Study by BCG Shows That Millennials, Who Account for $1.3 Trillion in Direct Annual Spending, Engage More Extensively with Brands Than Do Older Consumers and Expect a Two-Way Marketing Relationship
DALLAS—The Millennial generation not only represents the consumer market of the future. It is also transforming the way in which companies must market their products both online and offline in order to be successful, according to a report released today by The Boston Consulting Group (BCG).
The report, titled The Reciprocity Principle: How Millennials Are Changing the Face of Marketing Forever, says that U.S. Millennials—the generation of people now 18 to 34 years old—engage with brands far more extensively and personally than do older generations, and they expect their values to be reflected in the brands they purchase. Because Millennials are heavy users of social media and mobile devices, the impact of their brand choices and feedback is greatly amplified and accelerated. BCG’s global research suggests that the findings about U.S. Millennials and their impact on marketing reflect similar trends among Millennials in other developed countries.
“The conventional linear and rational approach to marketing has been a process in which companies defined their brands and pushed brand and marketing messages at consumers. But this doesn’t work well with Millennials,” said Christine Barton, a BCG partner and the lead author of the report. “Millennials want and expect a two-way, reciprocal relationship with companies and their brands. As a result, modern marketing has become an ecosystem driven by interactions among marketers, customers, and potential customers, who help define brands and influence their success.”
The report is based on findings from surveys in 2013 conducted by BCG’s Center for Consumer and Customer Insight involving nearly 4,000 U.S. Millennials and non-Millennials. The surveys covered behavior, values, brand engagement, marketing tactics, and other topics. U.S. Millennials already account for an estimated $1.3 trillion in direct annual spending, of which at least $430 billion is estimated to be discretionary, nonessential spending. These estimates do not include substantial Millennial-influenced spending, such as by parents and grandparents. And this sum will grow dramatically as more Millennials reach peak earning and buying power. By 2030, the projected 78 million Millennials in the U.S. will outnumber the projected 56 million baby boomers (ages 50 to 69).
Millennials are driving a transformation of consumer marketing across five elements: reach, relevance, reputation, relation, and referral. Several findings from the BCG surveys illustrate these points:
The report suggests several actions companies should take if they haven’t done so already. First, they should set clear, measurable goals for marketing to Millennials. Companies must also transform their organizations by breaking down silos that separate different marketing and media functions, building the new capabilities required to compete in a reciprocal ecosystem, and devoting greater investment to more innovative media and tools that can measure short- and long-term returns from marketing.
“The imperative to engage and win over the Millennial generation represents an entirely new set of challenges and tactics for marketers in developed economies,” said Lara Koslow, a BCG partner who is global coleader of the firm’s marketing topic area. “This generation is ushering in the end of consumer marketing as companies have long known it.”
The report advises that companies reach out to Millennials wherever they are with a cross-media, cross-channel, cross-device brand presence. Brands should reinforce their authentic reputations and brand soul with the relevant values, personality traits, and communications. They should relate to Millennials by moving from push communications to two-way, open dialogue. And they should cultivate referrals among Millennial customers and employees.
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