To what extent is the consumer behaviour of Millennials different to that of previous generations in the area of luxury goods?

To what extent is the consumer behaviour of Millennials different to that of previous generations in the area of luxury goods? Haydn Leeds 12373333

What is consumer behaviour?

Consumer behaviour will vary across the generations. This is due to many key factors that influences their buying behaviour. Those that are born in different generations will have specific characteristics based upon their upbringing, that in turn, will mold future purchasing decisions. This means companies must be able to market effectively to multigenerational consumers. Due to the complexities of these generational characteristics, attitudes towards goods have adapted as the generations have changed.

What are generations?

Generational theory is based upon the principle that people who are born an approximate 20-year period will share the same set of characteristics which have been formed by numerous societal and social factors (Reeves and Oh, 2007).

Generations are widely considered as Baby Boomers, Generation X and the Millennials. Although the name of each group is agreed upon, there are many that disagree with the time span of those generations.

Baby Boomers are commonly considered as those who are born from 1946-1964 (Lancaster and Stillman, 2002). With Generation X born from 1965 to 1980 (Oblinger and Oblinger, 2005; Zemke et al, 2000). Martin and Tulgan, (2002) define Generation Y or Millennials, are those who are born from 1978. On the other hand, Howe and Strauss (2000) argue that the generation starts as late as 1982. However, both agree that the end date of the generation is 2000 (Martin and Tulgan, 2002; Howe and Strauss, 2000).

For this report, only Millennials and Baby Boomers will be analysed.

What is Luxury?

The perspective of a luxury good has changed in recent times. Most notably due to the increased accessibility of these goods. What constitutes a luxury good will differ from person to person. A common conception of is that a luxury good is one that only few can afford (Wiedmann et al, 2007). However, due to the increased access it allows for businesses to target different segments and not just the wealthy (Krapferer, 2011). This means that luxury is available to all who maybe in different generational cohorts. The changes in how luxury is perceived has meant that defining luxury is difficult with disagreement among theorists. With Kapferer (2011), suggesting that a luxury good are well constructed aesthetic objects that demand a price higher than their function.

The Consumer Decision Making Process

To fully understand the differences between consumer behaviour between millennials and Baby Boomers, the decision-making process must be applied. The process examines the external and internal influences that will affect a consumer’s decision making.

External Influences

Generations have a great influence on purchasing behaviour. This can often be problematic for marketers and so generations are grouped. Segmenting the different generations is known as general cohort marketing. Members of each cohort will share similar values, beliefs and more importantly purchasing behaviour (Parment, 2013). These are developed over a period, as members will bond due to common life experiences (Shaie, 1965). During youth experiences shared can be decisive influence in consumer behaviour later in life (Casper and Briones, 2014). Period effects derive from cohort experiences. These are historical events that will occur in a person’s lifetime and will shape consumer behaviours. Each event will influence all age groups during this time. The impact of the historic events will impact younger generations as their values are not as established as their older counterparts (Pew Research Center, 2008). The third aspect is the life cycle effect. This involves the differences between age groups due to their position on the life cycle (Pew Center, 2015a). Attitudes and behaviour will change over time and is highlighted that younger generations will differ from their predecessors. However, research has shown that as a generation ages, they will inherit similar behavioural characteristics from the older generation.

Internal Influences

Attitudes are formed as a direct consequence of being exposed to products whether the person has purchased themselves or is viewing another purchase. This can be seen in generational theory. Growing up in different generations means that attitudes towards products and brands will differ.

Branding

Brand loyalty is a key aspect of consumer behaviour. As if a consumer is brand loyal they are more likely to repeat purchases regardless of other marketing influences to change brands.

This relationship comprises of three dimensions of commitment a consumer will undergo. Those being affective, continuance and normative. Affective commitment is a consumer need for belonging to a company. Continuance meaning that leaving a brand would be costly emotionally or physically. With normative commitment involves a person’s moral sensibility towards a brand (Allen and Meyer, 1993).

However, when it comes to millennials, brand loyalty can be difficult to acquire. This is due to traditional marketing methods which are less convincing to alter their loyal perspectives (Bush et al, 2004).

When applying the three dimensions of loyalty to millennials, they do have affective and normative commitment towards a brand. As they are willing to pay more for a luxurious good and overcome any barriers that would make the purchase difficult to change. These two commitments are highly significant, however there is a distinct lack of a moral sensibility to a brand. This aspect deal with behavioural loyalty, the act of re purchase (Grassl,1999). The principle is that millennials will have a connection to a brand and will stay with that brand, even if there are other brands available.

However, Millennials are very fashion oriented and easily influenced by celebrity endorsement. Their buying behaviour is dependent on the latest trends. If a company is out of touch with these trends, they will quickly lose these consumers to those companies that meet the millennials fashion and style needs (Reisenwitz and Iyer, 2009).

Information Searching

When it comes to information searching there are significant similarities and differences. Having grown up in a technological world, Millennials are tech savvy. Due to the array of products that are available to consumers, purchasing products could never be easier. Millennials will be more diverse in their shopping habits than Baby Boomers (Barton, Koslow and Egan, 2012). In regards to luxury brands millennials will want to purchase into a brand in which they can communicate via social media. As millennials purchase products, they can research a product extensively as they have access to more information (Lenhart, 2016). Asking for details of product information on social networking sites are the norm. Compared to that of Baby Boomers, information is gathered through instore salespeople. Baby Boomers are more likely to trust information given by instore staff without necessarily looking at alternatives (Lenhart, 2016).

Selections-Experiences from Purchasing Luxury goods

Baby Boomers viewed luxury products as high price items with designer labels. This was regardless of the quality if the product (Rowe, 2015). Baby Boomer purchase luxury items to show off their wealth and see them as potential trophies for their hard work. However, Millennials show their wealth in other ways after other needs are met first such as quality standards, as their attitudes towards luxury go against wasteful consumption (Yeoman, 2009). They are more likely to purchase a luxury good for an experience.

An experience means that Millennials can share their purchase on social media and recreate their story through a multitude of photos and videos. From this we can gather that buying luxury is more to do upgrading and enhancing their lives also known as the feminsation of luxury (Gambler, 2000).

Purchase

Baby Boomers are one of the wealthiest generational cohorts. Research has found that members of this group are twice as likely to earn over $50,000 (Brown, 2001). Due to the high disposable income Boomers can purchase higher amount of luxury items not just on themselves but on others as well (Potter, 2002).

Millennials on the other hand, although will still purchase luxury items, are more likely to rent (Smola and Sutton, 2002). This ties in with millennials being more likely to change brand loyalties as fashion trends are fast changing. This also shows that Millennials are economically conscious and that their luxury consumption will be significantly lower than their older counterparts.

Problems with the Consumer decision making process

Consumers will go through the decision-making process when seeking to purchase a product. However, while some stages will always be met others might not be. This is due to the level of involvement that an individual exerts onto the purchasing decision. Stages will be missed because of low involvement with a good. Luxury goods on the other hand will have high involvement as they require more analysis as more will be invested. Each stage maybe skipped due to past experiences or knowledge where they are conditioned to act in a similar way to other purchases (Schiffman et al, 2011).

Conclusion

Marketers will need to constantly change their strategies to meet the needs of millennials. As the generation grows, new behaviours will be donned because of external factors that have a great influence on consumer behaviour.

Reference List

Allen, N. J., & Meyer, J. P. (1990). The measurement and antecedents of affective, continuance and normative commitment to the organization. Journal of Occupational Psychology, 63(1), 1-18.

Barton, C., Koslow, L. and Egan, C. (2012). Millennial Passions. BCG Perspectives, [online] pp.1-6. Available at: https://www.bcg.com/documents/file121010.pdf [Accessed 27 Mar. 2017].

Brown, P. (2001), “Are the forties the new thirties?”, Brand Strategy, Vol. 153, November, p. 26.

Bush, A., Martin, C., & Bush, V. (2004). Sports celebrity influence on the behavioral intentions of generation Y. Journal of Advertising Research, 44(1), 108-118.

Casper, G., & Briones, E. (2014). La génération Y et le luxe. Paris: Dunod. major household appliances. Journal of Marketing Research 9 (Aug), 249–257.

Gambler, P. (1997). Female Economy. Illinois: University of Illinois Press.

Howe, N. and Strauss, W. (2000). Millennials Rising: The Next Great Generation. New York: Vintage Books.

Kapferer, J.N. (2011). Luxury after the crisis: Pro logo or no logo? The European Business Review, 42– 46.

Lenhart, M. (2016). Study: Millennials Eschew Luxury Brands. http://www.travelmarketreport.com/articles/Study-Millennials-Eschew-Luxury-Brands (Accessed 25 March. 2017).

Martin, C. A. and Tulgan, B. (2002). Managing the Generational Mix. Amherst, MA: HRD

Newman, J.W., Staelin, R., 1972. Prepurchase information seeking for new cars and

Oblinger, D. and Oblinger, J., Eds. (2005). Educating the Net Gen. Washington, D.C.: EDUCAUSE.

Pew Research Center (2010). Millennials Confident. Connected. Open to Change. Generation Next. http://www.pewsocialtrends.org/files/2010/10/millennials-confident-connected-open-to-change.pdf (Accessed 25 March, 2017).

Potter, D. (2002), “The 50 þ boomer: your key to 76 million consumers”, Retail Merchandiser, Vol. 42 No. 8, p. 58.

Reeves, T. and Oh, E. (2007). Generational Differences. In: J. Spector, M. Merrill, J. van Merriënboer and M. Driscoll, ed., Handbook of Research on Educational Communications and Technology, 3rd ed. New York: Routledge, pp.295-303

Reisenwitz, T., & Iyer, R. (2009). Differences in generation x and generation y: implications for the organization and marketers. The Marketing Management Journal, 19(2), 91-103

Rowe, L. (2015). Gen Henry: How Millennials are redefining luxury. http://www.pbjs.com/blog/how-millennials-are-redefining-luxury/ (Accessed 25 March 2017).

Schaie, K.W. (1965). A general model for the study of developmental problems. Psychological Bulletin, 64, 92–107.

Slama, M.E., Tashcian, A., 1985. Selected socioeconomic and demographic characteristics associated with purchasing involvement. Journal of Marketing 49, 72–82.

Wiedmann, K., Hennigs, N. & Siebels, A., 2007. Measuring Consumers’ Luxury Value Perception: A Cross-Cultural Framework, Germany: Academy of Marketing Science Review.

Zemke, R., Raines, C., and Filipczak, B. (2000). Generations at Work: Managing the Class of Veterans, Boomers, X-ers, and Nexters in Your Workplace. New York: Amacon.*

Appreciate

Credits:

Created with images by snowmentality - "Crowd" • Mediamodifier - "ecommerce selling online online sales" • diffus_ - "Generations" • kangheungbo - "baby twins 100 days photo" • IK's World Trip - "More international luxury brands" • Pexels - "amplifier brand classic" • Unsplash - "binoculars looking man"