The 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.
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” (March 12, 2007), 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.
In our hyperconnected society, companies are no longer in complete control of the time and place by which they communicate to the market. They need to make adjustments to their strategies if they hope to reach the digital native market. In 2006, Teen Research Unlimited (TRU) found that U.S. teens spent $179 billion on everything from clothing to music. A 2009 AOL study, “Three Screen Nation: Marketing to Gen Y,” states that members of Gen Y spend an average of $2,200 per year, with cell phones and fashion topping their list of expenditures. They also influenced purchases of food and other items for the household. Clearly, going forward, this generation will have a significant impact on the bottom line of many companies.
Digital natives were born into a world where they have always had multiple means to access content and communicate-sometimes simultaneously-and it can be a daunting task to figure out the appropriate mix of message and channel strategy to reach them. The challenge facing companies out to woo this market is to break through the abundant white noise and capture their attention, to build awareness and an enduring customer base.
Scion, a car manufacturer launched in the U.S. in 2003, worked off Microsoft’s New Marketing Playbook, which outlines the so-called important strategies for winning over and establishing brand loyalty with the digital natives. “Scion’s target buyer is information rich, time poor and highly technology savvy,” said Jim Farley, vice president of Scion. “Scion will cater to this influential generation with unique products, a distinctive dealership environment and a revolutionized sales process, all complemented by an astonishing sticker price.”
Armed with an interactive website for product information, a lifestyle/automotive magazine, and participation in lifestyle events, Scion was poised to take over this new consumer group. Initial response to products was good. Sales grew through 2006 and then saw a dramatic decline with the introduction of updated models. In addition, the demographic Scion had been targeting was overtaken by older buyers: The median age of buyers was 30, but 42 percent of Scion sales were to those 36-55 and only 38 percent to the 16-35 age group.
Scion set up its showrooms along the lines suggested by Microsoft’s automotive study: available products, self-serve internet kiosks, big screen TVs highlighting the vehicles features, and the opportunity for customers to discover the product at their own pace. Customers were presented with basic models to keep the decision process very simple and straightforward. They were then offered the ability to customize and personalize the vehicle with an assortment of 40-odd accessories.
Scion was left wondering why the 36-55 age segment snapped up cars in even larger numbers than its target market. First, even though digital natives grew up immersed in technology, they are not the only ones using it. The sort of sales tactics used in Scion showrooms actually appeals to individuals across many market segments. However, what Scion failed to identify and leverage were any benefits of Scion ownership that would appeal specifically to Millennials. Scion is now focused more on the potentially negative effect of the car’s popularity among older customers, and the effect this will have on its perceived “coolness” among younger buyers. Scion should instead invest energy into discovering why, even when digital natives did purchase the car, these “trend- setters” didn’t share positive reports with their peers. The company should be trying to determine whether the car failed to deliver in the eyes of these potential consumers.