Marketing to Millennials: Know Your Market to Stay on Target

Jan 16, 2012

Article ImageThe following is the first in a series of eight articles on Marketing to Millennials (aka, Digital Natives), and is an excerpt from a chapter in the book, Dancing with Digital Natives: Staying in Step with the Generation That's Transforming the Way Business is Done. The full chapter is titled: "Adapting Old-Fashioned Marketing Values to the Needs of the Digital Native" and is written by Michael P. Russell. The book is available through Amazon, Barnes & Noble, and other retailers in e-book and print format. See the end of this page for related articles.

A number of companies have taken the "we know our market" approach by using a simple demographic definition of the market, as opposed to defining the market based on an understanding of the drivers of demand. Knowing these drivers offers far more insight when establishing a market strategy.

Helio, a managed virtual wireless network operator launched as an Earthlink and SK Telecom partnership, targeted the "youth market" (i.e., a demographic definition). During its approximately two years of operation, the company burned through its initial investment of $440 million plus additional funding. Helio's idea was to offer "cutting edge" technology devices to the tech-savvy younger generation. Since it had no in-depth understanding of what made this youth market tick, Helio ultimately attracted very few customers (170,000) before it was acquired by Virgin Mobile U.S., for $50 million, which also targeted the same market. Virgin Mobile U.S. was losing customers at the time and acquiring Helio seems to have been an attempt to maintain its customer base in this demographically defined target market. Basically, Virgin Mobile U.S. bought 170,000 customers.

Helio mistakenly believed that a "youth" message and position, along with a few different devices, would draw younger consumers to it. The company did not fully understand this market's drivers of demand. Its failure is evidence that a company needs to offer products to the target market that deliver more effectively than the relative alternatives available to them in the marketplace. The larger, better-established telecom carriers offer access to similar, if not the same, content and services as Helio and Virgin Mobile U.S., and have a broader array of the latest devices, which are subsidized to make them more affordable. The large telecoms offer unglamorous "Friends and Family" plans at an acceptable price point that include a much larger "in-calling" network. Like every generation, digital natives are not immune to a good deal. While AT&T, Verizon, Sprint, and T-Mobile are not direct mobile virtual network operator competitors, they are direct competitors for the wireless services that digital natives are looking for.

Helio would have been better off examining the market and breaking it down in a granular manner, so it could develop products that appealed to specific demand components. Helio should have examined consumers' specific desires and offered products tailored to these demands. Producing offerings that address what the market segments are seeking or repositioning current offerings to respond to specific demands provide a better opportunity to resonate with the targeted market. Listen to the market, find out where consumers are spending time, and present them with products that will provide them with the benefit bundles they are looking for.

Photo courtesy of r.f.m. II, Flickr Creative Commons.

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