The foundation of successful branding lies in understanding what makes consumers do what they do. Many brands struggle with a good problem. They offer myriad products and services that can be consumed by almost anyone at any age. These are truly “mass market” offerings. Consider natural foods; anyone over 6 months of age can use these products and enjoy the benefits of a healthier diet. But no marketer has an unlimited budget, and mass marketing can often be too generalized to be optimally effective. So how do brands determine who to market to and how to spend their marketing budgets? One way is through segmentation and targeting by generational cohorts.
Generational cohorts, or “generations” as you might also know them as, are comprised of individuals who are grouped together based on age. These individuals may vary vastly in life experience and other demographics, but consumer research consistently shows that the people in a particular cohort tend to have similar traits that help marketing professionals market to them. This is largely due to shared experiences that people have as they come of age. For example, both authors remember exactly where they were when the space shuttle Challenger exploded on live TV. That experience profoundly affected our entire generation.
Brand marketers have traditionally focused on the coveted 18-34 young-adult age demographic, and so lately there have been two generations in play: Millennials and Generation Z. The common assertion is that these large groups collectively have strong buying power, and since they are younger consumers, brands want to gain their loyalty now and nurture them as potential lifelong customers. Yet, younger consumers, especially Millennials, don’t have as much per capita buying power as did previous generations due to lower incomes, student debt, living at home well into adulthood, and a variety of other factors. Their Baby Boomer parents, another heavily targeted group of consumers, are now in their 60s and 70s and are adjusting their consumption behavior accordingly.
Alas, marketers continually ignore what might be the most important demographic group, the smallest of the cohorts, Generation X. This group may be the smallest in number, but it has the largest income and buying potential of them all. Ignore this dynamic and influential generational cohort at your peril.
Segmentation, Targeting and Generational Cohorts
Marketers of well-established brands know their customers, and so they find it helpful for marketing strategy to create consumer “personas” that depict the people they are trying to reach. A persona is graphic representation of a target audience as well as a description of major characteristics that the brand believes the average consumer in that group possesses. Generational cohorts feed into the personas. Let’s consider some theoretical personas in the natural products industry: one persona, a Denver, CO woman in her mid-30s, is an attorney with two young kids. She is a runner, does yoga and wants her kids to consume food with less salt and sugar. Another persona is a Colorado Springs man in his early-70s who is retired after 40 years in education. He cycles and walks five days week. He has high blood pressure, so he avoids salty foods. These personas are meant to represent the target audiences who are defined by the Millennial and Boomer generational cohorts.
Marketers who want to more specifically target their marketing will divide the potential consumers into groups based on categories of characteristics such as geographics (location-based), demographics (age, gender, income, education), and psychographics (attitudes, behaviors, lifestyle interests). Generational cohorts are mostly defined by age (demographics) and behavioral lifestyle characteristics (psychographics). Indeed, brands conduct extensive research to better understand their target audiences and, if possible, connect them back to the generational cohorts.
Generational Cohorts and Branding
Marketers began the practice of using generational cohorts to segment potential consumers in the late 20th century. These groupings allow brands to think in age-based terms first and then narrow the audience based on other traits of the members. The age ranges for each group and relative sizes are important, but it’s the combination of characteristics of the groups that help marketers decide what products to offer to which people, at what prices, in which places, and with what messaging.
Baby Boomers (Boomers): 1946–1964 – The Boomer group represents approximately 70 million people in the U.S. The name is derived from the population explosion at the end of World War II. Boomers grew up during a time characterized by frequent product innovation and major social change. The prosperity of the post-war United States drove many Boomers to be first generation college graduates who then went on to earn high incomes and generate large amounts of uninherited wealth. This currently represents about 54 percent of U.S. wealth. Boomers have been retiring in large numbers, but many still work at least part time. According to the Bureau of Labor and Statistics, Boomers have an average annual household income of about $78,000. Most Boomers readily adopt technological advances since so many advancements happened during their prime work years; Bill Gates is a Boomer born in 1955 and his company, Microsoft, was responsible for many workplace innovations. Boomers use the internet regularly, are used to making purchases online, but still enjoy in person shopping and talking to real people when in need of customer service.
Brand marketers have been targeting Baby Boomers since the 1970s, but many 21st century brands, such as Spotify, will spend much less to reach this older group that they believe is not as interested in the product or whose members have already established loyalty to other brands.
Generation X (Gen X): 1965–1980 – Gen X represents approximately 65 million people in the U.S. Generation Xers are a bit of a mixed bag in that some of them are the children of Boomers and some are children of the “Silent Generation”—the parents of Boomers who weren’t really all that silent, but whose older members might have seen so-called “silent movies.” But despite coming from two distinct generations, Gen Xers do retain a certain set of traits. They are self-sufficient and hardworking “doers” who prefer less talk and more action. Gen Xers are children of the “women to work” Boomers and spent lots of time on their own. Gen Xers are technologically advanced and are often early adopters. Xers grew up with the inventions of Jobs and Gates, and later became inventers themselves. Google was created by two Gen Xers; Jeff Bezos and Elon Musk are also Xers. Gen Xers are well educated and seek out information. They are also extremely brand loyal; because they like to get things done, they look for quality and reliability. And when they find brands that meet those needs, they tend to stick to those brands. But Gen Xers remain open to brands of high value.
Brands spend some money to target Gen Xers, but mostly expect to reach older Xers through targeting younger Boomers and younger Xers through targeting the older Millennials.
Millennials (also Gen Y): 1981–1996 –Millennials, formerly called Gen Y, represent approximately 72 million of the U.S. population, and are primarily the children of well-established Boomers and have benefitted from their parents’ high standard of living. They enjoy having the finer things in life, yet, due to lower overall incomes than the previous two generations, they have trouble affording them. Because of the comfort that many Millennials grew up with, they tend to be less brand loyal and instead change brands as they age. Millennials grew up with the internet as a tool for information and they use knowledge to make decisions and purchases. Millennials can be heavily influenced by those they trust; they listen to their friends and family when it comes to brand choice.
Brand marketers spend much of their marketing budgets trying to generate Millennial sales and loyalty, not just because they are the largest cohort in size but also because they are younger with many years ahead for brand loyalty. Brands continue to focus heavily on this group despite the lower incomes and high brand switching behavior, often at the expense of the lucrative Generation X cohort.
Generation Z (Gen Z): 1997–2012 – Gen Z represents approximately 67 million people in the U.S and are primarily born to Gen Xers and older Millennials. Notably, they retain many qualities related to self-sufficiency that we see with Xers. They embrace all forms of self-serve apps and dashboards. They are the generation who cannot live without their smartphones, and yet very rarely use them to have a voice conversation. They are more than digitally native; they don’t use much traditional media and expect that the brands they use will communicate with them digitally. If a brand is not on the “Socials,” most members of Gen Z will never find them. They also dominate when it comes to video consumption, tend to be less brand loyal, and are interested in new and unique brands that may have a specific, “niche” application.
Much of this generation is still in childhood with limited spending power but brands have been increasing their Gen Z spending in the hopes of gaining their trust and loyalty, which is not easy, since they have grown up with an immensely short attention span in an era of tweets and SnapChats. Now with Tik Tok, brands have about seven seconds to make an impression. Which marketing strategies and tactics will prove to be the most effective remains to be seen.
Gen X Mythology
It is clear from the ads we see every day that brand marketers tend to focus attention and marketing dollars on Millennials and Gen Z at the specific expense of Gen X. If we look at pure numbers, Gen X is the smallest cohort and sometimes marketers think the smallest target requires the smaller marketing budget. Smart marketers know that the size of the group does not necessarily define it’s buying power, and in the case of Gen X, the buying power per person is technically the strongest of all the groups.
There is also the perception of Gen Xers being an apathetic cohort of “slackers” who are largely disinterested in brand messaging and have little to no loyalty. If this were ever true, it is certainly an old construct. Xers have become fiercely brand loyal as they have aged, and marketers of the brands they use should be working to introduce them to new products and services while competitors should be working to convert the group, knowing that any conversion may lead to a new lifelong customer.
Probably the most egregious misperception regarding the marketing potential of Gen X relates to their buying power. As the “slacker” generation, there is a notion that Gen Xers have mediocre careers and mediocre incomes. Once again, this is patently untrue. Gen Xers got things done early in their careers, and then enjoyed promotions to leadership role with higher incomes. Many will retire early.
The perception of these negative traits discourages marketers from spending precious marketing dollars to reach this audience, especially if there is belief that they won’t purchase! Marketers need to consider the real Gen X factors and quit ignoring their buying power.
X Factors
Factor 1 – General Buying Power: As of 2020, there were approximately 65 million Gen Xers. And according to Business Insider and the Bureau of Labor and Statistics 2020 Consumer Expenditure Survey, they possess approximately $10.3 trillion in “equity assets” and have an annual household income of approximately $114,000. Millennials, on the other hand, have an annual household income of approximately $85,000 and “equity assets” of approximately $1.5 trillion. Gen Xers do indeed have more income and assets than other cohorts.
Factor 2 – Not Apathetic and are Brand Loyal: As for the perception of the “slacker” generation, the reality is that Gen Xers spent so much time alone that they learned to be self-sufficient and get things done because they had no choice. For example, if you wanted lunch, you had to make it. They rely on brands that are known for quality and reliability—brands that get things done. When they find those brands, they tend to stick with them.
Factor 3 – Leaders with Income and Influence: Gen Xers currently hold the majority of positions of leadership in corporate America, and hold sway over the younger cohorts like Millennials and Gen Z. They are decision makers in the workplace and often share their rationale with the other cohorts. Gen Xers are currently gainfully employed in higher paying leadership positions, and therefore may have much more overall disposable income, even though the cohort is technically smaller than the Millennials.
Factor 4 – Technologically Advanced: Gen Xers are technically savvy; they were the ones who could actually program the VCR clock! Xers were also early adopters in using the Internet and some of the best technology companies were created by Gen Xers (Google, Tesla, Amazon).
Gen Xers are the MTV generation; given their love of music and that they were early users of Napster (the pre-cursor to iTunes), they flocked to Pandora as the preeminent music streaming service. Because Gen Xers are rather loyal to brands, it’s harder for them to cancel one service and adopt another or switch toothpastes. This may be one reason why there is such a huge gap between the generational use of Spotify versus Pandora. Newer brands like Spotify may be missing out by not specifically targeting Gen Xers. This is also where technology and buying power intersect: Gen Xers do buy, and they buy with loyalty. Doing the work to secure them as customers will pay off with their long-term loyalty provided that the product quality remains high.
According to the Corporate Finance Institute’s overview of Gen Xer attributes, Apple is their favorite brand by far. What company has a stronger commitment to product quality advancement than Apple? Gen Xers would likely switch to Spotify given the more technologically advanced features of the streaming app if Spotify would simply put forth the effort to gain them as customers.
When it comes to the natural products industry, one could easily draw a similar conclusion when evaluating how Whole Foods and Sprouts market to various age cohorts. Since Whole Foods was started by a Boomer, and therefore Xers grew up with Whole Foods in their lives, they possess a distinct loyalty to Whole Foods. If Sprouts wanted to convert those Xers, they would need to focus their efforts to speak to Xers and get them to try their stores. Alas, they seem to be focused on Millennials.
Converting a Generation
Targeting Gen Xers, or any Cohort for that matter, takes strategy and a step-by-step process. It also requires developing creative assets that appeal to the Xer. Brands need to take the following steps to get started in refocusing some of the marketing effort to reach and convert Xers to the brand, fostering more sales and long-term loyalty from the Gen X Cohort:
1. Use research and data to determine Gen X populations in certain geographies related to brand’s products and services
2. Create multiple personas based on key traits of Gen Xers in the geographies
3. Match the personas with segmentation information from marketing channels
4. Determine how many Xers are using what marketing channels
5. Determine marketing spending based on reaching and converting Gen X consumers per top 5 channels
6. Create media assets designed to reach Xers that also fit within the framework of the channel—Facebook post, Instagram post, Tweet, etc.
7. Launch and track marketing plan focused on Xers
Clearly, a concerted marketing focus on Gen Xers would increase brands’ sales and long-term loyalty from this cohort, especially when the brand shows that it values this cohort and their buying power. Boomers are spending less and less, Millennials are still struggling in a variety of ways, while Gen Z is still an emerging group with very little buying power. Continue to ignore Generation X, and you will certainly fail to optimize your brand’s potential. NIE
Gen Xer, Darrin Duber-Smith was president of Green Marketing Inc. from 2000-2016, was the recipient of two Wall Street Journal Awards and has been one of the most interviewed marketing experts in the U.S. since 2005. He has been senior lecturer at Metropolitan State University of Denver since 2003 and can be reached at [email protected].
Gen Xer, Laurel Lane was a digital marketing professional from 1998 until 2016, and then joined Metropolitan State University of Denver as a marketing lecturer, where she teaches digital marketing courses.
