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Social Responsibility: Marketing Luxury to Gen Y
Written by Buddy Hobart on July 31st, 2009
There has been a great deal written lately (such as this Business Week article titled “The Leaner Baby Boomer Economy”) about how luxury brands will suffer because Baby Boomers are pulling back on large purchases. Demographics show that Gen X does not have sufficient numbers to replace the buying power of the boomers. Marketers are turning their attention to Gen Y, who has more members than the boomers.
While this is a good idea, Gen Y is not in a position to replace boomers when it comes to $75,000 cars. While Gen Y loves luxury goods and services, Gen Y will not be able to make these big ticket purchases for quite some time. A luxury marketing strategy for Gen Y will need to focus on “affordable luxury”, not on true high end products. Things like massages and upscale restaurants may be pricey and a luxury, but at least Gen Y can save up and afford the indulgence.
A bigger concern I have is for businesses whose TARGET market is Gen Y. There is a subtle shift in Gen Y’s buying habits that should not be ignored. Gen Y has shifted their focus to more value based purchases and are making more conservative buying decisions. Why? The high unemployment rate among Gen Y is only part of the answer, not the entire answer.
Gen Y is a VERY aware group. While one of the prejudices against them is that they are self centered, the opposite is actually true. Gen Y does not believe it is “all about me”. Most (if not all) Y’ers know someone looking for work and struggling. They are AWARE or what is happening, at a very deep level. Even if they can personally afford a certain purchase, Gen Y will hesitate simply because they know that times are challenging. The purchase must not just satisfy their personal need, it must also contribute to some sort of greater good.
This is why I believe marketers who are emphasizing value, versatility and support of causes that will affect positive change will have an edge. One such example is the Thermos Hydration for All campaign that benefits charity: water. Gen Y will not spend their disposable income just because they can. In fact, Gen Y looks to boomers and X’ers for leadership. If these groups are making more conservative buying decisions, Gen Y is likely to follow.
