What does generational theory tell us about consumer habits?

4th Jan 2016

In place of classic demographic age bands, organisations should use generational theory to predict consumer trends, says Stephen Hampshire from consumer experience measurement specialist The Leadership Factor. 

According to Hampshire, the experiences that individuals from the same generation share are likely to shape similar consumer choices. Hampshire cites William Strauss and Neil Howe, historians closely associated with generational theory, who believe that history can be described as a cyclical series of crises and awakenings. Allegedly, when you were born in relation to these events will have a strong bearing on your values. An understanding of these shared values, Hampshire argues, can be used to inform customer service strategies. 

The silent generation

Those born between 1925 and 1945 hold values instilled by the Great Depression and World War II – times of political tension, limited provisions and struggling economies. Duty, loyalty, respect for authority and self-sacrifice seem almost universal, and can be traced back to experiences of a nation pulling together.

Baby boomers

For those born between 1946 and 1964, however, war and depression were in the past. Rationing was phased out, men were home from war and women were starting to see an unprecedented amount of freedom. This was a very much a post-crisis era of ‘awakening’. 

According to Hampshire, boomers – such as Steve Jobs – have been the engines of some of the most of the exciting companies in the world. But why is this generation so relentlessly driven, so entrepreneurial, so confident? “They were moulded by good times,” he explains.

Generation X

The next stage in the cycle is generation X, consumers born between the mid-1960s and mid-1980s. By and large, this generation distrusts authority and shows a shared desire for individuality, customisation and self-expression. Brands love generation X, and generation X loves brands.

Millennials

Finally, we have the millennials. Born between 1980 and the early 2000s, millennials grew up in a world of increased optimism and global connectedness. According to generational theory, they were nurtured and protected in childhood, are at ease with technology and are likely to demand a rationale for instructions or requests. 

But how can organisations use this theory to tailor their services to different customers? While the silent generation has mostly retired, they still have significant spending power, Hampshire warns. Baby boomers still carry the most power in this regard, but generation X is starting to take over the reigns. Service strategies that appeal to the latter will tap into the concept of collaboration between customers and businesses. The key to appealing to the millennials, on the other hand, is to ensure social platforms are harnessed. 

“There are obvious things like preferred channels and forms of address, but also more subtle considerations,” says Hampshire. “For example, older generations are more likely to use authorities such as Which? or professional reviews as sources of advice on products.” Meanwhile, generation X is more likely to turn to other customers, while millennials will seek advice from friends or social networks, he adds. 

But generational theory not only gives organisations a framework that helps them to understand customers better, Hampshire explains. If used well, it may also give us an insight into the future.

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