Segmentation based on Generation
Beyond during gender, age, income, ethnic heritage, education, or other demographic variables for segmentation, many marketers target generational cohorts. This approach doesn’t require the use of psychographic information to enrich the demographics. It does possess some of the richness of the psychographics. The concept behind marketing to generational cohorts is that common experiences and events create bonds between people who are about same age.
Segmentation bases on generations notes that as people experience significant external events during their late adolescence or early adulthood, these events impact their social values, attitudes, and preferences. Based on similar experiences, these cohorts of individuals develop common preferences for music, movies, foods, and other products. They also tend to respond to the same type of marketing appeals. Based on this idea six cohorts or generations have been identified.
Generation Y (individuals 18-24 years old) contribute only 5% of the total spending power. It is the smallest of the six generational cohorts, but it is growing both in size and wealth. Cloths, automobiles, and college are the big ticket items for this group. Nearly 90 percept of generation Y lives in a rent or with parents. Buying a home and home furnishings is a low priority. Generation Y spendins substantial amount on television sets and stereo systems and products that enhance personal appearance and fun.
Generation X (individuals 24-34 years old) contribute to 18% of the total spending power of consumers in the United States. Members focus on family and children. Food, housing, transportation, and personal services are important categories for this segment. Time pressures are intense for this generation as they strive to balance work and family therefore, they outsource many of the daily tasks such as house cleaning, lawn mowing, babysitting, and other domestic chores.
Young Boomers (individuals 35-44 years old) have an estimated spending of $.1.1 trillion. This home and family is the focus of younger boomers’ spending. The majority (60%) own homes. Consequently, a considerable amount of income is allocated to mortgage expenditures, home furnishing, and home renovations. The remaining disposable income is spent on family purchases such as pets, toys, play-ground equipment, or a large recreational item such as a boat or 4-wheel-drive vehicle.
Older boomers (individuals 45-54 years) account to 24% of total spending, an estimated $1 trillion. The priorities of this group include upgrading homes, ensuring education and independence for their children, buying luxury items such as boats or hot tubs, and taking more exotic vacations. With fewer responsibilities as home, older boomers spend considerably more on recreation that any of the other generation groups. Insurance and investments are also a high ticket item as they this about their older years of retirement.
Empty Nesters (individuals 55-64yesrs old) contribute 13 percept of the total spending and spend heavily on home mortgages, new furniture, new automobiles, and personal indulgences items. Over 80 percent own homes. Many have paid their mortgage in full. Their focus in now on fancy and high-ticket items that they could not afford earlier because of children.
Seniors (individuals over 65 years) account to 14 percent of all spending in the US. Because of fixed income and tighter budgets, household income and spending decline sharply. Drugs, health insurance, and health case constitutes the top three categories of spending for this group, followed closely by medical supplies and medical expenses.