consumer behaviour of baby boomers and millennials in regards to luxury goods Rosie Crofts

Consumer Behaviour and the Luxury Market

Consumer behaviour is “the study of consumers’ actions during searching for, purchasing, using, evaluating, and disposing of products and services” (Schiffman and Wisenblit, 2015:456). This can vary greatly between generations, this page aims to explore the differences and similarities in the purchasing of luxury goods between Millennials and Baby Boomers.

MarketLine (2017) states in the United Kingdom the “apparel, accessories and luxury goods market” is valued at $95,157.4 million, growing 15.8% from 2012. Luxury refers to “exclusive, high priced, extravagant goods and services” (Saine, Trocchia and Luckett, 2013). It is said that we now “live in a world where luxury reigns” (Chevalier and Mazzalovo, 2012:2).

Millennials

Millennials represents the group of consumers born between 1980 and 1996 (Schiffman and Wisenblit, 2015:459). Millennials grew up around technology, fully embracing it, they tend to be attracted to high stimulation levels and easily become bored. They tend to be confident for their age due to growing up in a youth focused society and an American emphasis on self-esteem. Millennials want fast product turnover, involving interactive platforms allowing them the ability to create their own products and receive personal promotions (Schiffman and Wisenblit, 2015:329).

Baby Boomers

Baby Boomers represent the generation born after the Second World War, typically between 1945 and 1965 (Evans et al, 2009:496). In the UK there are over 20 million people aged over 50, this is expected to rise to 25 million by 2021. Baby Boomers are relatively wealthy due to family inheritance (Evans et al, 2009:163). Baby Boomers are a desirable to marketers. Baby Boomers make up around 50% professional or managerial job roles, making purchasing decisions that influence entire consumer good categories. In the US, Baby Boomers account for half of spending on consumer packaged goods and control between 65% and 75% of disposable income (Schiffman and Wisenblit, 2015:331-332).

Theory of Planned Behaviour

The theory of planned behaviour states that when making a purchasing decision, a consumer is influenced by opinion and knowledge. This knowledge may be instrumental (learned knowledge), or experiential (feelings based). This model is used to predict behaviour by a consumer’s intention to perform that behaviour. Intention is split into three key categories: “attitude towards the behaviour, subjective norms, and perceived behavioural control” (Evans et al, 2009:113).

(Azjen, 1991)

Attitude towards behaviour is “predicted by salient beliefs about a behaviour, weighted by the subject’s estimation of the likelihood of performing the behaviour will result in a given outcome.” The subjective norm is predicted through what relevant others would suggest, and a consumer’s motivation to follow their advice. Finally the perceived behavioural control “is measured through control beliefs that may help or hinder the individual in carrying out that behaviour” (Evans et al, 2009:113). Through a combination of these past behaviours and attitudes, future outcomes can be predicted as a consumers attitude towards a behaviour has more of an effect on their actual behaviour than their attitude towards an object.

This theory can be applied throughout the consumer behaviour of purchasing luxury goods, however it is worth noting that this model is rather simplistic. It fails to take into account gender and personality differences as well as the effect of things such as mood.

Millennials Consumer Behaviour

Millennials are willing to part with their money on goods and travels, due in part to an inflated property market that makes saving for a home a fantasy. When applying the theory of planned behaviour this links to control, Millennials feel they lack the ability to save for a home therefore their spending behaviour changes. Millennials tend to have no loyalty to brands, allowing many new fashion labels to emerge, but has presented a challenge for ‘legacy’ fashion (Brinded, 2017). Millennials are also willing to mix luxury purchases with “bargain bin finds” (Han, 2017). Marketers have increasingly targeted Millennials, due to their consistent increase in spending on luxury goods and services (Jaworski, 2007).

Millennials have redefined luxury, putting more of an influence on experiences. Brands are now blurring the line between luxury goods and experiences, through the use of digital platforms. Instagram and Snapchat have taken the fashion world by storm. Within the past year there has been a 400% increase in fashion brands Instagram posts, with designers frequently giving influencers special access to shows and products (Rein, 2017). These platforms are a good fit, as fashion is visual. Using celebrities allows brands to reach millions of followers generating a huge buzz (Brinded, 2017). Celebrity endorsements can play an important role in theory of planned behaviour, many Millennials idolised ‘stars’ when they recommend a product a consumer may feel more motivated to purchase to fulfill the social norms aspect. However this may cause conflict with the control element, whereby everyday consumers don’t have the ability to recreate this celebrity lifestyle.

Louis Vuitton and Burberry have successfully attracted Millennials by creatively using popular trends. Louis Vuitton featured a character from the video game ‘Final Fantasy’ within a campaign blurring the lines further between the digital world and the luxury fashion world. In 2015 Burberry collaborated with Apple Music, creating an exclusive channel in which fans could engage with the Burberry Acoustic initiative which gives a voice to new artists (Rein, 2017). This use of familiar trends among Millennials can play a part in the attitude element of planned behaviour, if consumers have had positive experiences they will associate this new behaviour or purchase with having a positive outcome.

Millennials have been stereotyped as “unsocial, lazy and irresponsible,” however this generation are now developing their careers and acting as socially responsible adults. Luxury products allow Millennials to receive recognition. A survey showed that 62% make a luxury purchase “to gain some form of social acknowledgment” (Tesseras, 2017). This allows the social norms aspect of planned behaviour to be fulfilled.

Baby Boomers Consumer Behaviour

Baby Boomers are comfortable in using new technology especially to enhance their shopping experiences, they have a strong desire for discovering new experiences which they pursue through luxury goods and travel (Marsh, 2017). When applying the theory of planned behaviour, it can be said that Baby Boomers attitude to trying this new behaviour has been formed through past positive experience and through their knowledge, developed through technology. The use of technology can also be applied to the behavioural control aspect of the theory, the more confident in their ability to carry out the behaviour the more likely they are too. However rather than being a planned behaviour based on attitude and ability, Baby Boomers may carry out this behaviour due to viewing it as a necessity.

Baby Boomers are referred to as “flat agers” by marketers, they no longer feel defined by their age. Yves Saint Laurent used this concept of “agelessness” when promoting the Or Rouge face cream. Rather than advertising it as an anti-ageing product, the luxury brand referred to it as a “renaissance treatment” which proved successful with their Baby Boomer target consumer (Han, 2017). Not all brands have taken this approach. A survey showed 46% of Baby Boomers felt advertisements stereotype their age group. Furthermore around 37% of Baby Boomers feel excluded by advertising in general this is compared to 28% of consumers on average. These statistics reflect the limited presence of Baby Boomers within marketing campaigns (Academic.mintel.com, 2015).

Luxury fashion brands have begun to take notice of these statistics. In 2015, French luxury fashion house Céline debuted a campaign featuring Joan Didion, an 80-year-old author, generating huge media attention. Following this Yves Saint Laurent featured 70-year-old singer Joni Mitchell in advertisements, while luxury accessories designer, Kate Spade built her whole campaign around 93-year-old style icon Iris Apfel. Selfridges, ran a window and in-store campaign called ‘Bright Old Things’, allowing 14 new fashion designers aged from their 40s to 80s an opportunity to showcase their offerings (Academic.mintel.com, 2015). The use of older models and designers plays upon the idea of the importance of social norms in planned behaviour, as it seeks to show the link between an older generation and luxury brands and normal and something to be impersonated.

Wealthy Baby Boomers tend to have a positive response to well-timed promotional messages and offers. In a survey conducted by Forbes, seven out of ten claimed they bought a luxury product when the message they had received was timed to when they needed a product. A further half of respondents said they have purchased luxury goods due to a specific offer. Word of mouth referrals and direct mail were the preferred channel of receiving messages, following this trend eight out of ten surveyed claimed they would promote a luxury brand through word of mouth. When making luxury purchases Baby Boomers still prefer to purchase products in person rather than online, this is due to receiving a higher value, more tactile experience (Forbes.com, 2015). This emphasis on word of mouth and in-store interaction highlights the importance of social norms within the theory of planned behaviour. Baby Boomers seek the advice of those they consider relevant and demonstrate motivation to follow it, therefore influencing their purchasing intention.

How millennials and baby boomers are similar

• Bargains: both generations share a mutual love for using coupons and purchasing during sales.

• Online activity: both generations are confident with using technology for “browsing, researching and shopping online.”

• Females and social media: females are more like to talk about purchases on social media. 82% of female Baby Boomers and 83% of female Millennials regularly share retail experiences and purchases across various social networks. (Business Insider, 2017)

How millennials and boomers differ

• Digital activity: Millennials are still much more likely to use a digital device as a shopping tool.

• Word-of-mouth: Millennials favour word of mouth when deciding what to buy (82%) whereas 52% of Baby Boomer favour this method and are often more influenced by retail websites.

• In-store experience: Baby Boomers place high importance on customer service when assessing the quality of their shopping experiences, whereas Millennials are likely to use technology in improving their in-store experience.

• Pricing: Baby Boomers tend to be less price motivated, rather being more brand loyal. (Business Insider, 2017)

References

Academic.mintel.com. (2015). Rise of older models in fashion and beauty campaigns - 29th April 2015. [online] Available at: http://academic.mintel.com/display/736920/?highlight [Accessed 23 Mar. 2017].

AJZEN, I. (1991). The theory of planned behavior. Organizational behavior and human decision processes, 50 (2), 179-211

Brinded, L. (2017). Luxury fashion houses are starting to crack the secret to attracting millennials. [online] Business Insider. Available at: http://uk.businessinsider.com/luxury-fashion-good-millennial-consumers-kanye-west-2016-2 [Accessed 23 Mar. 2017].

Business Insider. (2017). These findings about how millennials and baby boomers shop may surprise you. [online] Available at: http://www.businessinsider.com/sc/how-millennials-and-baby-boomers-shop-2015-4?IR=T [Accessed 24 Mar. 2017].

Evans, M., Jamal, A. and Foxall, G. (2009). Consumer behaviour. 2nd ed. Chichester: Wiley.

Forbes.com. (2015). New Report Shows Luxury Brands Can Benefit by Building Personalized Relationships with Boomers. [online] Available at: https://www.forbes.com/sites/forbespr/2015/11/16/new-report-shows-luxury-brands-can-benefit-by-building-personalized-relationships-with-boomers/#6fcd6fef387f [Accessed 22 Mar. 2017].

Han, E. (2017). To which consumer tribe do you belong?. [online] The Sydney Morning Herald. Available at: http://www.smh.com.au/national/consumer-tribes--how-gen-y-x-baby-boomers-shop-and-respond-to-brand-marketing-20150311-141tgp.html [Accessed 23 Mar. 2017].

Jaworski, M. (2007). Outspending baby boomers; Outlays on luxury goods and services exceed parents'; traveling in style. Crain's New York Business, 23(14), p.1.

MarketLine (2017). United Kingdom - Apparel, Accessories & Luxury Goods. [online] Available at: http://advantage.marketline.com.proxy.library.lincoln.ac.uk/Product?ptype=Industries&pid=MLIP0952-0005 [Accessed 26 Mar. 2017].

Marsh, P. (2017). Why it's time to turn back the clock on Baby Boomers. [online] Campaignlive.com. Available at: http://www.campaignlive.com/article/why-its-time-turn-back-clock-baby-boomers/1353632 [Accessed 26 Mar. 2017].

Mazzalovo, G. and Chevalier, M. (2012). Luxury brand management. 2nd ed. Hoboken, N.J.: Wiley.

Rein, G. (2017). Think Tank: Why Millennials Are the Future of Luxury. [online] WWD. Available at: http://wwd.com/fashion-news/designer-luxury/millennials-luxury-spending-10417737/ [Accessed 20 Mar. 2017].

Saine, R., Trocchia, P. and Luckett, M. (2013). Consumer Perceptions Regarding Luxury and Aspirational Brands: A Cross-Generational Investigation. Society for Marketing Advances Proceedings, 25, pp.74-76.

Schiffman, L. and Wisenblit, J. (2015). Consumer behavior. 1st ed. Boston: Pearson.

Tesseras, L. (2017). Four trends changing the definition of luxury - Marketing Week. [online] Marketing Week. Available at: https://www.marketingweek.com/2015/09/30/four-trends-changing-the-definition-of-luxury/ [Accessed 22 Mar. 2017].

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