Generations and luxury Age-based segmentation of luxury consumer behavior in U.K.

INTRODUCTION

As a group, the Millennials generation, also called Generation Y, was born between 1982 to 1997. The more numerous and better educated generation is the first global-centric generation compare to previous ones (Howe, 2009). Generation Xers were born from roughly early the mid-Sixties to the Eighties. They are given a variety names, such as "flyers" (Mowen and Minor, 1997). Each group has its own distinctive characteristics, values, and attitudes toward luxury products based on different life experiences and technology development.

As a group, the Millennials generation, also called Generation Y, was born between 1982 to 1997. The more numerous and better educated generation is the first global-centric generation compare to previous ones (Howe, 2009). Generation Xers were born from roughly early the mid-Sixties to the Eighties. They are given a variety names, such as "flyers" (Mowen and Minor, 1997). Each group has its own distinctive characteristics, values, and attitudes toward luxury products based on different life experiences and technology development.

Recently, research has suggested that the expenditure rapidly rise and luxury consumption in the UK society has become a commonplace (Foulkes, A, 2016). Therefore, for marketers, it is important to explore and deeply understand a variety of consumer behaviours to make a better market segmentation, positioning and targeting for the luxury brand. It is believed that market segmentation is a process of dividing a mass market into subsets of consumers with common needs or characteristics (Schiffman and Wisenblit, 2015). Furthermore, It has been reported that in order to sell products in industrialized countries, market segmentation plays a significant role as the company will have a poor performance without the understanding of consumers (Wedel and Kamakura, 2000). However, nowadays, marketers are confronted with the issue surrounding targeting goods and services to different consumer groups with a wide range of preferences and should appeal to different generations (Foulkes, 2016.) Cohort analysis is an advantageous and helpful marketing research tool for market segmentation and market trend forecasting (Fukada, 2009).

Generation marketing is one of cohort analysis. Generation marketing is defined as a process of promoting, selling and distributing products or services based on basic values, attitudes, and common age groups that influence consumer behaviours (Foulkes, 2016). Recent research has suggested that the Geneation Y and Generetion X are the main consumers in the UK luxury market. Interestingly, these two generations are both think highly of fountional value of the luxury products and it is the key diver of these two generations' consumer decision making (Foulkes, 2016). It is surprised that Millennials in UK are also focus on the quality of the luxury goods instead of the brand itself. Thus, for luxury brands, they are responsible to offer more benefits to their customers due to the high price, especially, the excellent quality. It is a right way to make the luxury brand more desirable (Nueno and Quelch, 1998). The key drivers are quite dissimilar in different countries. In China, most of luxury consumers pay the high price for confident and higher social status; they are more influenced by their reference groups, that is, Chinese purchase luxury items due to vanity.

In 2015, the top ten individual luxury brands are Michael Kors, Cartier, Prada, Burberry, Chanel, Rolex, Hermes, Gucci, Louis Vuitton and Tiffany respectively (Foulkes, 2016). A recent study shown that one of the differences between Millennials and Gen X is the level of loyalty to particular brand. Generation X is more loyalty to a luxury brand (Foulkes, 2016). Nevertheless, Millennial consumers are highly brand conscious and tend to be more materialism than Gen X. They are willing to pay for a better taste and lifestyle compare to Gen X. because the millennials widely use social network like Twitter, Facebook and Instagram, they make the purchasing decision per as the suggestion of peer friends. As the Millennials are also called 'Net Generations', they are well-educated, globally aware and technologically users. Accordingly, the Millennials have more options and they are more flexible with diverse choices. Moreover, luxury items are more accessible for the Millennials and they are tend to use more luxury items than Generation X in recent years (Fernandez, 2009).

It has commonly been assumed that consumer behavior is influenced by internal and external factors which are selected into psychological, personal, social and culture. Unfortunately, most of the factors are not controllable for marketers. For instance, In this luxury consumption case, based on age-segmentation, marketers need to find out that how consumer feel about the luxury brand, what they are thinking about the brand and why they choose or purchase the brand (Babu,et al., 2010). Apparently, the Millennials and Gen Xers were born in distinctive culture and environment, the values and educations are not the same. Therefore, the consumer attitude from the Millennials and the Generation X are dissimilar because the social factors are very different from two age groups. Family, reference group and social status are the core element of social factors of consumer behavior.

Family, reference group and social status are key elements in social factors in this case. Social status usually connected closely with education, occupation, and income, because a high-level job certainly require a high-level education to access and complete tasks, and as a result, he or she can have a high-level of income compare to the lower status. Especially, in the luxury case, consumers need high income or the ability to support them to buy luxury goods (Schiffman and Wisenblit, 2015).

Social Factors

Both the Millennials and Generation X are similar in this situation. The power of reference group is absolutely capable and can not be ignored. Family is the most important component of the reference group, because family is the place that people grow their value, attitude, learning and experiences. In this prospect, Millennials and Generation Xers have dissimilar consumption behaviour due to the different growth environments. In addition, word-of-mouth is the best advertising in marketing, and with the dramatic development of social media technology, it is definitely becoming more and more important in Generation Y group. The persuasive power from celebrities, salesperson, social media, friends, relatives, neighbours and communities in social network are strongly buying-related information of customer behaviour. Futhermore, luxury consumer view reference groups with which they have personal contacts as more cridible than marketer or promotion people (Schiffman and Wisenblit, 2015).

CONCLUSION

This essay has explored and analysed the differences and similarities of consumer behaviours between Millennials and Generation X in UK luxury industries. It found out that in UK luxury market, the key driver of personal luxury consumption is the quality and function of the goods. The luxury market is becoming more complex, income or wealth is no longer enough for marketers. There is no doubt that quality, uniqueness, usability and reliability are the basic benefits for luxury items consumers. Both generations are disagree with the decision making progress of luxury buying is showing off to others (Foulkes, 2016). In UK market, people are not looking for social value by purchasing an unaffordable luxury items in generations. However, the dramatic changes in lifestyle pattern and social environment have shown in different generations consumer behaviour in the Millennials and Generation X. It is shown that the Millennials are concerned about their peer suggestions more than the Generation Xers, as the Millennials are the net generation who grown with a mass social media. They are tend to give more attention to what brands they friends or reference group have, and Generation X do not have this consumer behaviour.

REFERENCES Atwal, G. and Williams, A. (2009). Luxury brand marketing – The experience is everything!. Journal of Brand Management, 16(5-6), pp.338-346. Babu, M.G., Vani, G. and Panchanatham, N., (2010). Consumer Buying Behaviour. Global Vision Publishing House Foulkes, A. (2016). A comparison of luxury perceptions of Generation X and Y consumers in the United Kingdom. Kingston University. Fukuda, K. (2009). A cohort analysis of household vehicle expenditure in the U.S. and Japan: A possibility of generational marketing. Marketing Letters, 21(1), pp.53-64. Fernandez, S. (2009). Comparing Generation X to Generation Y on work-related beliefs. Howe, N. and Strauss, W. (2009). Millennials rising: The next great generation. Vintage. Mowen, J. and Minor, M. (1997). Consumer Behavior. 1st ed. Upper Saddle River, N.J.: Prentice Hall. Nueno, J. and Quelch, J. (1998). The mass marketing of luxury. Business Horizons, 41(6), pp.61-68. Kamakura, W. and Wedel, M. (2000). Factor Analysis and Missing Data. Journal of Marketing Research, 37(4), pp.490-498. Schiffman, L. and Wisenblit, J. (2015). Consumer behaviour, 11th edition. London: Pearson Education.
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