Indulgent, opinionated, short attention spans, frequent job-hoppers. These are a few labels that have characterised Millennials.
However, we’re all products of our own generations, and Millennials are no different. They’ve grown up in an era which has witnessed an unprecedented speed of change in technology and connectivity; drastically influencing consumer behaviour.
Effective marketing to Millennials, therefore, requires a deep understanding of their psyche, which can only be done if we look at their stereotypes as new types of demand. They’ve grown up in an age of disruption, and companies need to disrupt their own marketing strategies to appeal to them.
Making sense of the trillion-dollar goldmine
Millennials now form a quarter of the world’s 7.4 billion population and will comprise half of the total global workforce. On top of that, one in three purchases will be made by them in 2020 and they are set to grow their buying power to a whopping US$1 trillion.
Companies looking to thrive in this growing consumer market hence need to align their strategies with Millennial demands; however conventional methods won’t be enough as over 84% of Millennials don’t trust traditional advertising. To explain this, we need to look at how Millennials have been shaped by their environment.
The rapid evolutions in technology have shifted social connectivity from physical realms to digital ones – giving rise to online retail. This has led to an explosion of choices as brands can now offer a greater variety of goods without being constrained by physical limits of brick-and-mortar stores.
This abundance of choice, however, also comes with congestion, and therefore brands need to do more to cut through the noise to attract today’s consumers. It’s no longer enough for a company to sell something based on just the product’s merits. It needs to be packaged as part of a greater experience, which is what over 70% of Millennials are willing to put their money down on.
Buying into personal development – lessons from Lululemon
Experiences are only one part of the Millennial buying mindset; they value brands that resonate with their ideology and celebrates their unique identity. As Millennials have grown up with digital technology, they are savvier than previous generations and often disregard generalised marketing approaches which focus more on product features, rather than how they – as people – would truly benefit from them.
Millennials want the brand that they’re engaging with to treat them as human beings, which is especially important today where digital connections are superseding physical ones. They want brands to build a relationship with them and promote their personal development, rather than being viewed as just paying customers.
This is a trend that brands like Lululemon have successfully taken advantage of. The sports apparel brand – which primarily caters to yoga enthusiasts – has shied away from traditional marketing tactics, relying heavily instead on word of mouth recommendations and community building. This may seem slow and cumbersome, but Lululemon has attracted a global following due to what’s called a ‘holistic guerrilla marketing approach’, which positions the purchase of its products as being connected to a larger community. For example, the way their staff engage with customers is more akin to yoga buddies talking about setting goals, rather than the product pitches from salespeople.
On weekends, Lululemon stores turn into fitness and conversation hubs to raise community involvement. Closer to home in Singapore, the company converts open spaces to host yoga classes, as they have done outside of ION Orchard and in the Marina Barrage area.
Offering experiences with lower commitments
Brands such as Lululemon are showing how prioritising experiences can generate a massive Millennial cult following, however another side to this experience which today’s marketers need to be cognisant of is value extension. Millennials today are shaped by growing student debt and have grown up through a series of global recessions. As such, owning a product for an indefinite period of time is seen being committed to it.
Satisfaction towards a single product – for Millennials – is diminishing at a faster degree as compared to previous generations. Millennials have a greater desire to experience new things at a faster pace, and so they see sharing as a more attractive option over owning as it they perceive it to carry lower commitments.
This is the attraction of the subscription economy, and explains why modern consumers, are likelier to subscribe to a service instead of buying products that just clutter their home in the long-term. Point in case, Spotify and Netflix have effectively replaced the album purchases and movie rentals of yesterday with monthly subscription fees that give the customers a much wider array of choices. Essentially, these platforms offer that low-commitment proposition with affordable monthly fees. At the same time, these companies have benefited from the past decades’ rapid tech developments to make accessibility of their services more seamless for the digitally-savvy consumer.
It’s evident that subscription services gel well with the Millennial purchasing mindset and, over the next 2 years, the preference for these services is projected to grow even further. But subscription services are now moving beyond entertainment items; they’re now entering areas where ownership has been necessary yet burdensome – car ownership.
Today’s ride-hailing services have attempted to bridge the ownership-commitment gap, but they don’t offer the convenience of driving their own car. This is especially tough when you want to take your car out for a weekend excursion or go on that long-planned road trip with your friends. Instead, we’re now seeing a birth in car subscription-based services, which – for Millennials who struggle to finance a brand-new car – provides a low-commitment option for something that’s been typically flagged as high-commitment.
Just like streaming services, car subscriptions charge an all-in, monthly flat fees which not only include the use of a car, but also the insurance, maintenance, road-side assistance and road tax that come with owning a car. This is vastly different from rentals, as the consumer will effectively own the car for as long as they like, but have the added flexibility of changing their vehicles regularly, so long as they pay the all-in monthly fee.
This is a dream solution for enthusiasts who like the feeling of trying different cars and – for everyday drivers – a more practical one as they can trade in their cars for others based on their different needs. These services are providing today’s generation of drivers the unmatched experience of driving their own car without being tied down by the normal ownership burdens.
It’s by marketing these low commitment experiences, one that Millennials crave for, that car subscription services can shake-up traditional car ownership as we know it.
This post is written by Manisha Seewal, group CMO of Carro.
(Photo courtesy: 123rf)