The U.S. population currently stands at nearly 323 million and may reach almost 364 million by 2030.6 The single most important demographic trend in the United States is the changing age structure of the population. Primarily because of falling birthrates and longer life expectancies, the U.S. population is rapidly getting older. In 1970, the median age was 28; by 2016, it was 38.7 This aging of the population will have a significant impact on markets and those who service them.

The U.S. population contains several generational groups. Here, we discuss the four largest groups—the baby boomers, Generation X, the millennials, and Generation Z—and their impact on today’s marketing strategies.

The Baby Boomers

The post–World War II baby boom produced 78 million baby boomers, who were born between 1946 and 1964. Over the years, the baby boomers have been one of the most powerful forces shaping the marketing environment. The youngest boomers are now in their 50s; the oldest are in their early 70s and well into retirement.

The baby boomers are the wealthiest generation in U.S. history, what one analyst calls “a marketer’s dream.” Today’s baby boomers account for about 26 percent of the U.S. population but control an estimated 70 percent of the nation’s disposable income and half of all consumer spending.8 The boomers constitute a lucrative market for financial services, new housing and home remodeling, new cars, travel and entertainment, eating out, health and fitness products, and just about everything else. And contrary to the popular belief that they are staid in their ways, one recent survey found that 82 percent of boomers are open to new brands. Says a researcher, “Changing and trying new brands helps boomers feel like they are staying current.”9

It would be a mistake to think of older boomers as phasing out or slowing down. Rather than viewing themselves that way, many of today’s boomers see themselves as entering new life phases. More active boomers have no intention of abandoning their youthful lifestyles as they age. For example, adults over 50 now account for 80 percent of luxury travel spending in America. Boomers are also digitally active and increasingly social media savvy. They are the fastest-growing shopper demographic online, outspending younger generations two to one. They are also the fastest-growing social media users, with an 80 percent surge in Facebook usage over the past four years.10

Thus, although boomers buy lots of products that help them deal with issues of aging—from vitamins to blood pressure monitors to Good Grips kitchen tools—they tend to appreciate marketers who appeal to their youthful thinking rather than their advancing age. For example, Walgreens recently launched a campaign called “Carpe Med Diem,” telling older boomers how to “seize the day” to get more out of life and their Medicare Part D prescription coverage at Walgreens, not just with savings on prescriptions but also with products that make them look and feel good.11 One “Carpe Med Diem” ad features an active and stylish boomer-age woman with purple highlights in her hair and the headline “Who says blonds have more fun.” In another ad, two boomer women pick up their prescriptions at Walgreens but also load up on sunscreen before heading out to a nude beach, where they drop their clothes and enjoy some fun in the sun. “Walgreen’s has you covered,” says the ad. “Who says that being on Medicare has to stop you from being edgy?”

Generation X

The baby boom was followed by a “birth dearth,” creating another generation of 49 million people born between 1965 and 1976. Author Douglas Coupland calls them Generation X because they lie in the shadow of the boomers.

Considerably smaller than the boomer generation that precedes them and the millennials who follow, the Generation Xers are a sometimes-overlooked consumer group. Although they seek success, they are less materialistic than the other groups; they prize experience, not acquisition. For many of the Gen Xers who are parents, family comes first—both children and their aging parents—and career second.

From a marketing standpoint, the Gen Xers are a more skeptical bunch. They are sensible shoppers who research products heavily before they consider a purchase, prefer quality to quantity, and tend to be less receptive to overt marketing pitches. They are more receptive to irreverent ad pitches that make fun of convention and tradition. The first to grow up in the internet era, Generation X is a connected generation that embraces the benefits of new technology.

The Gen Xers, now in their 40s, have grown up and are taking over. They have increasingly displaced the lifestyles, culture, and values of the baby boomers. They are firmly into their careers, and many are proud homeowners with growing families. They are the most educated generation to date, and they possess hefty annual purchasing power. Although Gen Xers make up less than a quarter of all U.S. adults, they pull in 29 percent of the nation’s total income.

With so much potential, many brands and organizations focus on Gen Xers as a prime target segment. For example, a full 82 percent of Gen Xers own their own homes, making them an important segment for home-and-hearth marketers. Home-improvement retailer Lowe’s markets heavily to Gen X homeowners, urging them to “Never Stop Improving.” Through ads, online videos, and a substantial social media presence, Lowe’s provides ideas and advice on a wide range of indoor and outdoor home-improvement projects and problems, providing solutions that make life simpler for busy Gen X homeowners and their families. Its myLowe’s app is like a 24/7 home-improvement concierge that lets customers build room-by-room profiles of their homes, archive their Lowe’s purchases, build product lists with photos, receive reminders for things like changing furnace filters, and even consult with store employees online as they plan out home-improvement projects.12

Millennials

Both the baby boomers and Gen Xers will one day be passing the reins to the millennials (also called Generation Y or the echo boomers). Born between 1977 and 2000, these children of the baby boomers number 83 million or more, dwarfing the Gen Xers and becoming larger even than the baby boomer segment. In the post-recession era, the millennials are the most financially strapped generation. Facing higher unemployment and saddled with more debt, many of these young consumers have near-empty piggy banks. Still, because of their numbers, the millennials make up a huge and attractive market, both now and in the future.

One thing that all millennials have in common is their comfort with digital technology. They don’t just embrace technology; it’s a way of life. The millennials were the first generation to grow up in a world filled with computers, mobile phones, satellite TV, iPods and iPads, and online social media. As a result, they engage with brands in an entirely new way, such as with mobile or social media.

Compared with other generational groups, millennials tend to be frugal, practical, connected, mobile, and impatient. More than sales pitches from marketers, millennials seek authenticity and opportunities to shape their own brand experiences and share them with others. One AT&T marketer identifies what she calls “universal Millennial truths: being transparent, authentic, immediate, and versatile.”13

Many brands are now fielding specific products and marketing campaigns aimed at millennial needs and lifestyles. For example, many financial services firms are shedding their once-stodgy images to make their brands more appealing to millennial consumers. Consider Fifth Third Bank:14

Fifth Third Bank knows that waiting is hard for time-crunched millennials. So it launched a new campaign called “No Waiting” that shows how its mobile app takes the wait out of banking. The campaign targets younger consumers who are increasingly put off by the traditional banking world. The “No Waiting” campaign includes TV spots but also a full slate of digital video and social media content, even a novel mobile game, aimed at engaging impatient, social-media-savvy millennials. The anything-but-stodgy digital videos provide humorous side-by-side comparisons showing that a check can be deposited using the Fifth Third Bank app faster than a hamster can eat five cheese balls or faster than an accordion player can play “Mary Had a Little Lamb.” The campaign also features an animated mobile game, “TXTvsTXT,” that tests a user’s ­texting speed. Something you wouldn’t expect from a bank, the mobile game offers a quirky way for text-savvy millennials to test their finger-clicking skills, challenge friends on Facebook, and earn badges ranging from “molasses hands” to “turbo twiddler.” Millennials “want it fast, whether in a text conversation or checking your balance on the Fifth Third Bank mobile app,” says Fifth Third’s chief marketer. “Our mobile banking takes the wait out of banking and we believe [this campaign] tells that story in a fun engaging way.”

Generation Z

Hard on the heels of the millennials is Generation Z, young people born after 2000 (although many analysts include people born after 1995 in this group). The approximately 82 million Gen Zers make up the important kids, tweens, and teens markets. They spend an estimated $44 billion annually of their own money and influence up to $600 billion of family spending.15 These young consumers also represent tomorrow’s markets—they are now forming brand relationships that will affect their buying well into the future.

Even more than the millennials, the defining characteristic of Gen Zers is their utter fluency and comfort with digital technologies. Generation Z takes smartphones, tablets, internet-connected game consoles, wireless internet, and digital and social media for granted—they’ve always had them—making this group highly mobile, connected, and social. On average, connected Gen Zers receive more than 3,000 texts per month. “If they’re awake, they’re online,” quips one analyst. They have “digital in their DNA,” says another.16

Gen Zers blend the online and offline worlds seamlessly as they socialize and shop. According to recent studies, despite their youth, more than half of all Generation Z tweens and teens do product research before buying a product or having their parents buy it for them. Of those who shop online, more than half prefer shopping online in categories ranging from electronics, books, music, sports equipment, and beauty products to clothes, shoes, and fashion accessories.

Companies in almost all industries market products and services aimed at Generation Z. For example, many retailers have created special lines or even entire stores appealing to Gen Z buyers and their parents—consider Abercrombie Kids, Gap Kids, Old Navy Kids, and Pottery Barn Kids. The Justice chain targets only tween girls, with apparel and accessories laser-focused on their special preferences and lifestyles. Although these young buyers often have their mothers in tow, “the last thing a 10- or 12-year-old girl wants is to look like her mom,” says Justice’s CEO. Justice’s stores, website, and social media pages are designed with tweens in mind. “You have to appeal to their senses,” says the CEO. “They love sensory overload—bright colors, music videos, a variety of merchandise, the tumult of all of that.”17

Marketing to Gen Zers and their parents presents special challenges. Traditional media are still important to this group. Magazines such as J-14 and Twist are popular with some Gen Z segments, as are TV channels such as Nickelodeon and the Disney Channel. But marketers know they must meet Gen Zers where they hang out and shop. Increasingly, that’s in the online and mobile worlds. Although the under-13 set remains barred from social media such as Periscope, Snapchat, and Instagram, at least officially, social media will play a crucial marketing role as the kids and tweens grow into their teens and early twenties.

Today’s kids are notoriously fickle and hard to pin down. The key is to engage these young consumers and let them help to define their brand experiences. For example, to engage young consumers more deeply, The North Face even invites them to help design its outdoor apparel and gear:18

The North Face Youth Design Team holds focus groups at summer camps with tweens 9 to 12 year olds and their parents to get their input on the brand’s outdoor clothing for kids. “We find that these kids are just beginning to have their own personal style and are also beginning to influence their parents in their purchases,” says a North Face marketer. To engage kids even further, The North Face recently launched a design contest in which it invited young would-be artists ages 6 to 12 to submit new apparel and gear designs that represent what the brand’s “Never Stop Exploring” mantra means to them. The 10 winners will see their artwork featured in the brand’s youth collection. “Kids are our main source of inspiration,” says a Youth Design Team marketer. “It’s important that we make things that are ‘fun,’ and how fun would it be to have kids help design our product?” Such engagement efforts have helped to make The North Face one of today’s hottest brands among teens and tweens.

An important Generation Z marketing concern involves children’s privacy and their vulnerability to marketing pitches. Companies marketing to this group must do so responsibly or risk the wrath of parents and public policy makers.

The traditional household consists of a husband, wife, and children (and sometimes grandparents). Yet the historic American ideal of the two-child, two-car suburban family has lately been losing some of its luster.

In the United States, fewer than half of today’s households contain married couples, down from 76 percent in 1940. Married couples with children under 18 represent only 19 percent of the nation’s 125 million households. Married couples without children represent 23 percent, and single parents are another 14 percent. A full 34 percent are nonfamily households—singles living alone or unrelated adults of one or both sexes living together.19

More people are divorcing or separating, choosing not to marry, marrying later, remarrying, or marrying without intending to have children. Currently, 15 percent of all new marriages are interracial or interethnic, and 7.3 percent of same-sex couple households are raising children.20 The changing composition of today’s modern American families is increasingly reflected in popular movies and television shows, such as Modern Family, the award-winning TV sitcom about an extended nontraditional family. Marketers must consider the special needs of nontraditional households because they are now growing more rapidly than traditional households. Each group has distinctive needs and buying habits.

The number of working women has also increased greatly, growing from 38 percent of the U.S. workforce in 1970 to 47 percent of the workforce today. American women now make up 40 percent of primary family breadwinners in households with children under 18. Among households made up of married couples with children, 60 percent are dual-income households; only the husband works in 27 percent. Meanwhile, more men also stay home with their children and manage the household while their wives go to work.21

Companies are now adapting their marketing to reflect the changing dynamics of American families. For example, whereas fathers were once ignored or portrayed as dolts in family-oriented ads, today’s advertisers are showing more caring and capable dads. One recent Samsung Galaxy phone ad, for instance, features a dad swaddling and calming his newborn son while Mom runs errands. When the anxious mom calls home to check in, the newly minted swaddle master replies, “We’re having a dudes’ day here. We’re fiiiiine. You take the weekend if you want to.”

Other ads reflect the evolving diversity in modern American households. For example, Campbell Soup’s recent “Your Father” commercial—part of the brand’s “Made for Real. Real Life” campaign—features a real-life same-sex couple feeding their son Campbell’s Star Wars soup as they mimic Darth Vader’s famous Star Wars line “I am your father.” The commercial, like others in the campaign, aligns the brand with the company’s purpose: “Real food that matters for real life moments.” Similarly, General Mills ran a series of commercials for Cheerios featuring an interracial couple and their daughter portraying typical young family scenarios—from the daughter pouring Cheerios on her sleeping dad’s chest after learning that Cheerios are good for your heart to her negotiating for a new puppy after learning that she is going to have a baby brother. Said a General Mills marketer, “At Cheerios, we know there are many kinds of families and we celebrate them all.”22

This is a period of great migratory movements between and within countries. Americans, for example, are a mobile people, with about 12 percent of all U.S. residents moving each year. Over the past two decades, the U.S. population has shifted toward the Sunbelt states. The West and South have grown, whereas the Midwest and Northeast states have lost population.23 Such population shifts interest marketers because people in different regions buy differently. For example, people in the Midwest buy more winter clothing than people in the Southeast.

Also, for more than a century, Americans have been moving from rural to metropolitan areas. In the 1950s, they made a massive exit from the cities to the suburbs. Today, the migration to the suburbs continues. And more and more Americans are moving to ­“micropolitan areas,” small cities located beyond congested metropolitan areas, such as Minot, North Dakota; Boone, North Carolina; Traverse City, Michigan; and Concord, New Hampshire. These smaller micros offer many of the advantages of metro areas—jobs, restaurants, diversions, community organizations—but without the population crush, traffic jams, high crime rates, and high property taxes often associated with heavily urbanized areas. Ten percent of the U.S. population now resides in micropolitan areas.24

The shift in where people live has also caused a shift in where they work. For example, the migration toward micropolitan and suburban areas has resulted in a rapid increase in the number of people who “telecommute”—work at home or in a remote office and conduct business by phone or the internet. This trend, in turn, has created a booming SOHO (small office/home office) market. Increasing numbers of people are working from home with the help of electronic conveniences such as PCs, tablets, smartphones, and broadband internet access. One recent study estimates that 37 percent of employed individuals do some or all of their work at home.25

Many marketers are actively courting the lucrative telecommuting market. For example, online applications such as Citrix’s GoToMeeting, Sqwiggle, and Cisco’s WebEx help connect people who telecommute or work remotely. With such applications, people can meet and collaborate online via computer, tablet, or smartphone, no matter what their work location. And companies ranging from Salesforce.com to Google and IBM offer cloud computing applications that let people collaborate anywhere and everywhere through the internet and mobile devices.

Additionally, for telecommuters who can’t work fully at home, companies such as ShareDesk, DaVinci, and Regus rent out fully equipped shared office space. For a daily, monthly, or yearly fee, telecommuters who work away from a main office can rent shared space that includes the same amenities of a regular office, from networked computers, printers, and copiers to conference rooms and lounge spaces.

The U.S. population is becoming better educated. For example, in 2012, 88 percent of the U.S. population over age 25 had completed high school and 32 percent had a bachelor’s degree or better, compared with 66 percent and 16 percent, respectively, in 1980.26 The workforce also is becoming more white collar. Job growth is now strongest for professional workers and weakest for manufacturing workers. Between 2014 and 2024, of 30 detailed occupations projected to have the fastest employment growth, most require some type of postsecondary education.27 The rising number of educated professionals will affect not just what people buy but also how they buy.

Countries vary in their ethnic and racial makeup. At one extreme is Japan, where almost everyone is Japanese. At the other extreme is the United States, with people from virtually all national origins. The United States has often been called a melting pot, where diverse groups from many nations and cultures have melted into a single, more homogenous whole. Instead, the United States seems to have become more of a “salad bowl” in which various groups have mixed together but have maintained their diversity by retaining and valuing important ethnic and cultural differences.

Marketers now face increasingly diverse markets, both at home and abroad, as their operations become more international in scope. The U.S. population is about 62.2 percent non-Hispanic white, with Hispanics at 17.4 percent and African Americans at 13.2 percent. The U.S. Asian American population now totals more than 5.4 percent of the total U.S. population, with the remaining groups being Native Hawaiian, Pacific Islander, American Indian, Eskimo, or Aleut. Moreover, one in eight people living in the United States—more than 13 percent of the population—was born in another country. The nation’s ethnic populations are expected to explode in coming decades. By 2060, Hispanics will be about 28 percent of the population, African Americans will be about 14 percent, and Asian Americans will increase to 9 percent.28

Most large companies, from P&G, Walmart, Allstate, and Wells Fargo to McDonald’s and Southwest Airlines, now target specially designed products, ads, and promotions to one or more of these groups. For example, Southwest Airlines’s outreach to Asian Americans includes being the title sponsor for the Chinese New Year Festival and Parade in San Francisco, the biggest nighttime parade in the United States and the second-biggest in North America after the Macy’s Thanksgiving Day parade:29

San Francisco’s Chinese New Year Festival and Parade typically draws hundreds of thousands of spectators and is broadcast on English- and Asian-language TV stations to viewers around the world. Consumers in the affluent, fast-growing Asian American segment travel often. And they are concentrated in a few key areas such as California and New York, making them easy to pinpoint. That makes them an ideal target for Southwest. The Chinese New Year Festival and Parade event also aligns well with Southwest’s preference for grassroots marketing programs that position it as a hometown carrier targeting local “passion points,” in this case a cultural and family-related celebration. To support its title sponsorship, Southwest ties its brand to the Lunar New Year through promotional efforts ranging from floats and ticket-giveaway contests to “cleverly constructed well wishes and cheerful nods to the community” on street pole banners, bus shelters, billboards, and traditional broadcast and print ads. Something must be working right—Southwest has been the event’s title sponsor for more than 15 years.

Diversity goes beyond ethnic heritage. For example, many major companies explicitly target gay and lesbian consumers. According to one estimate, the 6 to 7 percent of U.S. adults who identify themselves as lesbian, gay, bisexual, or transgender (LGBT) have buying power of more than $884 billion.30 As a result of TV shows such as Modern Family, Transparent, and Gotham; movies like Brokeback Mountain and Carol; and openly gay celebrities and public figures such as Neil Patrick Harris, Ellen DeGeneres, David Sedaris, and Apple CEO Tim Cook, the LGBT community has increasingly emerged in the public eye.

Brands in a wide range of industries are now targeting the LGBT community with gay-specific ads and marketing efforts—from Amazon, adidas, Allstate, and Apple to Kaiser Permanente, Wells Fargo, Macy’s, and Best Buy. For example, Allstate recently ran an “Everyone deserves to be in good hands” campaign with ads featuring same-sex couples and the hashtag #OutHoldingHands. Last Valentine’s Day, adidas posted an image on Instagram featuring a same-sex couple and quoting the Beatles’ “The Love You Take Is Equal to the Love You Make.” Macy’s and Best Buy run regular ads for their wedding registries featuring same-sex couples. And Frito-Lay launched a limited-edition Doritos Rainbows, multi-colored chips demonstrating the brand’s “expression of inclusion and support for individuality.”

Wells Fargo recently became one of the first banks to feature an LGBT couple in a national TV ad campaign. The heartwarming commercial, featuring a lesbian couple adopting a deaf child, is part of a nine-commercial series that also spotlights other diverse customer groups ranging from Asian Americans to small business owners. Says a Wells Fargo representative, “We…embrace diversity in every aspect, internally and externally. Diversity and inclusion is something we live internally very strongly. This [campaign] is a very important and natural progression of [that value] in how we serve our customers.”31

Another attractive diversity segment is the 53 million U.S. adults with disabilities—a market larger than African Americans or Hispanics—representing anywhere from $200 to $500 billion in annual spending power. Most individuals with disabilities are active consumers. For example, one study found that the segment spends $17.3 billion on 73 million business or leisure trips every year. And because people with disabilities typically travel with one or more other adults, the economic impact is estimated to be at least double that amount.32

How are companies trying to reach consumers with disabilities? Many marketers now recognize that the worlds of people with disabilities and those without disabilities are one in the same. Marketers such as McDonald’s, Verizon Wireless, Nike, Samsung, Nordstrom, Toyota, and Apple have featured people with disabilities in their mainstream marketing. For instance, a recent Apple iPad Air commercial features real-life travel writer Chérie King traveling the world with her iPad Air in hand, helping her along as she travels through diverse global settings. She communicates back home, posts photos, writes articles, and lets her iPad translate what she wants to say to shop keepers and others who don’t speak English. Only at the very end of the commercial is her disability revealed—she is deaf.33

As the population in the United States grows more diverse, successful marketers will continue to diversify their marketing programs to take advantage of opportunities in fast-growing segments.