IRI research: Millennials are misunderstood by marketers

Millennials not only have been dubbed the most self-absorbed generation ever, they also have been said to be tethered to their mobile devices and to lack any loyalty to brands. New research from Chicago-based market research firm Information Resources Inc. (IRI), however, reveals that there are many misconceptions about millennials — and that millennials are much more unique than first meets the eye.

Marketers must move past simplistic generalizations of millennials and understand their unique qualities to capture the growing purchasing power of this consumer segment, IRI said.  After all, millennials are expected to spend $290 billion on consumer packaged goods (CPG) products by 2020.

Although millennials are often thought to have no brand loyalty, according to IRI, they are loyal to certain brands. Those brands simply must first prove themselves worthy.

And millennials enjoy the hunt for a good deal. Overall, 44 percent say they are loyal to the brands they buy, and 52 percent will choose quality over price. However, two-thirds are working with limited grocery budgets, so a good number are value-conscious by necessity, IRI said.

Additionally, millennials are the first generation of "store brand natives," Donna Wydra, IRI's principal, consumer and shopper marketing, told Store Brands. They have grown up with store brands as true competitors to national brands and need to be convinced that a product is worth their loyalty — whether it is a national brand or a store brand. To millennials, a good brand worth their loyalty must offer value, high quality, reliability and trust.

Marketers often believe that traditional marketing doesn’t work with millennials, too. However, IRI found that although millennials are strongly influenced by recommendations through social media, blogs, product reviews or other online resources, 66 percent also respond to loyalty cards/discounts. In addition, 65 percent respond to couponing and 50 percent to store circulars — all traditional marketing tactics.

IRI’s research also uncovered six distinct segments of millennials, including:

• Free Spirits: Thirteen percent of millennials are young, single, college-educated trendsetters who are impulsive and social.
• Struggling Wanderers: Twenty-one percent are not highly educated, are struggling financially and are not strongly digitally connected.
• New Traditionalists: Twenty-two percent are educated, affluent and married; they are values-driven and have good financial habits.
• Concerned Aspirationalists: Thirteen percent are moms who are both cash- and time-strapped. They are social media devotees and are convenience- and price-driven.
• Conscious Naturalists: Fifteen percent are eco-conscious moms who desire minimally processed foods and prefer locally grown items. They also are less digitally reliant and are fiscally cautious.
• Confident Connectors: Seventeen percent are ethnically diverse, socially conscious leaders who are digitally savvy and shop in specialty stores.

With these six segments in mind, it’s obvious that a “one-size-fits-all” approach will not work with millennials, Wydra said. Therefore, retailers will be challenged with providing a product mix that meets the varied needs of the different millennial segments (e.g., convenience for some, healthful options for others).

Additionally, categories will need to be organized to deliver against the varied needs of millennials in an easily-shopped fashion, she said. And while the marketing of store brands will not reach the level of national brands, retailers will need to be sure store brand products have packaging that clearly communicates product benefits, as well as signage that communicates price benefits.