Key takeaway

Demographic segmentation of customers is no longer an effective way to predict customer behaviours and mindsets. Instead, we are entering an age of post-demographic consumerism.

• It is no longer possible to predict customer behaviour and mindsets effectively by demographic segmentation according to age, gender, location, income bracket, and so on.
• Instead, thanks in part to the global brain and the erosion of traditional social norms, consumers are more free than ever to construct lifestyles and mindsets of their own choosing.
• As a result, new ways of consuming, and new products, services and campaigns, can now spread rapidly and unpredictably across the old demographic customer segments.

The insight

Consumer behaviour can seem increasingly unpredictable. In a recent poll, 67 per cent of men say they would be willing to change jobs to better balance family life, against 57 per cent of women.¹ Asked to plot themselves on a sexuality scale, 49 per cent of British 18–24-year-olds choose something other than 100 per cent heterosexual.² A full 74 per cent of Chinese consumers are likely to consider whether a product is fair trade, sustainable or helps a charity, a higher proportion than in New Zealand.³

These data points give glimpses of one of the most important recent shifts in consumerism, and one which will require a fundamental overhaul of the demographic-focused approach that companies have turned to in order to understand and predict consumer behaviour for decades.

In short, we’re entering a world of post-demographic consumerism, in which consumption patterns are much less defined or predictable by traditional demographic segments, such as age, gender, location, income, family status and more

Mattin believes this trend will have a fundamental impact on those in online retail who previously have relied on demographic frameworks to segment and target consumers. But it will also have a far-reaching implication for senior executives in all consumer-facing businesses: namely, that little, if anything, will remain the preserve of a single demographic for long.

A strategic landscape where any product, service or business model that solves a pressing need, or satisfies a fundamental desire, will rapidly spread beyond its initial demographic is a very different one from what most B2C professionals are used to, and many still assume exists.

What is driving this trend?

This new era is driven by the convergence of many of the mega-trends that have shaped the economy and society over the past decades: globalisation, urbanisation, mass affluence and expanding consumer markets, widespread adoption of digital technologies and increasing socio-cultural diversity. For consumers, these mega-trends manifest themselves across four increasingly post-demographic dimensions:

1. The global brain
   Consumers of all demographics and in all markets increasingly buy and use products and services from the same mega-brands: Apple, Facebook, Amazon (the technology sector is especially universal), IKEA, McDonald’s, Uniqlo, Nike, and more. Alongside these global mega-brands, the global reach of information has also created a convergence in tastes and outlook among consumers, from 16 to 60 and from Boston to Beijing. BBC Radio 1’s head of music recently observed, ‘If you look at the list of the 1,000 favourite artists for 60-year-olds and the 1,000 favourite artists for 13-year-olds, there is a 40 per cent overlap.’ It is arresting to note that pop music, once one of the most reliable indicators of generational boundaries, is now becoming increasingly cross-generational.
2. The erosion of social norms
   Perhaps not always politically, and certainly not uniformly, societies around the world have become more socially liberal as many conventions – from family structures to gender roles – have collapsed. Cities, with their greater social freedoms and exposure to alternative lifestyle choices are a key factor here: 87 per cent of BRIC feel that living in a city has expanded their worldview, whilst 85 per cent like the freedom of city life.⁴ The choice and freedom found in cities gives individuals more opportunities to construct their own identities outside of the traditions of their specific demographic.
3. Choice explosion
   Individuals are now able to personalise – and express themselves through – their consumption to a greater degree than ever before. This is being driven at a macro level with the global expansion of the consumer class and the explosion of product choice in mature markets, but also on an individual level where digital experimentation allows for greater experience at lower cost, and by online social networks (enthusiastically used by all demographics), which allow people to identify with brands, products and services, even if, perhaps, they cannot or do not purchase them.
4. New forms of consumer status
   The pursuit of status is one of the key drivers of all customer behaviour in affluent societies. Traditionally, status has been about wealth display: the sports car, designer handbag or expensive jewellery. But today we are so affluent that even these status markers are losing their power. Instead, consumer status in affluent societies is starting to orbit around a more diverse set of issues: taste and sensibility, ethics, creativity, and more. That has made it harder to predict how affluent consumers – who typically are older – will behave, think and spend.

What does all this mean?

So, powerful forces are driving the emergence of post-demographic consumerism. What does this mean for customer behaviour and for the brands trying to serve those customers?

When it comes to customer behaviour, the top line implication is clear. That is, it is no longer possible to reliably predict how customers will act, think and spend by looking at their demographic profile: that is the age, gender, location, income bracket, and so on. Of course, no one ever claimed that the demographic model was perfect when it came to predicting customer behaviour. But today, its predictive power has been significantly weakened by the forces discussed above and the emergence of post-demographic consumerism.

These changes were powerfully summed up by the vice-president of product innovation at Netflix, Todd Yellin, when discussing how Netflix predicts what its users will want to watch. Yellin said: ‘Everyone thought, “if you find out their age and gender data, that’s fantastic”, and what we learned was that it was almost useless. It’s not who they are in a superficial sense, like gender, age, even geography. It’s not even what they tell you. It’s what they do.’

It is hard to imagine a more powerful and straightforward acknowledgement of post-demographic consumerism.

As for the consumer arena and the brands moving in it, the key implication of this trend is the way that new products, services and campaigns will spread much faster across demographic boundaries.

Yes, younger, affluent consumers are still (usually) the earliest adopters of new products and services. They are more open, more experimental and have fewer commitments. But any and all revolutionary – or simply just compelling – innovations will be more rapidly adopted by, and/or reshape the expectations of, any and all demographics. Society is now too fluid, ideas now too available, the market now too efficient, the risk and cost of trying new things now too low (led by the digital world, but increasingly the case for physical products, too) for this not to be the case.

Indeed, we see this again and again when looking at the adoption of novel and supposedly niche consumption habits. Another example (to add to the ones opening this article): a 2014 study showed that whilst 48 per cent of those who had used collaborative consumption platforms (such as Airbnb, Zipcar and Kickstarter) were aged 18–34, 33 per cent were aged 35–54 and fully 19 per cent were aged over 55.⁵

How should brands respond?

How should consumer-facing brands respond to the rise of post-demographic consumerism? Mattin and TrendWatching see four main opportunities and responses from successful post-demographic brands:

1. New normal
   Embrace and celebrate new racial, social, cultural and sexual norms.
2. Heritage heresy
   Be prepared to re-examine or even overturn your brand heritage.
3. Cross-demographic fertilisation
   Look to seemingly foreign demographics for inspiration.
4. Taste-led targeting
   Use data to target the ‘segment of one’.

Below we explore each in a bit more detail.

1. New normal

Embrace the new normal. To thrive in a post-demographic world, celebrate and cater to the new and diverse range of lifestyles and attitudes that it is creating. In January 2016, for example, the men’s deodorant brand Axe unveiled its latest TV ad for the US market. The ‘Find Your Magic’ clip shows a variety of men – from a dancer wearing heels and women’s apparel to a political protestor running from the police and one man in a wheelchair dancing with his girlfriend. The brand states, ‘No must-have, must-be, fashion norms or body standards. The most attractive man you can be is yourself. So find what makes you, you.’ Meanwhile, UK brewery Brew Dog launched the No Label beer in November 2015. Billed as the world’s first ‘non-binary, postgender beer’, No Label is made with Jester hops, which naturally change sex during growth. The 4.6 per cent ABV beer is available to buy online and all profits go to Queerest of the Queer: a London lesbian, gay, bisexual and transgender organisation.

2. Heritage heresy

Be heretical towards your brand heritage. In a world where customers are no longer behaving as expected, neither should brands. Instead, brands will have to be prepared to reimagine or even overturn years, or even decades, of brand history and tradition that may be acting to hold them away from customers that might otherwise engage. Luxury female yogawear brand Lululemon – with a brand tradition that orbits around women and health – made a heretical turn in the third quarter of 2015: they partnered with Vancouver’s Stanley Park Brewing to produce Curiosity Lager. Eighty thousand cans of the 4.6 per cent ABV lager were made, available to buy in liquor stores across British Columbia and Alberta. Can we discern in that a post-demographic move to engage with new kinds of customers – the same thinking that prompted Lululemon to open its first store specifically for men in New York City recently? The Savoy Hotel in London showed a similar kind of heretical thinking when it overturned decades of brand heritage around luxury to open a takeaway food counter, called Melba, in April 2015. The move showed an awareness of the new, post-demographic fluidity around who is a ‘luxury’ consumer.

3. Cross-demographic fertilisation

This should be encouraged. With consumer preferences being ever more universal, the opportunities to transfer innovations from an initial demographic to another have never been greater. Health and wellness is one vertical where these strategies have been especially successful. Ex-wrestler Diamond Dallas Page created DDP Yoga after finding that practising yoga helped him recover from injury. Targeting men who might be sceptical of conventional yoga programmes’ spiritual elements, the variant incorporates additional muscle strengthening elements. Similarly, Crossfit Kids, a variant of the high-intensity workout phenomenon of recent years, can now be found in over 1,800 gyms and 1,000 schools worldwide.

4. Taste-led targeting

Target a segment of one. Consumers are spinning off more data than ever about their personal behaviours, preferences and past purchases. That means it is now possible to replace broad brushstroke demographic targeting with a targeting that is truly individualised. Meanwhile, the digital space lends itself to personalisation, making it possible to tailor your offering so that no two individuals experience them the same way. In August 2015, Spotify introduced Discover Weekly, a custom-made mixtape that is unique to each user and delivered each week. The playlists take Spotify users’ previous song selections and use them to find tracks that have been played by other users with overlapping taste. Meanwhile, to celebrate the anniversary of its Milan–São Paulo route in May 2015, TAM Airlines created free personalised on-board magazines, Ownboard, for each passenger. The airline introduced a Facebook Connect request during the online purchase process in order to access information about passengers’ friends, likes, places and photographs. The information was used to generate customised content for each passenger; their name and photograph were on the front cover of the magazines placed in their seats.

Recommendations

It is now a brave new post-demographic world, where consumer tastes and behaviours can no longer be understood by traditional demographic approaches. Successful products, services and brands will transcend their initial demographics almost instantaneously. As a result, executives who continue to attempt to navigate using demographic maps with their borders defined by age, gender, location and income will be ill-prepared for the speed, scale and direction of change. By contrast, those that encourage their organisations to look at winning innovations in often seemingly dissimilar, or even opposite, demographics and can incorporate what they learn into their strategies (no matter which demographic segment they target), will succeed.

• Overturn old brand traditions and do something (a new product, service or campaign) that runs counter to those traditions. In a world in which consumers are not behaving as expected, brands can win new customers if they also embrace the unexpected.
• To position yourself as a post-demographic brand and win new customers, celebrate and cater to new and non-traditional lifestyles.
  • Use data to personalise your offering around the individual customer; that is, the ‘segment of one’.

Recommended actions

• Short term/quick win
  Survey your customers, who they are, where else they shop, what makes them come to you, what improvements they would like to see, etc.
• Medium
  Roll out a loyalty scheme to reward returning customers and to build a relationship.
• Long term
  Use cookies and third-party plugins to start to personalise the customers’ experience of your website.