Understanding Generation Y

Michael Agnew presents some highlights from the Future Foundation’s research into Generation Y

Generation Y – ages 16 – 30 – is a generation facing serious financial pressures: high youth unemployment, increased tertiary education costs, aspirations towards property ownership remaining unfulfilled.

It is a self-aware group, however, and 60% recognise that they face considerably more financial challenges than those of previous generations and their attitudes and behaviours are adjusted accordingly.

Perhaps the most radical thing about this generation is how (sensibly) radical they are – they significantly over-index in terms of taking risks to get what they want out of life.

Partly this is driven by recognition that they cannot expect good things to happen; they have to make their own future in a world where tertiary education may not be affordable. Between June-August 2012, 957,000 people aged between 16 and 24 were unemployed (ONS).

For many, access to careers through traditional big-employer routes are a thing of the past. Hence a more creative view of the future and a greater spirit of self-reliance are found. Manifesting itself in an entrepreneurial drive, a third of this group would like to set up their own business. There are many high-profile examples of successful digital entrepreneurs such as Mark Zuckerberg, Jack Dorsey and David Karp, who are aspirational figures for this generation.

The ability to be constantly connected and networked is fundamental to the behaviour of Generation Y – 80% of them have a smartphone. Their lives are shaped by rapid social and cultural change as the world of digital transforms not only their social lives but their approach to careers, media consumption, information gathering and shopping; indeed, the vast majority would welcome a more efficient way to shop.

For brands to sell to this group they will need to demonstrate a strong value story. This generation is not one to spend frivolously; three quarters of them shop around extensively and use price comparison sites. Additionally, ever easier access to data, reviews, expertise and recommendations makes them the most well-equipped generation of shoppers in history. Purchases are carefully researched in advance – they do not like surprises.

In the digital age, the issue of data privacy is an ever potent topic. Four out of five Generation Y consumers would prefer to hold their personal information and exchange it for services when they choose. Almost 70% are willing for their loyalty card providers to track their purchases in order to be rewarded with extra benefits, while a significant minority believe that individualised pricing, based on past purchases, would lead to better deals.

Generation Y is the recommendation generation – 68% agree that they are more likely to buy a product or service from a friend’s recommendation and half agree that they like to make sure their lifestyles keep pace with those of their friends and family.

Recognition is important to this generation, particularly women. Generation Y like it when people acknowledge their posts or comments on social networking sites, while humour is the quality they most like to have recognised by their friends.

Through a combination of financial challenges and digital savvy, never before have Marketing Directors in every sector faced a more well-resourced, more hard-to-penetrate generation. Price sensitivity is bound to remain acute for Generation Y, while choices will increasingly be made by first seeking as much information and product-comparison as possible before committing. What this calls for is a focused commercial appreciation of the unique lifestyle pressures faced by this group. This must be respected and addressed by brands and products hoping to build loyalty.