IN THIS CHAPTER

Serving the sweet over-60 crowd

Making money with web-savvy millennials

Appealing to the next generation of young buyers

In this chapter, we take a look at carving out niche markets around segments of the population that are grouped together based on age, or the time period in which these consumers were born. Finding a small but lucrative subset of a larger market is the goal of any niche business. Some of the more popular niches that continue to withstand the test of time involve whole generations of a consumer base, including baby boomers, millennials, and Generation Z — and each of these categories keeps spinning out even smaller niche opportunities within the niche!

A record number of people were born between 1946 and 1964, and they eventually received the baby boomer label. The first generation large enough to have significant (and identifiable) influence on jobs, homes, and the economy, baby boomers at one time represented one of the fastest-growing markets. Not to mention, they have enjoyed an overall level of prosperity that has long made them a viable customer for many online business concepts. Considering this generation has been around long enough to be thoroughly sliced and diced into smaller niches, you may question whether any untapped market opportunity still exists. That’s the beauty of segmenting a market by generation-based consumers. As consumers age and transition to different stages of life, their interests and needs evolve, which opens up new possibilities for businesses who serve them. For example, the baby boomer generation is retiring in record numbers and beginning to feel their age — this opens up new niche markets for everything from recreational activities to healthcare.

As we indicate, baby boomers are no longer the only generation with large numbers and very specific needs and wants. Millennials (those born in the 1980s to early 90s) are now the largest living generation, having recently taken that title away from boomers. We discuss millennials in greater detail later in this chapter, but for now, just know that millennials have also surpassed baby boomers as the largest segment of employees in the U.S. workforce and are having kids of their own.

Speaking of children, on the heels of the millennials is Generation Z — loosely defined as those kids and young adults born in the mid-1990s to late 2000s. The approximate 15-year span that defines Gen Z is made up of consumers that total approximately 60 million. This is roughly the same size as the millennial generation. As you may have guessed, children make up a fairly large market of potential online customers, and there’s no reason why you can’t take a piece of that market — as long as you can keep them interested in what you have to offer.

In this chapter, we show you how to tackle the marketing strategies that help you tap into this young Gen Z market. There’s no limit to the type of niche you can carve out to serve any of these diverse population segments.

Understanding the Baby Boomer Market

When baby boomers hit the big Five-Oh, they became part of another interesting demographic — the over-50 market, with projections putting that total market size (not only baby boomers) at nearly 97 million in the United States. Today, most baby boomers are in their 60s (and beyond) and have been making news for their impact on the American workforce. Estimates show baby boomers are retiring at a rate of 10,000 per day, leaving large gaps in the workforce, and especially depleting the more experienced senior management roles. The aging baby boomer market has both pros and cons for online businesses targeting this niche market.

On one hand, the boomer group has earned a reputation for spending billions of dollars — online and off. However, some analysts wonder if members of this aging population, now headed into their Social Security–funded years, will still help fuel the economy with their buying habits or start to become a financial burden. So far, research indicates that the boomers’ spending will remain strong. Not only does this generation control nearly three-fourths of all U.S. disposable income, but also its members are set to inherit $15 trillion in the next two decades, according to Nielsen. That is a lot of money sifting through the wallets of baby boomers!

Before targeting the over-60 customer base, you need to know some things about this group. Most importantly, you should monitor the changes in this group’s traits and buying behaviors as the boomer population shifts and adjusts with time. For now, consider boomers to be lucrative customers, and take a look at these common traits. They are

• Open minded: Research indicates that boomers are willing to try new products, regardless of who makes them. Like everyone else, they have their favorites, but these consumers aren’t bound by brand alone. This flexibility means that you have room to introduce alternative products or services to boomers, and they’re likely to receive the message.
• Value conscious: Everyone likes getting a good deal, especially consumers over the age of 50. We’re not talking about bargain basement shopping, though. Research shows that although this group is willing to spend money, boomers want to know that they’re receiving a value in return. That value can range from a quality product for the price to a fantastic experience that makes the money worth spending. Again, consider that the tendency toward shopping for a value may only increase as this market segment reaches retirement age or if general economic conditions change for the worse.
• Influenced by peers: Friends tend to have lots of opinions about their buying experiences, and boomers seem particularly interested in hearing from their comrades. And those opinions frequently influence the boomers’ final buying decisions.
• Self confident: Friends and family aren’t the only ones with valuable opinions. People over 60 trust themselves, too. A person’s experience with a product or service greatly affects future purchasing decisions. That’s not to say that you can’t make an honest mistake and be forgiven. But this group thinks carefully before spending more money at your site if you’ve already let boomers down.
• Research advocates: Before buying, this market wants the scoop on products. And boomers are willing to invest whatever time necessary for a prepurchase investigation.
• Willing to spend: As we mention, baby boomers have plenty of disposable income and they have a propensity to spend it.

Figuring Out What Millennials Want and Delivering It

Unless you’ve spent the last couple of years hiding under a rock, you probably already know a few things about millennials. Politicians need them to vote, the entertainment industry wants them to watch movies and stream shows on Netflix, and e-commerce sites expect them to snap, chat, tweet, like, and share their favorite products with all their friends and followers. Considered to be in their early 20s to mid-30s, millennials are now considered the largest and most influential living generation, overtaking baby boomers in size; millennials account for 25 percent of the U.S. population.

This generation has also suffered through some disparaging labels, such as being lazy, underemployed, disrespectful, self-centered, and demanding. The research paints a different picture. This is not a generation of slackers, but they do have specific expectations from brands and they spend a lot of time on social media sharing their opinions and experiences — the good, the bad, and the ugly! They’re also an instant-gratification type of consumer — meaning they don’t like to wait.

Online businesses are a perfect fit for this consumer. Not to mention, millennials will spend $200 billion per year by 2017, and a whopping $10 trillion across their lifetime. That buying power makes millennials a sought-after niche consumer. When targeting this influential generation of shoppers, here are some important traits to take into consideration:

• Self-service options required: As an online business, you want to provide excellent customer service, but millennials don’t want that or anything else to disrupt the buying process. This generation wants to decide when and how they need assistance when buying online (or off).
• It’s all about the journey: Millennials focus on the experience that comes with everything they do, whether that’s shopping, eating, or travelling. When catering to this niche, you’re likely to earn these online shoppers’ loyalty if you create a unique or special environment around buying from your store.
• Tech, tech, tech: It’s very likely this group of consumers are shopping from a smartphone, so your online store better deliver a seamless mobile experience. It’s also a given that you’ll use the latest technology to enable purchasing, servicing, and marketing to these super tech-savvy shoppers.

• Cause-centric brands appreciated: Millennials not only have a generous heart, they also want to shop with online brands that share their passion for making the world a better place. Cause consumerism, or businesses that support social good, came into the spotlight with companies like Toms (www.toms.com), which donates a pair of shoes to charity for each pair of shoes purchased. Millennials have an affinity for this type of business model, and it’s paying off for newer social good brands like FlexWatches (www.flexwatches.com), which is winning over online shoppers with its commitment to charitable giving that is tied to specific watch styles.

  To be successful with this type of approach to wooing millennial customers, you need to be sincere about your support to a cause. It goes beyond making occasional donations to nonprofits; millennials expect your business to be centered around giving, and the cause to truly be at the foundation of your business model.

• Be the brand: Similar to wanting to have a unique experience when shopping, millennials want to be actively involved with your brand. It’s not only about providing consumer-generated content, but rather helping influence the way your products are created or selected, and being an intimate part of the process somewhere along the way from start to finish. Think of this as going a few steps beyond customers giving feedback. If you can provide this niche market a sense of ownership in your online brand, you’ll be rewarded with long-lasting loyalty.
• Social currency rules: It shouldn’t be a surprise that this socially adept generation of consumers take to social media, often when shopping online and off. They take to social platforms (including Facebook, Instagram, Twitter, and YouTube) to share their experiences with your brand, communicate with your brand, and learn about your brand from peers. If you’re going to focus on a niche with millennial consumers, then you want to integrate social media into all aspects of your company, and do it well.

Getting Online with the Digital Kids: Generation Z

Often described as the younger siblings of the tech-savvy millennials, this is the first generation to grow up completely digital. Gen Z kids have never known what it’s like to live in a world without the Internet or without social media. Even the younger side of this market segment, those kids under 10, are comfortable with technology; they have likely been playing video games and using smartphones since starting pre-school.

The older segment of Gen Z has some specific traits that you want to consider when trying to market to them, especially online. The Gen Z teens and young adults tend to share the following traits:

• They are adept at communicating via social media, but prefer platforms like Snapchat and Whisper — and shy away from Facebook.
• They are guarded with online privacy, having seen older generations disclose too much online.
• They are entrepreneurial; this generation prefers to own a business as opposed to work for one, but is still practical when it comes to earning a living.
• They are risk-averse and generally cautious.

After learning all these traits, you may be curious as to what type of customer an older Gen Z would make. In actuality, they are likely to be a loyal, repeat customer. The caveat is that you must treat them fairly, offer a solid product (or service) at a reasonable price, and respect their privacy when marketing to them online. But what customer wouldn’t you treat this same way? When focusing on the younger side of Gen Z, privacy is also a huge concern. To understand the privacy regulations when marketing to this group, let’s look at the way in which younger children are further divided into three distinct groups, based on age:

• Kids: Although children who are 7 or younger don’t always have enough independence to shop by themselves, they’re influential in their parents’ final purchasing decisions. Parents want to please their offspring and usually give ’em what they want. And keep in mind that marketers only consider kids 5 and older as part of Gen Z, so this group is a very small segment, but still counts!
• Tweens: Children between the ages of 8 and 12 are considered a target market unto themselves. These kids have outgrown “baby” items and are starting to emulate the trends made popular by their older counterparts (teens).
• Teens: Ranging in age from 13 to 17 (some marketers go all the way to 18), this group is typically more mature. Savvy-shopping teens usually have greater decision-making abilities with less adult input. And many teens have hefty amounts of money to throw around, from working part-time jobs or from receiving an allowance from their parents (or both).

All three age groups are adept at using computers. Tweens and teens are particularly comfortable surfing the Internet and embracing technology for multiple purposes — including shopping online, downloading apps and music, and playing online games. According to a 2014 Taking Stock with Teens report from Piper Jaffray Cos, 80 percent of teens (ages 12 to 17, with an average age of 16) shop online. That number breaks out to 78 percent of girls and 82 percent of boys with online shopping habits. Fast forward to the 2014 report, and we get a closer look at overall online habits. Gen Z teens:

• Shop at specialty stores and boutiques over large retailers and department stores
• Watch more Netflix and YouTube versus traditional television and cable
• Plan to buy next-generation game consoles more than in previous years
• Prefer smaller, independent brands over large brands, particularly with cosmetics
• Stream music more than listen to broadcast radio

Other interesting take-away points from this niche group of online spenders are the uses of mobile devices and digital streaming. Approximately 55 percent of teens have an Apple iPhone, and 56 percent own a tablet. Mobile devices are an important part of teens’ lives, and they use smartphones and tablets for everything from online research to online shopping. And nearly half of teens are equally passionate about downloading or streaming movies from the Internet.

Similar trends have been identified by Pew Internet and the American Life Project study, including these facts:

• More than half of teens using the Internet do so every day.
• When it comes to socializing, 73 percent of teens actively use a social networking site, and prefer Instagram, Twitter, and Snapchat.
• It’s not all fun and games; approximately 62 percent of teens look to the Internet for news, current events, and political information.

Pew Internet has a lot of good research to help you better understand the market of kids and teens online. You can access more facts about Gen Z teens and Internet usage for free on its website at http://pewinternet.org/topics/teens-and-youth.