To what extent is the consumer behaviour of Millennials different to that of previous generations (e.g. Generation X and Baby Boomers) in the area of Luxury Goods?
INTRODUCTION
Millennials are a generation born between 1982 and into the early 2000s (Brown, 2017). There are different factors which contribute to the culture and attributes of millennials, including their working ethics, family orientation, technology awareness and social networking. There are varied opinions towards millennials and how they are received, such as being negatively viewed by previous generations of Baby Boomers and Generation X due to their rebellious adolescent behaviour (Keeling, 2003). Yet, as Howe and Strauss state, millennials can also be defined as ‘optimistic’, ‘special’ and ‘achieving’. Millennials differ to other generations, due to their high numbers, greater affluence, higher education and ethnic diversity (Keeling, 2003). Differences between millennials, generation X and baby boomers influence their consumer behaviour.
ABOUT GENERATIONAL GROUPS
The baby boomers are born post World War 2 during the years 1946-1964, with generation X between 1965-1980, and millennials born from 1982 into the 2000’s (Walters, 2017). Both baby boomers and millennials are of a large population, with generation X in the middle of two largely populated generational groups (Fry, 2016).
A demographic change from the baby boomer generation to the millennial consumer has bought a disruption in the consumer behaviour of purchasing luxurious goods (Danziger, 2016). The millennials are considered to have bought changes to cultures and values, originally in place from previous generations, which has contributed to a change in what constitutes as a luxury (Dannar, 2013). This stems from millennials having a different mind-set, creativity and higher use of technology (Gilbert, 2011). Millennials purchasing luxury brands depends on the personality, aspirations and income of the individuals; influencing what they spend their money on and not (Dubois and Duquesne, 1993). This causes difficulty with luxury brands, as millennials aren’t purchasing products on the scale of baby boomers and generation X, as they desire something more authentic to qualify as luxury.
CONSUMER BEHAVIOUR DIFFERENCES
SEGMENTATION
Segmentation within all generation groups can create even more differences with consumer behaviour. With millennials, the age range is vast meaning luxury brands could be luxury to some and basic for others. The focus on the younger millennials is relevant, defined as ‘trendsetters’ they want a luxury brand which enhances their self-image and keeps up to date with the latest trends (Oracle, 2017). Luxury goods can do well in this market, as if the product is fashionable and cool, younger millennials will purchase.
WHY LUXURY?
Millennials Marketing, YouTube, 2016
Market segmentation is important for consumer behaviour, and it can be challenging for markets, linking greatly to luxury goods and millennials (Dubois and Duquesne, 1993). Millennials spending habits differ from previous generations, as they are likely to spend on luxury experiences, like holidays and activities, more so than products; causing change to the way luxury brands and products are purchased (Brinded, 2016). Luxury goods like designer handbags, clothing and watches aren’t a main focus for Millennials, as they were for baby boomers and generation X (Rein, 2016). Affluence plays a significant part, influencing the way millennials chose to buy luxury. This affluence stems from millennials having higher annual household incomes, which alongside their huge population portrays the future earning capability that younger millennials could reach, indicating their potential towards the market of luxury goods, and a great change in consumer behaviour (Eisen, 2011).
INDIVIDUALITY
The great size of the millennial group means their buying power is significant, and markets must adapt to suit their changing consumer behaviour. Millennials want something which enhances their individuality, as with so much freedom and options to choose from, a brand must adjust. This means brand loyalty is difficult to maintain among millennials, especially in comparison to baby boomers and generation X who are more likely to stand by a brand they know, and would base a luxury purchase on a loyal brand to them. This change could stem from millennials wanting brands that aren’t popular and something their friends haven’t heard of, in order to stand out from the crowd and enhance their image. It is also considered that entry level brands do well in the luxury market (Brinded, 2016). This could be from the excitement surrounding a new brand, offering something diverse on the market and setting a new trend.
OBSERVATIONAL LEARNING
The theory of observational learning is relevant with all generational groups. With millennials as a group, they hold influence over one another’s purchasing. Observing advertising can hold a beneficial hold on millennials, particularly through the use of celebrity endorsement. When celebrities promote new brands, millennials are more likely to want to purchase something new and exciting, which can make things such as price less considered, as the luxury name of a product becomes the most important aspect. This is important for a brand, as millennials are observational, and what they as a target audience think is important. Whilst, baby boomers in particular are much less likely to see an advertisement with a popular celebrity and immediately purchase, indicating to the ways consumer behaviour has changed.
POWER OF THE INTERNET EVERYWHERE
The consumer behaviour of Millennials means that marketers have to consider different ways to market their brands in an appealing way to them, in comparison to previous tools used to entice baby boomers and generation X. This is due to the generation of Millennials finding empowerment in the media landscape, through immersing themselves in social media (Geraci and Nagy, 2004) Due to the increased use of technology and online purchasing, much of luxurious goods promotion can be done online. This is a popular and fashionable way for them to communicate to their consumers. Millennials are a group who have access to their internet everywhere and anywhere, particularly the ‘Gadget Gurus’ who are always looking for the new and updated gadgets, which can often be deemed as luxury (Schiffman and Wisenblit, 2015).
SOCIAL MEDIA
A great influence online is social media, which entices millennials and some of generation X (Sago, 2010). If something is quirky and new on the market, the power of social media can quickly grab the attention of large amounts of people, through hashtags, photos and location services. Social media creates a beneficial face for luxury brands to communicate to their consumers and fill their feeds with the latest fashionable trends, without them having to step away from laptops and smart phones. Millennials in particular find it an accessible platform to communicate socially with both peers and brands (Sago, 2010). This means brands have a fantastic way to capture the individual and cater to the different generational groups. The use of social media, such as Facebook, Twitter, Instagram, Pinterest, Snapchat, LinkedIn, and Google+, gives individuals the option to share their views on brands, both good and bad, which influences one another’s purchasing.
"INSTAGRAMMING" EVERYTHING
For millennials, a powerful social media tool is Instagram. The site allows them to share photo updates in a quirky and trendy way, which appeals to millennials to enhance their individuality. Posts of luxury products, holidays and nights out cause influence among their peers, as they want to keep up with latest trends. With 90% of Instagram users being under the age of 35, there is a huge market for reaching out to millennials (DMR STATS, 2017). There are also millennials being paid to be ‘Insta Famous’ which means brands can pay individuals to wear their products and share with their thousands of followers, creating brand awareness. Instagram offers a hugely beneficial way to capture the attention of consuming millennials.
CONSUMER BEHAVIOUR MODEL
The Consumer Behaviour Model relates to all generational groups in differing ways, such as external influences of cultures and family opinions effecting the lifestyle and livelihoods of the individual (Mothersbaugh and Hawkins, 2016). With the decision process, the ways a younger millennial spends on luxury differs greatly to the way generation X would. An individual of generation X would have a longer process, analysing the problems and outcomes of a particular purchase such as a luxury car, whilst a millennial would view the situation differently, evaluating the purchase based on its trend, less so about its risk. With the increase in choice in luxury goods, millennials most likely view the luxury goods based on their desires, personality and attitudes, whilst baby boomers would engage with a product or brand from their perception and memory, linking back to their brand loyalty (Mothersbaugh and Hawkins, 2016).
CONCLUSION
The consumer behaviour of millennials is different to that of the baby boomers and generation X regarding the luxury market. Millennials desire more than just a product, and have the choice of so many options. In order to stand out to them, a brand or product needs to offer something individual and different. This brings an opportunity for brands to diversely change the way they market to suit the millennial consumers and gain their interest. Social media and technology very much plays a role in this, differing from baby boomers and generation X marketing techniques. Through the generational demographics developing and changing over the years, from baby boomers to the millennials, the behaviours of the consumer has very much transformed and reformed.
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