among the key takeaways:
To a surprising degree, Millennials are a generation actively engaged in consuming and influencing. They are optimistic about the ability of business and government to affect global change.
- Millennials and non-Millennials spend roughly the same amount of time online, but Millennials are more likely to use the Internet as a platform to broadcast their thoughts and experiences and to contribute user-generated content.
- Millennials are far more engaged in activities such as rating products and services (60% vs. 46% of non-Millennials) and uploading videos, images, and blog entries to the Web (60% vs. 29%).
- Millennials put a premium on speed, ease, efficiency, and convenience in all of their transactions. For example, they shop for groceries at convenience stores twice as often as non-Millennials.
- They are receptive to cause marketing and are more likely to choose products whose purchase supports a cause (37% vs. 30%).
- Of Millennials who make direct donations (34%), almost half donate through their mobile devices (15%), compared with only 5% of non-Millennials.
- Millennials rely much more on recommendations from peers or friends than from “experts.” For this generation, the meaning of expert – someone with the credibility to recommend brands, products, and service – has shifted from someone with professional or academic credentials to potentially anyone with firsthand experience, ideally a peer or close friend.
- More Millennials than non-Millennials reported using a mobile device to read user reviews and to research products while shopping (50% vs. 21%).
- “Crowd sourcing” – tapping into the collective intelligence of the public or one’s peer group – has become particularly popular among Millennials.
- Millennials are much more likely than non-Millennials to explore brands on social networks (53% vs. 37%).
- Millennials are true “digital natives” who are extremely comfortable with technology and social media. Using these new tools is a natural, integral part of their life and work. They also consider themselves fast adopters of new technologies and applications.
- When it comes to making purchases, Millennials are far more likely to favor brands that have Facebook pages and mobile Web sites (33% vs. 17%).
- They overwhelmingly agree (47% vs. 28%) that their lives feel richer when they’re connected to people through social media.
- Millennials are far more likely than non-Millennials to be the very first, or among the first, to try a new technology, and they tend to own multiple devices such as smartphones, tablets, and gaming systems.
- More Millennials than non-Millennials reported using MP3 players (72% vs. 44%), gaming platforms (67% vs. 41%), and smartphones (59% vs. 33%), while more non-Millennials reported using desktop computers at home (80% vs. 63%) and basic cell phones (66% vs. 46%).
- As a result, American Millennials are also much more likely to multi-task while online, constantly moving across platforms: mobile, social, PC, and gaming.
“This is a generation that engages with brands, channels, and service models in new ways that have been instrumental in creating our current ‘participation economy,’” says Jeff Fromm, executive vice president at Barkley advertising agency and the founder of Share.Like.Buy, a Millennial marketing conference. “Since these consumers are always in a hurry, it’s critical to determine how you can get them to spend time developing a relationship with your brand.”
The research also found that although Millennials’ perceptions of themselves are generally favorable, non-Millennials tend to view them more negatively. These perceptions may be coloring how executives view the Millennial consumer, preventing companies from understanding and fully addressing the product and service needs of this generation.
“If executives have negative and dismissive feelings about Millennials, they won’t be able to provide relevant products and services that resonate with these consumers and meet their needs,” states Barton, who also serves as an advisor to BCG’s Center for Consumer and Customer Insight. “There is potential for differentiation and an advantage for companies that not only deeply understand, but also embrace this generation.”
The 6 Key Consumer Segments of Millennials
The research identified six distinct segments of American Millennials that could help companies improve the ways they develop their marketing, brands, and business models reach this increasingly important audience. These segments are as follows, along with representative quotations:
- Hip-ennials (29 percent)—“I can make the world a better place.
- Millennial Moms (22 percent)—“I love to work out, travel, and pamper my baby.”
- Anti-Millennials (16 percent)—“I’m too busy taking care of my business and my family to worry about much else.”
- Gadget Gurus (13 percent)—“It’s a great day to be me.”
- Clean and Green Millennials (10 percent)—“I take care of myself and the world around me.”
- Old School Millennials (10 percent)—“Connecting on Facebook is too impersonal, let’s meet up for coffee instead!”
While oversimplified to highlight differences, these categories reveal significant variances in the attitudes and behaviors of U.S. Millennials, a group that numbered 79 million last year and is projected to far outnumber Baby Boomers (78 million to 56 million) by 2030.
“Understanding and recognizing these distinct segments and their nuances is essential for companies that hope to develop effective product offerings, marketing campaigns, channel strategies, and messaging,” Barton notes. “A one-size-fits-all effort will fail to connect with every Millennial segment.”
The Implications for Consumer Companies
So what does all this mean to companies and their brands? For some, a fundamental reinvention may be in order. For instance, brands that target teenagers, college students, or young adults may have to be rethought for each successive generation.
In other cases, companies may need to figure out how to introduce their brands to Millennials at the appropriate life stage. Still, for others, reaching Millennials may require more relevant and resonant marketing messages. Some brands – such as Nike and Sony – are favorites among Millennials and non-Millennials alike, and must try to remain so. Others, such as Target and Apple, appear to have an edge with Millennials.
“Some may argue that the peak spending years of the Millennials are far enough in the future that companies can take their time in developing well-targeted, appealing products and services. We believe that staying on top of Millennial trends is critical because they will ultimately influence today’s big spenders, the 35- to 74-year-old non-Millennials,” notes Chris Egan, COO of SMG, a customer experience analytics agency.