WHAT STARBUCKS CAN TEACH US ABOUT MARKETING TO GEN Y
Colin Shanks, Marketing Communications Manager
February 25, 2013
Marketing to Gen Y Can Be Challenging. Learn How Top Brands Are Winning Over the Hearts and Wallets of Millennial Consumers.
The Millennial generation consists of about 95 million people between the ages of 18 and 34 with a spending power of over $200 billion annually starting in 2017, which translates into roughly $10 trillion in their lifetimes. In fact, by 2017, Generation Y will eclipse Baby Boomers in spending power. Marketing to Gen Y will become more important to brands as the spending power of Millennials continues to grow.
As it turns out, there is similarity in thinking among the Gen Y population in the United States and the rest of the world. This 95-million-strong generation is motivated by three key values: the need for a feeling of connection among relationships and community, social proof that they can make the world a better place and an authenticity of seeing things as they truly are. And there should be no surprise that the one thing tying it all together is technology.
This opens up a whole new realm for brands to work in and creates an endless number of marketing possibilities for companies as they scramble to tap into this growing market’s social lifestyle. However, although Millennials share common ground worldwide, there are distinct segments with unique points of view and preferences.
Hip-ennials – 29%
“I can make the world a better place”
- Cautious consumer, globally aware, charitable, and information hungry
- Greatest user of social media but does not push or contribute content
- Female dominated, below-average employment (many are students and homemakers)
Millennial Mom – 22%
“I love to work out, travel and pamper my baby”
- Wealthy, family-oriented, works out, confident, and digitally savvy
- High online intensity
- Highly social and information hungry
- Can feel isolated from others by her daily routine
Anti-Millennials – 16%
“I’m too busy taking care of my business and my family to worry about much else”
- Locally minded, conservative
- Does not spend more for green products and services
- Seeks comfort and familiarity over excitement, change or interruption
- Slightly more female, more likely to be Hispanic and from the Western U.S.
Gadget Guru – 13%
“It’s a great day to be me”
- Successful, wired, free-spirited, confident and at ease
- Feels this is his best decade
- Greatest device ownership, pushes and contributes to content
- Male dominated, above-average income, single
Clean and Green Millennial – 10%
“I take care of myself and the world around me”
- Impressionable, cause-driven, healthy, green and positive
- Greatest contributor of content, usually cause related
- Male dominated, youngest, more likely to be Hispanic, full-time student
Old-School Millennial – 10%
“Connecting on Facebook is too impersonal, let’s meet up for coffee instead!”
- Not wired, cautious consumer and charitable
- Confident, independent and self directed
- Spends least amount of time online, reads
- Older, more likely to be Hispanic
Brands of Substance
In the Digital Age where the Internet is flooded with information, it has increasingly become more and more difficult to sift through facts and opinions to find the truth. Because of this, Millennials place a greater importance on accountability with the brands that they love, especially when it comes to corporate social responsibility and keeping promises.
“There is a new distance between the brand and consumer, and regulations such as tamper-evident packaging are having a significant impact”
A Social Economy
When it comes to marketing to Gen Y, most brands simply create a Facebook, Twitter or LinkedIn page and instantly consider themselves socially savvy. But with the average Millennial switching between digital platforms an average of 27 times per hour, their attention span is notably low. In order to escape the ‘fake friend’ persona, brands must create a more active and social experience for their followers. Companies must make it a key priority to create an easy way for Millennials to share content and engage with their brand. They also need to respond to Gen Y suggestions and feedback _- Gen Y’ers have strong opinions and want to be heard. In fact, social opinions are valued so highly that they trust strangers via blogs and forums with relevant information and experiences the most when making purchasing decisions. “Travel brands like Starwood Resorts have encouraged all travelers to contribute reviews of not just their hotels but surrounding restaurants, destinations, nightclubs, shops and neighborhoods to create a deep bench of ‘expert’ content that appeals to young travelers” (Nelson, Advertising Age, 2012). Creating positive word-of-mouth buzz around your brand and allowing customers to engage freely with genuine feedback can allow you to capture the loyalty of Millennials and keep it for the future.
Millennials consider their favorite brands an extension of their own personalities. Favorite brands are ranked with religion and ethnicity as a top personal identifier online. With a tremendously high brand loyalty (70% claiming they will always come back to brands they love), companies have an opportunity to capture one of the most free-spending powers in United States history with a little research and social media expertise. This generation also responds well to traditional marketing tactics from retail brands such as direct mail (92% influenced) and email blasts (78% influenced).
Brands Doing It Right
Pacific Foods soups realized significant advantages of shelf-stable cartons over cans such as engaging graphics, light weight feel, recloseability, easy storability and assumed ease of recycling. They also drive the perception that the product is healthier and fresher. By realizing this trend, Pacific Foods is beginning to fight a 10-year decline in soup purchases by consumers 25 and under.
Accommodating for Millennials’ diverse and healthy tastes, Trader Joe’s has begun marking all of their products with clear indicators guaranteeing the absence of artificial preservatives, gluten or trans fat.
Whole Foods has taken advantage of the explosion of Pinterest by regularly updating over 60 pin boards with recipes, kitchen design and gardening.
With nearly 1/3 of Millennials’ purchasing decisions based off of a brand’s values and a consumer base of primarily this generation, Starbucks recently launched a campaign of ‘acting locally to create impact globally,’ which met the Gen Yer’s desire of social activism.
Pepsi harnessed their innovation to develop a 100% plant-based plastic bottle, which can easily be a game changer in a ‘cola war’ over Millennials where every bit counts.
In order to build excitement, Vitaminwater created the “vitaminwater flavorcreator” in which consumers could collaboratively create the next flavor – ultimately leading to a 1000% increase in Facebook fans.
With more product variety than ever before, marketing for beverages, in particular, proves to be a constant struggle for brands. However, Diet Coke continues to be popular and is still the leading diet brand; proving Millennials often go back to ‘what they know.’
Customizable drinks are becoming increasingly popular among Millennials, so brands such as Honest Tea who offer many exotic flavors, are capturing niches large enough to attract Coca-Cola as a major stakeholder.
Jones Soda strategically sells their products where Millennials tend to gather – think surf and skateboard shops – drawing a positive correlation between their product and the emotions felt by Millennials.
Brands Doing It Wrong
Being an experience-driven generation in search of meaning, Millennials tend not to fall for the marketing ploys of luxury brands and are instead skeptical of the benefits of purchasing such a product. Gen Y is much more likely to view these brands as over priced with a perception of being pretentious.
What do you think? What brands are succeeding at marketing to Gen Y?