Playing the generation game

Marketers tend to group young adults together, but new research shows how segmentation can provide a more sophisticated picture of today’s youth

The young adult market poses one of the biggest challenges for marketers. Not only does this growing market have more buying power than ever before, but there also exists a sophistication created by the information age, which demands consumer segmentation within this group.

Datamonitor’s new report, Young Adults’ Consumption Behaviour, finds that this segment presents marketers with a paradox. The most successful consumer packaged goods brands, such as Coca-Cola, appeal to all youth groups but there is also a need to target the behaviours of specific groups within this generation. This segmentation must depict groups that are worthwhile targeting in their own right, as well as offer insights into characteristics common across all groups.

All too often marketers pick up on new segments of the youth market, but there is a tendency to get caught in the hype. Some of these segments are important, but Datamonitor believes that segmenting young adults by lifestage is often more appropriate than lifestyle.

Lifestage segmentation allows advertisers and marketers to identify the specific needs of each group as well as characteristics common between groups. Such information is crucial – to avoid the dangers of a one-size-fits-all message without focusing on too small a target group. It also identifies stages at which changes occur in purchasing behaviour.

Datamonitor says there are three main lifestage groups to consider within this market. The first group is “teenagers”. Datamonitor’s definition of a teenager is of a 14to 17-year-old, either in full-time education or in employment. These teenagers typically still live at home and their parents have a strong influence over them. The second group is “students”. These are aged between 18and 24-years old who are in full-time education. The third group is the “newly employed”, comprising those aged between 18 and 24 in their first year of employment.

Examining the different demographic trends among these lifestage groups highlights that marketers may need to update their strategies. The number of 14to 24-year-olds in Western Europe is in decline, as is the number of teenagers and the newly employed. It is only the students group that is set to expand.

Young adults’ incomes offer a more comforting story. Youth incomes have risen quickly in the past, but although the rate of increase will not be so great in the future, young adults’ incomes are set to grow. In 2002, teenagers in Western Europe had a total income of E9.9bn (£6.8bn), which is forecast to increase to E10.8bn (£7.5bn) in 2007. Students’ total income will increase from E114.7bn (£79.3bn) to E133bn (£91.9bn) over the same period, and the income of the newly employed will increase from E33.8bn (£23.4bn) to E34.9bn (£24.1bn).

Across the young adult groups there are several common characteristics. In different ways teenagers, students and the newly employed are all seeking to affirm their increasing level of maturity. One way in which they can achieve this is by showing how “adult” their tastes are. Personal care manufacturers have targeted this in the past but, increasingly, food marketers will also incorporate this into their marketing.

Other areas that affect these consumers are the need to belong to a group and overcome their lack of experience of buying and using consumer packaged goods.

For some, targeting these needs will be worthwhile. For others, though, there will be a need to be more specific and the distinct needs of each young adult group provide a basis for doing this. As long as potential returns justify it, Datamonitor’s research shows that product development and updated marketing can be used to target each group. For instance, teenagers often require concentration and energy boosts and, with concerns about teenagers’ levels of calcium intake, opportunities for calcium-enriched goods are also emerging.

Students who live away from home often require help in preparing meals as many have poor cooking skills. This offers manufacturers and retailers the chance to attract students to their brands by offering education about their products.

The newly employed, a smaller group but one with more money, are often seeking to differentiate themselves from the student-lifestyle that many of them have recently left behind – making them likely to trade up to higher-quality brands.

Segmentation along the lines of lifestage provides invaluable information about young adults’ needs, and highlights common characteristics that can be targeted. Datamonitor believes that the challenge for manufacturers and retailers is either to successfully incorporate brand values into their goods that have appeal to all young adult groups or, if seeking to target one specific group, ensuring that sufficient returns can be made to justify it.

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