Marketing to Millennials: Know Your Market to Stay on Target

Jan 16, 2012


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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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There seems to be a great deal of uncertainty about how to tap into the digital native (the Millennial generation) market. Take a breath -- the task is not as difficult or as different as some would have you think. Digital natives may be a new crop of potential customers, but many of their core drivers of demand are similar to what motivated previous generations. It's important to remember that when establishing a marketing strategy, the first step remains the same: Start by understanding what it is that the market is looking for.
It is helpful to keep in mind a simple adage coined by Ray Krok, the founder of McDonald's: "Look after the customer and the business will take care of itself." This is true for any generation (or population for that matter). Understand your customers, what motivates their demand, and meet those needs. The fact that Millennials now use multiple means to obtain and share information creates both a challenge and an opportunity. For a long time, marketers took a broad approach, as the channels available to them were geared toward a mass market strategy. The message could be targeted, but the medium reached the masses. Contrary to some current beliefs, those avenues are still available.
A global study conducted by the Economist Intelligence Unit (EIU), titled "Maturing with the Millenials," claimed that more than half of the executives polled had not yet developed a way to target, attract, or retain Millennials as customers. This is a significant insight, since this generation is and will continue to be a formidable purchasing body. They are just beginning to graduate from college, enter the work force, and establish lives of their own. With those life steps comes the need to make purchases, including the most basic ones such as a car, furniture, and food. Digital natives didn't just appear on the horizon, and it is surprising to see that companies are, to a great extent, still up in the air about how to go after this audience.
With the emergence of digital natives, companies are questioning how best to gain brand awareness with this sizable new group. As Celia Goodnow of the Seattle PI noted in her article "Millennials Thrive on Choice, Instant Results," Millennials are the second-largest generation in U.S. history after the Baby Boomers. They are coming into their own and companies want to determine how best to market to them and generate sales from them.
Digital natives have a heightened expectation of immediacy in their desire to gain information and be able to react to it now. A key element in gaining and keeping the attention of this generation is to regularly modify and update your product and message. Don't be stagnant. Keep the message simple and to the point. Accustomed to the rapid evolution of the tools that they use, digital natives want something fresh from companies trying to market to them.
Millennials are a driving force for mobile services and will increasingly be so as they move into the world and take on more responsibility for their own lives. According to Nielsen's 2009 "How Teens Use Media" report, 77 percent of teens in the U.S. already have a mobile phone. Wireless communication, a constantly evolving space, presents a big opportunity for companies. Mobile marketing and its promise has been hyped for a number of years, but only recently has it shown signs of delivering on that promise. There have been a number of hurdles holding back mobile as an effective channel: privacy concerns, the expense of data plans, ease of use, speed, and consumers' not wanting spam on their mobile devices, to name but a few.
In the information circulating about digital natives, there are many references to the idea that older generations always think the upcoming generation is different from previous ones, but that this generation of digital natives really is different. They have more communication devices at their disposal. They are much more comfortable with them and much more adept at using them. Having grown up in a tech-heavy environment, they are quick to pick up on new technology and expect improvements or new offerings to come rapidly.