Academic journal article Academy of Marketing Studies Journal

Generation Y: Purchasing Power and Implications for Marketing

Academic journal article Academy of Marketing Studies Journal

Generation Y: Purchasing Power and Implications for Marketing

Article excerpt

ABSTRACT

The study examines the buying habits of Generation Y The sheer size of the market of some 80 million strong makes it worth the attention of any retailer. The difference between Generation Y's purchasing power and Generation X's purchasing power is amazing. The income of the younger generation is used for more than just entertainment purposes, such as toys, but also for more adult-like purchases, such as stock. The researchers sought to determine what impact this had on the market compared to Generation Xers.

INTRODUCTION

During the mid to late 1990s, the literature was replete with information about Generation X, the 46 million Americans between the ages of 20 and 33 having come of age in the 1980s and 1990s, and who were dramatically different from preceding generations in terms of attitude, language, culture, lifestyle, orientation, and aspirations (Burandt, 1997-, Morrison, 1997). Today, Generation Y (those boom from 1977 to 1997) seems to be edging out Generation X in terms of coverage in the literature and with emphasis upon the financial clout this group of young people has. Currently, there are said to be some 80 million members of Generation Y, those individuals between the ages of one and 20. "Of the $6.5 trillion spent annually by consumers in the U.S., some $600 billion is spent by the 80 million members of Generation Y" (Gronbach, 2000a, p. 45). Other terms applied to this generation are Echo Boomers (Gronbach, 2000b), Net (or Internet) Generation, Nexters, Millenials, and Nintendo Generation (Alch, 2000).

CHARACTERISTICS OF GENERATION Y

They Have Time and Money

Today's Generation Y teenagers have grown up with a greater degree of affluence than any generation before them. Offspring of the Baby Boomers, today's teenagers, the leading edge of the Generation Y market, are defined by two things: time and money. Because, in most cases, both parents of Generation Y teenagers work outside the home, they have been able to provide their children with four times as many toys when they were growing up as were provided to children of 20 to 30 years ago (Gronbach, 2000a). For example, in 1972, the average child received $50 in toys during the year; in 1992, when the Echo Boom hit, that amount went to more than $200 per child per year (in adjusted dollars). Consequently, today's generation of seven-to-12 year-olds have high expectations in terms of future purchases (Gronbach, 2000b).

Now spanning 3 to 23 years of age, these young people have $150 billion in direct purchasing power today, more than their parents ever had at their age, and about $500 billion indirect purchasing power. According to Teenage Research Unlimited, there are 31 million kids in the U.S. between the ages of 12 and 19 (Barrett, 2000). Teen income was estimated to be $119 billion in 1998, and it has been projected to grow to $136 billion by 2001. The younger members of the Echo Boomers Generation (4-12 years old) had about $28 billion in income (Alch, 2000). Teenage Research Unlimited estimated that Generation Y teenagers spent $153 billion in 1999, 8.5 percent more than 1998. TRU also estimated that this group (those between 12 and 19) would increase by four million (to 35 million) by 2010, making it the largest teen population in U.S. History (Barrett, 2000). Many of these young people are, and will be, living in broken and blended families, having extra sets of grandparents who are happy to add to kids' pocket money (Alch, 2000).

They Are Self-sufficient, Responsible, and Mature

The fact that both parents work outside the home has also made these teenagers more self sufficient, responsible, and mature than any other generation. For example, teens have assumed the responsibility for the family's grocery shopping, giving them a direct impact on the American marketplace. Because they also do much of the meal planning and cooking for the family (including their parents), they shop for prepared foods such as Hamburger Helper, etc. …

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