Companies in the U.S. are very much focused on the “aging out” of the Baby Boomer generation, and what it means for their business. From my perch in Taiwan, it seems as if the main focus in the U.S. is on the difference between Baby Boomers and Millennials.
Here in Taiwan, many are taking a longer view, making comparisons between Boomers and Generation Z on questions important to manufacturers and retailers. We recently conducted research on the Boomer/Z differences for those who want to get ahead of the curve, before Generation Z becomes a group with significant disposable income.
It’s an important topic here. Of a total Taiwanese population of 23 million, Boomers represent 5 million, and Generation Z represents 3 million. The Boomers are passing out of their high-spending years, while Generation Z head toward theirs. And there will be a lot of competition for Generation Z, because it’s getting smaller—Taiwan is an aging society. Between 1990 and 2010, those aged 14 and under dropped from 21.2 percent to 15.65 percent of the population, while those aged 65 and over increased from 8.6 percent to 10.74 percent.
Most large Taiwanese companies understand that this group represents their long-term future. As such, it’s crucial that they understand how members of Generation Z differ from the Boomers who have propelled successful Taiwanese companies to significant heights today. I’m not sure, however, that all of these companies see just how crucial the differences are—and I would say the same of multinational companies doing business in Taiwan.
None of this is to say companies should not be attending to changing attitudes among Boomers. Far from it: in a society in which the mandatory retirement age has just been revised upwards to 65 years, Boomers will remain a force to be reckoned with for a while. As such, although our research focused most on the differences between Boomer and ‘Z’ attitudes, we also discovered—and flag here—some changes in the way aging Boomers think.
For instance, 53 percent of consumers between 50 and 65 pay attention to the price of daily essentials. Not surprisingly, then, 72 percent of them are open to changing what they buy based on promotions—a clear signal to marketers that well-designed promotions are promising ways to change Boomers’ buying behavior. But at the same time as they show evidence of price consciousness, Boomers want to spend more on themselves: In 2008, 35 percent said they “wanted to treat themselves better.” In 2013, the number was 43 percent. How do they treat themselves better? They spend more money on food, cigarettes and alcohol, and travel than other cohorts. And they spend more than they used to in pursuit of a youthful look—the percentage changes between 2008 and 2013 on body and facial care, cosmetics and hair coloring have all gone up significantly.
These are important changes, and companies should consider adjusting their business models accordingly. More important for their long-term success, however, are a number of changes between Boomer and Z behavior that will determine whether companies thrive or falter. Some of what we discovered will not be a surprise—but there were also some unexpected results.
First, and not surprisingly, Generation Z wants to be trendy. The numbers for those who “like trendy things” and are “always the first to use a new product” are 69 percent and 44 percent, compared with 51 percent and 38 percent for the total 12-65 cohort.
They also like “hanging out with friends” more than the total cohort—but, surprisingly perhaps, more of them do things alone (64% versus 59%). Similarly, it’s no surprise that teenagers and young adults are less comfortable with people they don’t know than the larger cohort—but it’s interesting that they are made more nervous by unfamiliar surroundings. They are also measurably less confident than the total cohort—by a margin of 57 percent to 49 percent.
They also like to share their thoughts and feelings with others with others about what they have just bought or used (72% said yes to this), which perhaps also suggests that they would respond well to easy-to-share mechanisms now driving the share economy. But when it comes to their actual purchase activity, no one will be surprised to hear that they register higher on impulse buying by about 10 percent. They are also willing to identify themselves as materialistic at higher rates (57% to 44%). By similar margins, they are more willing to spend on leisure and entertainment than on saving than the total cohort. All in all, it seems clear that marketers who create an attractive environment could benefit greatly from these attitudes. Indeed, in line with a greater level of materialism, Generation Z scores very high on the feelings a product evokes in them (82%), on willingness to spend more for design (70%), and on their desire to “shop and dine in stores with great atmosphere and decoration” (82%).
Finally, they consume information in different ways than Boomers. They are more responsive to ads, which are the major tool for them to know a product (77% versus 66% for Boomers), and can increase their preference for a brand (72 versus 55%). They are significantly more likely to purchase a product simply because they like the ads (68% versus 51%). Similarly, they are more open to other traditional influences: 67 percent would pay attention to what experts say, 60 percent listen to those around them, and 51 percent are influenced by celebrities. The comparable numbers for Boomers are 54 percent, 43 percent and 41 percent.
What does all this mean? For this particular survey, that companies need to give Boomers reasons to treat themselves better and help them feel and look young—and to recognize that winning Generation Z can be done through ads; that they are likely to respond well to the effective use of experts and fan pages; that they care about design and atmosphere—and that, like most teenagers and many young adults, many of them like the spotlight! More generally, that companies need to keep a close eye on the changing attitudes of this generation as it becomes the most important customer for their products, as not all their attitudes will be intuitive.