Making generational marketing come of age
Rice, Faye. Fortune. New York: Jun 26, 1995. Vol. 131, Iss. 12; pg. 110, 4 pgs Abstract (Summary)
 

Generational marketing is supposed to reach consumers right where they live, demographically, socially, and psychologically. A generation is defined by dates of birth, a cohort by important external events that occur during formative years. Markets still get defined mostly by age brackets rather than by defining experiences. Marketing consultant Carol Farmer introduced Lowe's, a home-improvement chain, to William Strauss and Neil Howe's book, Generations, and helped Lowe's develop a generational marketing program. Lowe's has since halved total advertising expenditures, from 2% to 1%. The next huge generational test for marketers begins next year when the first wave of boomers celebrate their 50th birthday and officially enter the senior market. As generational marketers create chic new models of aging for maturing boomers, they are being forced to overhaul other franchises to capture busters. Unlike previous generations, Generation Xers have no defining moments, so companies wooing them have little to grab at.

Last winter New York City radio station KISS-FM accelerated from 14th place to first in the ratings faster than a Manhattan cabbie goes through a yellow light. How? By targeting upscale black baby-boomers, tuning out raucous rap and hip-hop, and dialing up the melodious music of such honey-voiced singers as Al Green, Barry White, and Whitney Houston. "We have gotten much bigger by targeting smaller," says general manager Judy Ellis, who follows up that statement with a seemingly contradictory one. "Our target audience is 25 to 54," she says resolutely. Hmm, that's an awfully wide range for narrow casting, including as it does baby-boomers, Generation Xers, and a smattering of silents. "Well," Ellis explains, "that is how our ratings books categorize the market."

Welcome to the slightly absurd world of generational marketing, a venerable strategy that is supposed to reach consumers right where they live, demographically, socially, and psychologically, thus rendering mass marketing passe. Instead, mass marketing is grudgingly giving way to mass confusion as marketers such as KISS stumble toward the holy grail of segment-of-one selling. Says Peter Kim, vice chairman of ad agency McCann-Erickson: "Most companies are still organized around a mass-marketing concept. Very few people in research and marketing departments even understand the concept of cohorts or generations."

A generation is defined by dates of birth, a cohort by important external events that occur during its formative years. People born between 1930 and 1939 are often labeled the Depression generation, but those born between 1912 and 1921 are the Depression cohort, since they became adults between 1930 and 1939. In reality, a plethora of names exists for some generations (see below).

That's what marketers can't quite figure out. Consider Mercedes-Benz, which is trying to woo younger buyers through the music of Janis Joplin, the raspy-voiced blues singer and boozer who died of a drug overdose in 1970. Dinah Shore this is not. Yet Joplin's a cappella classic, "Mercedes Benz"--you remember, "Oh, Lord, won't you buy me a Mercedes-Benz?"--which chides bourgeois materialists (herself included; Joplin owned a Porsche), is the centerpiece of the company's commercials for its C- and E-class cars, with prices starting at $31,000.

The hard-living Joplin and the staid German company are an improbable match. But Mercedes is betting that the early-Seventies anthem will drive affluent 35- to 45-year-olds--many of whom have inhaled, to say the least--into their showrooms. "The median age of Mercedes buyers is 51. We must begin talking to a whole new generation," explains veteran adman Marvin Sloves, 61, chairman of Lowe & Partners/SMS, creator of the spot. "I don't know the generational names. Whatever everyone calls people 35 to 45 who grew up in the 1960s and 1970s is the generation we are targeting."

Markets still get defined mostly by age brackets rather than by defining experiences. Even the Mercedes ad team, which carefully researched its target market, gets tripped up. For instance, many 51-year-old consumers may feel as nostalgic hearing "Mercedes Benz" as those 35 to 45. (Joplin would be 53 now.)

Segmenting by age, experts keep insisting, is an ineffective way to divvy up a market. Ross E. Goldstein, a consultant at Torme & Kenney in San Francisco, explains: "It used to be that when you knew someone's age, you knew a lot about him because the population went through life stages, like marriage and having children, at fairly predictable times. Not anymore. My older brother is 52 and has a 1-year-old daughter."

Some marketers will simply toss Goldstein's brother into a vague 50-plus category and assume that his lifestyle and consumer behavior will mirror that of all 52-year-olds, or worse, 62-year-olds. Yet demographers count three and perhaps five distinct generations that are 50 and above, and first-wave boomers will join that list beginning in 1996.

The elder Goldstein's spending patterns might well mirror his age group's-until you get to the baby clothes, diapers, strollers, and such. Or his purchasing behavior could reflect a younger generation's, especially if his wife is an Xer or young boomer and her generational values prevail in the household.

If age segmentation provides so little insight into consumer behavior, why does it prevail? Because age is the universal currency in the high-stakes world of advertising and media. It is how ratings services like Nielsen and Arbitron and Starch categorize the viewers and listeners and readers they count. So when marketers throw down their dollars for TV spots, the orders go out for shows appealing to males 18 to 49, or to women 25 to 54. "It's nonsense when companies say their target market is 18 to 49. That's not a target, that is the world," says marketing consultant Carol Farmer of Boca Raton, Florida.

The renegade marketers circumvent the establishment. Listen to Steve Goldstein, head of marketing for Levi's men's jeans at Levi Strauss, talk about buying media: "Instead of looking at the typical age breaks, like 18 to 49, we want to lay a more sophisticated layer of generational information. We tell [media buyers] to find quintessential programs that resonate with the values of the generation we are targeting. The show must relate to their lifestyles and attitudes." Many advertisers stick with the 18-to-49 approach because they think, incorrectly, that it's cheaper than targeting.

Judy George, who founded the high-fashion furniture chain Domain in 1986 with $3 million, has cut promotional spending 35% since moving to generational marketing three years ago. After intensive study of her customers, George designed promotional and selling techniques for each segment.

Through research, for example, she learned that her core boomer clientele, a generation that has always valued personal growth, is as concerned about self-improvement issues as it is about decorating. So George launched two promotional series of in-store seminars. The focus of one is women's issues, and she speaks at her 18 East Coast stores on subjects like how to start a business.

"Sometimes we are mobbed with customers at these seminars," she says. The topic of the other promotional forum is design, and influential decorators help Domain customers juxtapose various styles and periods of furnishings. Repeat business among Domain's upscale boomers has nearly doubled, to 35%, since the new programs began.

At the other end of the time line, George is launching a new furniture series for her retired World War II and postwar clients. The sofas are narrower, with more back support, and aren't as deep as boomers sofas--that makes getting out of them easier.

The new approach costs less. Domain has replaced newspaper advertising with direct mail, bringing ad spending at the privately held company don from 7.8 of sales to 4.8% in three years. Sales jumped nearly 40%, to over $40 million.

Lowe's the giant home-improvement chain that has been on a tear building superstores in the South. reports similar results on a much larger scale. Consultant Farmer introduced the retailer to William Strauss and Neil Howe's book, Generations, and helped Lowe's develop a generational marketing program. Lowe's has since halved total advertising expenses, from 2% to 1% of sales, while revenues have doubled, to $6 billion, and profits have soared 90%, to $280 million. "With sales increasing and constant new store openings, you would normally expect advertising expenses to go up," says assistant to the chairman Thomas Smith. Like Domain's George, he and senior vice president of marketing Dale Pond attribute much of the drop to better targeting. Explains Pond: "Before, we just tried to reach as many people as possible. Now we mainly use specialty media to reach each of the consumer groups we are targeting."

To attract Generation Xers, who represent just 10% of its customers, Lowe's signed up as a sponsor for Nascar, an auto-racing organization that counts a large following of busters and late boomers. Says Chairman Robert L. Strickland: "We don't want to make the same mistake with Xers that we made with boomers. We stuck with the G.1. and silent generations too long."

The next huge generational test for marketers: begins next year, when the First wave of boomers celebrate their 50th birthdays and officially enter the senior market--kicking and screaming all the way. Remember Geritol and the Lawrence Welk show? Forget it. Unlike their silent predecessors, this vast cohort will demand that companies embrace their values, such as youthfulness and invincibility, no matter what the product: food, cosmetics, tools, or corrective eye lenses. "Nothing could be further from the truth than saying boomers will be like their parents," says demographer Cheryl Russell, editor-in-chief of New Strategist Publications in Ithaca, New York.

Take financial services products. Many Depression-era consumers, parents of the oldest boomers, are severely risk-averse. They prefer secure investments like Treasury bonds and CDs, even though returns are "They won't go into debt for any son," says Geoffrey Meredith, president of Lifestage Matrix Marketing of Lafayette, California, who conducted a generational cohort study with his partner, University of Massachusetts marketing professor Charles Schewe. "Many boomers, by contrast, will go into debt for any reason," says Meredith.

He recently designed an insurance policy targeted at two generations permanently scarred by the Depression--the World War II and Depression cohorts, as he calls them. Policyholders give the issuing company, Lifetime Security Plan, the right to inherit their homes when they die. Until then, the policyholders, mostly retirees, live in their homes and receive a monthly stipend. Because people are living longer, this relieves them of many financial worries. Lifetime even provides basic upkeep of the homes. By contrast, when boomers reach age 70, Meredith predicts they may be more interested in a reverse mortgage--a loan against the equity of property--since they do not fear debt.

As generational marketers create chic new models of aging for maturing boomers, they are being forced to overhaul other franchises to capture busters. When John Sykes took the reins at Viacom's VH1 MusicFirst video network last year, he promptly conducted a study of boomers and busters. VH1, the fading sister of MTV, suffered from a murky image and ratings in Weather Channel territory. When VH1 hit the air a decade ago, the oldest boomers were just turning 40, but the network's targeted audience was, surprise, 25 to 49. First mistake. If VH1 had focused on boomers, devout music lovers that they are, it might have been a rousing hit. Instead, the initial all-music, soft rock format lapsed into a cluttered lifestyle channel of standup comedy, talk shows, and syrupy middle-of-the-road oldie clips.

Enter the zoomers, a category that combines the youngest segment of boomers, those born between 1960 and 1965, with older busters, born between 1966 and 1970. They buy music by the ton and show no signs of stopping--behavior that VH1 ignored. Says Sykes: "There was a perception that once they passed their mid-20s they would be like their parents and stop buying music." But these consumers are still adding CDs to their collections and want a network to keep them up to date with new music.

The new format is thus chock-a-block with R&B and modern rock sensations Melissa Etheridge, Counting Crows, and R.E.M., the music that helped drive up CD sales 12% during the past two years. Sykes predicts it will do the same for his ratings. Levi Strauss, whose jeans clad the Woodstock generation (when it was wearing clothes), is now switching generations, forsaking boomers for slackers. The wildly successful, wider-in-the middle Dockers, introduced in 1986, aimed straight at boomers and their expanding waistlines. In soothing, reality-based TV commercials for Dockers, groups of 40ish men, some graying, some balding, sat around and talked about the good old days. Sales broke $1 billion last year.

Enter the X factor. The latest commercials for Dockers are high-energy, fast-paced shockers, as irreverent as Nirvana's songs. In one, "The Red Eye," a young twentysomething--emphasis on young--insomniac rolls backward on a plane trying to get comfortable and nearly collides with a fetching female Xer holding a teddy bear.

Why change so radically? "We could see sales were close to peaking," says Robert Hanson, vice president of R&D for the Dockers brand. "We had to figure out how to make the brand emotionally relevant to younger boomers and Generation X."

Researchers focused on three cohorts-Xers and first- and second-wave boomers-using telephone interviews, in-home visits, mall intercepts, and focus groups. The research included psychographics--evaluating emotions like fear and hope that drive brand choice--lifestyle issues, and other variables. The goal was to unite the three cohorts around one concept.

Fat chance. "Our 45-year-old boomer customers said they could identify with the imagery of younger men, but that didn't work the other way around," says Dockers division president James Capon. "Many of the Xers and younger boomers referred to Dockers as their dad's pants." Ouch. Having captured boomers, Levi has decided to place its marketing chips against Xers. That's why you don't see balding fat guys in Dockers commercials anymore.

Unlike previous cohorts, Xers have no defining moments, so companies wooing them have little to grab at. Says Margaret Reagan, a partner at Towers Perrin, a consulting firm: "It is amusing watching marketers trying to figure out how to reach Xers."

Subaru became a textbook case of how not to market to Xers. Its grunge-scene, oh-so-hip approach fell flat with Xers, who hate to be marketed at. GM's Saturn division hit the right note in a commercial in which a young lady visits many automobile showrooms and is treated shabbily by salespeople, presumably because of her age and limited budget, until she walks into a Saturn dealership. There she is greeted warmly and the staff is attentive. "This ad is always mentioned as a favorite in the Xer focus groups I conduct," says Reagan. "They like it because they can identify with her story."

Just who are these Xers? Saatchi & Saatchi (Cordiant) conducted an extensive study of the generation, employing teams of psychologists and cultural anthropologists. The research produced four key segments: the "cynical disdainers," the most pessimistic and skeptical, and the group that has gotten all the press; the "traditional materialists," the group most like boomers, positive, optimistic, striving for the American dream; "hippies revisited," who replay the lifestyle and values of the Sixties and express themselves through music (Grateful Dead), fashion, and spirituality; and the "Fifties machos," young, Gingrich Republicans who still believe in stereotyped gender roles and are the least accepting of multiculturalism. (The more extreme can cross over to skinheads.)

The five-year-old, $100-million-plus active-wear company No Fear may be a quintessential X marketer. Cool? Its first TV commercial, on the 1995 Super Bowl, failed to mention what the company sells.

No Fear, which splashes impudent slogans like NO CURE FOR DEATH and HOODLUM on its apparel, denies any generational appeal. "We don't even allow that word [Generation X] to enter our building," says Jim Hancock, marketing director of the privately held Carlsbad, California, company. "We tend to market to people's lifestyles, those attracted to the psychological challenge of sports. They could be 14 or 50." But most sales are to Xers and zoomers.

No Fear gives the impression that it succeeds on utter hipness. Not quite, dude. This company has meticulously crafted its chic mystique through intensive research and methodical niche marketing on billboards and in enthusiast magazines for surfing, cycling, and motor and bike racing.

That is the challenge of generational marketing: It requires far more sophistication than you needed in the days of calling three networks and reaching 80% of the market. Which is, of course, why the method is shunned. Says Ann Corman of Yankelovich: "Many companies look at their competition. If none of them are doing it, they figure, why should they?"

Why? Because the payback is abundant. More important, generational marketing is the next wave, and it's here now. Companies that wait any longer may find themselves a generation behind.

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