We’ve been relying on assumptions around generational buying behaviors for decades. But how up-to-date is our understanding of the life stages and experiences of each generation today? What is the driving mindset behind these generations? What are the behaviors expressed by these groups? While generational divides are helpful for consumer products companies to consider at a 30,000-foot view, it’s important to remain cautious of over-generalizing demographic groups, as it can lead to stereotypes that outlast the real and dynamic nature of people. It’s also important to recognize the historical events impacting generations and the effects on smaller sub-sets of people. Let’s take a look at some updated data to better understand how generational differences influence purchasing behavior in the market today: 

How Do Generational Differences Influence Purchasing Behavior?

The Baby Boomer Generation (1946-1964) 

Baby boomers (60 to 78 years of age) account for 69.6 million people in the United States and remain the wealthiest generation, spending more than $548 billion per year. As one of the last generations that have a secure and financially free retirement, they are investing in the younger generations. Whether that be in their children’s or grandchildren’s education or the latest tech gifts for their youngest family members, they remain critical in influencing downstream family members.  

Despite the fast pace of technological advancements, more and more Boomers are becoming adept at the latest technology and are actively online shopping. They account for $7 billion of annual online spending, and at least 82.3% of the generation belongs to at least one social media site – Facebook and LinkedIn being the two most popular within the group. Their increased presence online isn’t just for socializing; Boomers are using the internet to discover new and exciting products. This requires thoughtful marketing campaigns from companies who need to cater to a generation willing to put in the research of the products they’re buying.  

Overall, Boomers have been building a lifetime of brand loyalty, and they crave high levels of attention and personal service from their brands. While consumer products companies may be tempted to change strategy to go after a younger audience, Boomers continue to offer a stable core for many brands.  

Generation X (1965-1979) 

Generation X (45 to 59 years of age) can be a challenge to understand. Sandwiched between two extremely influential generations, the first half of the group tends to lean toward the characteristics of their predecessors, the Boomers, while the latter half tends towards Millennials’ buying habits. This makes Gen X quite difficult to nail down with their unique identity. 

Currently, a majority of Generation X is in their most stable spending years, with many of them falling into the highest-earning years of their careers. They’re in extremely influential positions over their households and the companies where they hold jobs. With such a level of influence, what are the key influencers on this generation?

Over 75% of Gen Xers are on some form of social media, using those platforms to research companies and gain different perspectives on brands and products. They read through reviews and are extremely likely to write their own. Gen Xers crave authenticity to bring back to their families and  value security for their family’s future and their financial future as well. As such, loyalty programs, promotions, and discounts heavily influence Gen Xers to invest in your brand and products. Cultivating a relationship with Gen Xers will yield strong dividends for years to come as this generation wields influence and spending power.   

Generation Y, a.k.a. “Millennials” (1980-1994) 

Brands may be surprised to realize those young consumers they were courting for the past decade are now between 30-44 years old. While still an appealing target for many CP companies, given their sheer size and, therefore, purchasing power, Millennials have surpassed the Baby Boomer Generation as the largest generation, currently accounting for 21.67% of the U.S. population. This equates to 21% of consumer discretionary purchases, which is estimated to yield around a trillion dollars in buying power. 

While there’s a lot of money to be spent, Millennials are an extremely cautious generation. They’re currently facing a future with less financial freedom compared to previous generations, as many are struggling with the burdens of student debt and an uncertain job market. This caution has led to the lowest brand loyalty seen in generations, with less than 30% reporting they’re unlikely to repeat buy from the same brand. Millennials are using their tech-savvy nature to research the brands they’re buying from, which also contributes to Millennials now buying from brands that are more closely aligned with their own personal values. They’re naturally skeptical of advertising, specifically “traditional” outbound advertising (e.g. email marketing). Instead, they will research brands on their own and seek out authentic messaging from brands with whom they can form genuine relationships.  

Millennials respond well overall to user-generated content, as they like the social aspect and tend to follow social commerce to influence their buying decisions. If they can find someone who has used that brand’s products and the products have positively impacted that person’s life, they will be more able to envision their own lives with the product, and therefore, invest in the product. Brands must cultivate a relationship and trust with Millennials – with a powerful pull towards technology – as they build their families and financial power. 

Generation Z (1995-2009) 

Members of Generation Z (15 to 29 years old), also known as “Gen Z,” currently comprise 20.88% of the U.S. population. They are already making their mark in the workforce, even with younger members of the generation taking on “side hustles” to make money. This all contributes to $360 billion in market spending power, proving how influential and strong they are in the market. Straddling teens at home and those newly entering the workforce, this generation is split into two very different life stages. The variation of life stage makes it nearly impossible to treat this as “one generation” but more as sub-segments within the group.  

They are the first digitally driven and data-native generation, and this competency in technology allows them unprecedented access to companies and their products. Gen Z has even less brand loyalty than Millennials and is quick to shop around to find the best deals. Peers and influencers play a strong role in both trend setting and information for this generation; product reviews and witnessing the experiences of their generation on TikTok, YouTube, and other channels drive purchasing in ways never seen before.  Finding a connection through social media is what Gen Z has grown up doing – they can find communities anywhere and everywhere. Because this is how the generation connects to the world around them, they feel empowered when creating conversations online or when accurately represented in digital marketing. Therefore, brands that are more entertaining and have more of a personality will connect better with Gen Z, as they see the brand active in their communities and feel more connected.  

This integration into Gen Z’s communities will come with challenges, however, as they heavily review and scrutinize a company’s values and mission prior to investing in a brand. To buy from a brand is to trust a brand, and this generation places high importance on whether or not a brand’s ethics and corporate responsibility aligns with their expectations.  

Generation Alpha (2010-2024) 

The first generation born entirely in the 21st century, Generation Alpha (newborns to 14 years old) is already making their impact on the market. With 2.8 million born each week globally, Gen Alpha is quickly becoming the most diverse generation thus far. Generation Alpha will be an ongoing challenge for businesses to completely understand but some things are becoming more evident as these kids age. With all the social influences on young people today, they start even earlier in advocating for what they want with their parents.  A strategy for this generation will include the young people themselves as well as their parents.  Gen Alpha are Millennial’s children and they certainly act like it. They are heavily influenced by their parents and their spending habits just as their parents are influenced by what they want – namely based on what they are seeing on social media. Therefore, despite not having a discretionary income, they influence their parents’ and grandparents’ spending.  

While Generation Alpha seems like an outright great investment, there’s an inherent challenge in marketing to a young generation. Companies need to consider the stability of their brand to consumers that are growing and changing. They need to understand and be willing to invest in the risk of having a brand name that will evolve and change with the generation it’s being advertised to. It will be a balancing act to follow and grow with Generation Alpha as their values grow and develop as well.  

Final Thoughts  

Overall, the ideas and values of each generation are extremely influential in how they approach brands and decide where they would like to invest. Brands need to understand the role different generational targets may play in their portfolio and craft their products and message accordingly while ensuring their tone and message is genuine and authentic. Each generation brings a certain perspective, whether financial, technological, social, or emotional, to their spending patterns and relationships with consumer products companies.  

It’s critical to have a sound strategy and execution plan against these targets. Contact Clarkston’s sales and marketing experts to build and execute your generational marketing strategy.