Defining Shopper Value in a Multigenerational Marketplace

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1 Defining Shopper Value in a Multigenerational Marketplace These are truly unique times for marketers. For the first time in history, three generations of consumers are active in the marketplace; and each generation has distinct shopping needs and wants. At the same time, new digital technologies have been adopted, all of which present new engagement and segmentation opportunities. Inevitably, given the confluence of multigenerational consumers and ever-expanding digital communications, new consumption and shopping behaviors have emerged. Value equations that extend beyond price concerns have become more prominent. All these factors need to be better understood and acted on, in order to leverage each generation s unique interpretation of the new value equations and how they can be delivered to win loyalty in the marketplace.

2 Executive Summary Garnering Results from Primary Shoppers across Generations When we began to see numbers reported throughout various industries about the growing impact of digital communications on shopping behaviors, it crystallized a thought we had been pondering. We decided we needed to survey primary household shoppers inorder to examine and uncover what they value in brands and to determine how the different generations respond to digitally-delivered promotional and content offerings. The Big Three Generations active in the marketplace are: Boomers, age 48-59, numbering 81 million; Generation X, age 33-47, and 60 million strong; Millennials, age 18-32, 51 million and adding new members daily. Millennials are generation is in transition. Ranging from recent high school graduates to professionals living in suburbia with their families, it s important to understand how their life stage affects their decisions. For marketing purposes, its best to halve this generation as Younger and Older Millennials. Despite inherent differences among generations, synergies in purchase driving influences exist. Consumers love low prices, but product performance and value deliver loyalty. We put our SMARTeam to work. With more than 20 years of CPG industry experience, and over 20 years of primary and secondary research expertise, our 40-member strong research team was perfectly positioned to explore the new paradigms in shopper value equations. Because we were concerned with how each generation interacted with technology, we conducted an online survey. The results we drew our conclusions from were derived from a total of 2004 primary shopper panelists, and statistical testing was conducted at a 95% confidence level. Quality is the primary factor in purchase decisions. Social media is a multi-generational tool that provides empowering information/solutions to shoppers that result in confidence in their product selection. Digitally delivered content that is practical and purposeful in nature is a powerful purchase influencer. All generations use multiple devices. However the overall usage of their devices appears to commiserate with each generations technology heritage. Boomers are slow to adapt as they consider many other media options, whereas millenials have never known a time without technology and as a result embrace the new more readily. METHODOLOGY: A total of 2004 primary grocery shopper panelists were surveyed and qualitative interviews were conducted. Various descriptive statistics were calculated for all data. Mean scored were most often reported for variables measured on a five-point scale. Statistical testing was conducted at a 95% confidence level. Shopping Styles Bargain Hunter KEY: BOOMERS 35% 35% MILLENNIALS 42% TOTAL Price Isn t Everything 20% 18% 21% TOTAL Online and Connected 18% 20% 21% TOTAL GEN. X TOTAL The results were encouraging. More than half of all shoppers (62%) describe themselves as Bargain Hunters or Online and Connected and shoppers across all generations say they are looking for bargains both in-stores and online. This immediately told us that that we can still continue to connect with multigenerational shoppers through proven, traditional methods, while also expanding the relationships to encompass their online activities as well. 82% BOOMERS 74% GEN. X Recipe, Cooking Techniques or Secrets 56% 59% Funny, Humorous Videos and/or Articles Educational Tutorials and Videos 21% Buy a Product, Give a Product 23% 31% 41% 41% 53% Shopping List Suggestions 15% 32% 43% 68% MILLENIAL BOOMER GEN X MILLENNIAL While we found many subtle, and not so subtle, differences between generations, one brand attribute remained paramount regardless of a consumer s generation: Quality. None of this research matters, no insights into digital usage and communication are helpful if the brand does not deliver a quality experience or product. This attribute held true across food and non-food categories. More and more brands are seeking to expand into content marketing, and that s a good thing, as all the generations involved in this survey valued good online content. And that s not confined to professionally produced or curated content marketing: 42% of respondents overall said they valued reviews and recommendations shared on social media from friends and family. How and where they like to consume that content varies a little, as you will see when we break out the generations later in this article. Here we note that there are subtle differences in the importance each generation puts on content areas perused on the path to purchase. Boomers, Gen Xers and Millennials all most valued recipes or cooking tips, while Boomers proved resistant to shopping list suggestions, and Millennials and Gen Xers were not overwhelming in their support of charitable suggestions. Preferred Brand Features and Values

3 One important thing to remember: while we re looking at trends, trying to find the right digital mix for each generation, let us not forget that there is still a place for tried and true methodology. Direct mail coupons and advertising still work today, across all generations of shoppers. As the population of each generation ages, we expect these numbers to shift heavily towards digital promotions, but as of today they are still a valid method of influencing customers. Influences Brand Purchases TRIED & TRUE: Coupons or ads recieved in mail In-store circulars 79% 75% When asked to confine their responses to digitally delivered promotional messages, coupons still garnered the most influence. We did find significant differences across the generations, such as Boomers are more likely to be influenced by digital coupons that they can print, Gen Xers are more likely to be influenced by load to card, and Millennials are influenced by a variety of digital sources, more so than other generations. TECHNOLOGY/DIGITALLY ENABLED: Digital coupon that you print 65% Load to Card Digital coupon 56% BOOMERS AGE The Boomers Can Be Reached Digitally, But Not on Their Mobile Devices This study defined Boomers as adults born from 1942 to More than half are not working. While most are married, they shop alone. As dietary concerns have taken center-stage, nutritional labeling has become more important. Convenient and reusable product packaging are important. They aren t much for experimenting, so they look for familiar brands. size, giveaways, shipping or returns. They like food sampling events and customer appreciation events. While they ve adopted new technologies like smartphones and laptops, they still use their desktop computers most often. They rarely, if ever, use their mobile devices to help make shopping decisions. Instead they rely on family or friends Boomers told us a retailer website is more influential than a brand website, and a digital coupon or may get their attention. Out of all digital devices they prefer their PCs when researching or planning a purchase. They say a retailer website is more influential than a brand website. A digital coupon or may get their attention. When they go online, they might visit Facebook to browse human interest stories and support the brands they like. They also check out YouTube for DIY projects or to browse for something funny. Newspaper ads or coupons TV advertising 71% from brand with engaging discount offers 56% Retailer discount app On fixed incomes, nearly half are bargain hunters; yet a quarter say that price isn t everything. They love anything free, whether samples, trial for recommendations. They are also influenced by in-store circulars, coupons and advertising from the mail and newspapers. Retailer Websites Social sharing from my friends 5% INSTAGRAM 40% YOUTUBE 54% 42% Brand Websites 48% Online branded content that matches personality 8% TWITTER Magazine articles or advertising Online advertising (ie: Web Banners) Shopping or list building app 35% SMS message 34% Boomers are mainly attracted by online offers of Free Shipping and Free Returns. Radio advertising Branded games and fun mobile applications 20% PINTEREST Billboards 34% Engaging experience through banner ads. 31% 41% FACEBOOK 100

4 GENERATION X AGE Gen Xers Are Hybrids: Half Boomer/Half Millennial MILLENNIALS AGE Younger Millennials: The Time to Connect is NOW Gen Xers, adults born from 1962 to 1981, are the middle child generation. They re the ignored population, because everything about them is somewhere in the middle of Boomers and Millennials. Most Gen Xers work full-time, so their income is a little higher than the retired Boomers. Most are married with children at home. With kids straining their budgets, about a third are bargain hunters. They like free things, but they also like money saving ideas and recipes. Digitally, they re interested in valueadded content that s educational and makes their life easier. They like beverage tasting events, tutorials and classes, food and non-food sampling events, in-store demonstrations and customer appreciation events. They are digitally connected with smartphones and laptops and ebook readers. Most use their mobile devices to help make shopping decisions, looking for coupons and discounts, recipes and menus, price comparisons, ratings and reviews. If they re online, they ll refer to online reviews and websites, otherwise they re most likely to rely on family and friends for product suggestions. Their media use is similar to Boomers. They are influenced by in- store circulars, coupons and advertising from the mail and newspapers. They say a retailer website is more influential than a brand website. They like digital coupons, but s are losing their appeal. They use Pinterest for recipe, craft and DIY ideas. Right in the middle of the multigenerational mix, Gen Xers share some attributes with both Boomers and Millennials. Traditional media, digital content and in-store engagement are all important for long-term success with this demographic. They like Facebook for human interest stories, supporting brands they like. They turn to YouTube for funny videos and DIY projects. Stuck in the middle, Gen Xers will follow the ways of both Boomers and Millennials. Traditional media, digital content and in-store engagement are important for long-term success with this cohort. Just starting out, these Millennials (born after 1989) are in the beginning stages of adult life. They may be students. They may have part-time jobs. They re college age and single. They don t have a lot of expendable income, but then, they don t have many responsibilities. They don t have children. They do have themselves, and they re impressionable. They are digitally connected with smartphones and laptops and tablets. They spend their personal time three or more hours each on their phones and their laptops every day. Nearly all use their mobile devices to help make all kinds of shopping decisions. Family and friends influence them, but so does social media, online reviews and websites, even blogs. They shop in the afternoons and evenings. They like coupons whether mail, newspaper or digital, but they don t use brand or retail Younger Millennials are digitally connected for three plus hours of their personal time every day. They are influenced on the path to purchase by social media, online reviews, websites and blogs. Offer them quality content online now to build lasting relationships. websites much. Sales at the shelf and in-store promotions are most likely to get their attention, since they don t plan or make regular shopping trips. They are still in an educational mode, so they like to learn. They look for alternative ways to use products, suggestions for saving money, tutorials and recipes ideas. They also like to be entertained. They re interested in most in-store engagement activities especially food sampling events. And free things appeal to them, too. They use many social media sites. Pinterest is tops for recipes and crafts. YouTube is their choice for DIY and funny videos. Facebook is the place they support brands, look for deals and offers. Instagram is where they keep up-to-date on fashion and beauty trends. This group is in an impressionable stage, so making a good first impression is important. Connecting digitally now will pay dividends down the road. 32% INSTAGRAM 68% YOUTUBE 52% INSTAGRAM 81% YOUTUBE TWITTER Gen Xers are the most receptive of all consumers to Articles and Tips. 53% TWITTER Millennials are more likely to be attracted to a range of online content, especially tutorials. 48% PINTEREST 66% PINTEREST 67% FACEBOOK 77% FACEBOOK

5 MILLENNIALS AGE Older Millennials: All Grown Up, But Still In Learning Mode Everyone is On Their Smartphone, But Generational Differences Matter for Marketers Now in their late 20s or early 30s, this group of Millennials is starting to settle down. Many have followed the roadmap of previous generations. Most have full-time jobs. Most are married or living with a domestic partner. About half have kids. They are online and connected with smartphones, laptops, tablets, desktop computers, even ebook readers. Just like Younger Millennials, they spend their personal time three or more hours each on their phones and their laptops every day. Nearly all use their mobile devices to help make all kinds of shopping decisions. While family and friends influence them the most, they also can be influenced by social media, online reviews and websites, and blogs. More than half enjoy interactive shopping events significantly more than any other group or generation. They like all kinds of coupons, too. In fact, they are more likely to respond to a retailer website coupon than other promotions. If they shop at a mass merchandiser, they re more likely than other generations to pay attention to retailer and brand websites. They are looking for ways to help stretch their budget and organize their life. They want to be charitable, especially if it s easy. As new chefs, they need cooking tips and recipes. They like tutorials, and they enjoy funny videos and articles. They want to feel good about their purchase decisions, ethically and environmentally. Pinterest is tops for recipes, crafts and DIY projects. YouTube is their choice for funny or human interest videos. Facebook is the place they support brands, learn about new products, keep up- to-date with fashion and beauty trends, and look for deals and offers. This group is evolving into grownups with responsibilities. They re digitally Older Millennials, just like the younger members of their age cohort, spend hours every day of their personal time digitally connected. But remember that they like to get out and about while still feeling connected: More than half enjoy interactive shopping events significantly more than any other group or generation. And they prefer to shop in the evening, so plan in-store events accordingly. connected and actively engaged online and in- store. They want to be entertained and educated. They want to feel good about their purchase decisions. Becoming their shopping partner through engagement benefits both parties. Digital media/delivery provide the greatest purchase influence to Millennials Digital Coupon that you print 44% 53% 57% 66% 65% 73% Digital Coupon that you load to card from the brand with engaging content 19% Retailer Discount App 16% 44% 50% Social sharing with friends 60% 67% 64% Mobile marketing is no longer an option, it has become an imperative. As consumers spend more time on their mobile phones and tablet devices, brands need to recognize and understand the importance of delivering strong mobile phone and tablet experiences. In some cases, that means apps but in other cases, it s as simple as optimizing coupons and websites for mobile usage. Boomers are the primary users of old school mobile phones and are not as likely to use most other mobile devices. Gen Xers usage spans across all devices with a slight skew toward smartphones, while Millennials show the highest preferences for devices that allow them to be on the go (Smartphones, Tablets, and Laptops). A key differentiator is that Millennials are most likely to continue to use their mobile device in store. TOP USAGE FOR MOBILE DEVICES: Millennials: Searching for coupons and discounts Gen Xers: Price comparisons Boomers: Searching for coupons and discounts Across all generations, mobile usage is most dominant for pre-shopping activities 65% 52% 37% 56% 47% TO FIND A STORE LEARN SAVE BUY TO READ RATINGS & REVIEWS PRODUCT INFORMATION TO FIND COUPONS & DISCOUNTS TO COMPARE PRICE TO BUY VIA DEVICE

6 The In Store Experience Is Still Important Across All Generations While connecting digitally is key, and we all need to be available on mobile devices and social media sites, the in store experience is still important to all consumers, regardless of age cohort and generational status. Our research found that a sale at shelf resonated with 65% of respondents, as compared to the influence of a digital advertisement, which prompted only a 17% response rate. In-Store events still remain a viable and valuable part of the marketing mix as well. Traditional promotions are still very important to both classes of Millennials, yet as a group Promotions that Influence Purchase Types of Promotions that Influence Purchase Types of In-Store Events Attended & Interest in Attending Food Sampling Event Non-food Sample Giveaways Customer Appreciation Event Beverage Tasting Event In-Store Demonstration Instructional Cooking Tutorial Classes or Workshops Promotional Date Night Meal Deal 18% 17% 15% 40% 39% 44% 49% 47% 52% 59% 66% 70% Sale at the shelf 79% In-store display 75% Store website coupon 71% Loyalty program Offer 54% Shelf tags 48% Coupon/Offer via text message Retailer contest or promotion Mobile Phone app Digital advertisement INTERESTED they are more likely than the average shopper to say that digital promotions such as coupons/offers via text messages (37%), mobile phone apps (34%), and digital advertisements (24%) influence their purchasing behavior. Boomers are the only generation to that is more likely than the average to say that loyalty programs impact their purchasing habits (54%). For in-store experiences, Gen Xers are most interested in attending Non-food sampling events (70%) while Millennials are most interested in attending Food sampling events (77%) and Beverage tasting events ATTENDED (70%). More than half of shoppers would purchase a brand showcased at an in-store event if there was a product demo or a coupon or trial size were offered. Boomers are more likely to look for in-store events that offer a coupon or discount on a product or a trial size of the product. As these consumers care about quality and reliability, they want to be able to buy an item before fully committing. Millennials, however, are more likely than the average consumer to care about an engaging event experience. The Big Takeaway: Incorporating Digital into the Mix Without Forsaking Traditional Methods While price is important, our research among primary shoppers in all generations shows that the new value equation goes beyond just price and is about product quality and using technology to provide meaningful content and experiences. By better understanding the nuances of how generations engage with digital media and define value we can provide more impactful shopper centric solutions. Yet while we focus on connecting digitally, we must never forget that the in store experience is a critical part of the value equation that is not getting enough attention today. Creating meaningful engagement at the point of purchase is a big opportunity across all generations. The task for today s marketer is to raise awareness and create relationships digitally, while never forsaking the tried and true promotional methods that have built strong customer-brand relationships in the past. The key is to initiate conversations and awareness through social media and retailer web sites, and then to provide quality products, quality promotions and a meaningful, friendly and positive in-store experience when the customer acts on the information we have delivered. 34%

7 We think differently to do better. With a number of agencies dedicated to providing best-in-class services, we re able to give a complete, total solution to any ask. A solution that s smart, challenging, innovative, and always accomplishes what it sets out to do. And with our winning together mentality, you can count on us to keep you involved every step of the way. For more information on how In Marketing Services can help you learn more about the multigenerational impact on your business please contact: Valerie Bernstein, SVP New Business Development Valerie.Bernstein@inmarketingservices.com