Posted by: goalpath | August 18, 2009

The Generation Gap – Why it is Important to American Business

Baby Boomers, Generation X, and Generation Y will all impact American business in different ways in the future and if companies don’t begin trying to understand their differences, they will be left behind. Why is this issue so important? It is important because the primary drivers of our economy, Baby Boomers are reigning in their spending and preparing for retirement. If businesses don’t start researching and learning all the subtle nuances between these generationally defined consumer groups, they will indeed be left behind.

Over the past 15-20 years Baby Boomer spending habits have been responsible for more than 75% of America’s gross national product. During this period the 78 million Baby Boomers have been in their peak earning years and have basically bought whatever they wanted whenever they wanted. Some researchers have labeled Baby Boomers as hedonists, free spenders and the most self absorbed generation in recent history.

Not exactly, the legacy most Boomers want to be tagged with, but it is hard for them to argue with the facts. During their younger years Boomers fought for social justice, spawned the peace movement and acted as America’s social and political conscience. They worked hard at changing the political system and they played hard. Remember sex, drugs and Rock & Roll? If you are a Boomer, your memory from that period might be a little sketchy. After college came marriage, family, careers and integration into normal society. And once the Boomers hit their peak earning years, they began spending like no generation before them. Of course, lax credit policies and intense marketing through an expanding media base helped perpetuate this boom period.

During the recent economic downturn that began last fall, the Boomers’ IRAs, stock portfolios and home values lost 20% to 40% of their value. Being so close to retirement, the Baby Boomers hit the panic button and just quit spending money on anything that wasn’t a necessity. Consequently, the economic meltdown accelerated. Signs of recovery are beginning to show in a number of sectors, but it isn’t going to happen quickly and it is hard to predict whether we will return to the good old days of mass consumption. Not that this is necessarily a bad thing, but if you are trying to grow your business in a declining market you had better outsmart your competition.

It is important to understand that the next generation after Baby Boomers, the Gen X’ers are quite different than the Boomers and there are fewer Gen X’ers out there. While there are 78 million Baby Boomers, there are somewhere between 47 million and 65 million Gen X’ers depending whose definition of Gen X you use. Some researchers classify Gen X’ers as those people born between 1965 and 1976, while others place the generation birth dates between 1961 and 1981. Gen Xer’s are characterized as independent, sometimes adversarial or rebellious, informal, entrepreneurial, and on a quest for emotional security. In the past they have been referred to as slackers and whiners, but I believe that was a mischaracterization originating from their behavior during their youth.

Members of Generation Y (aka Millenials or Echo Boomers) are considerably more like their Baby Boomer parents. They tend to feel empowered because of their overindulgent parents, they have a sense of security and are very optimistic about the future. Gen Y’ers are characterized as loyal and more likely to volunteer and help others. They look for employers that provide flexibility in the workplace. And they are undoubtedly the most technologically savy generation to come along. There are almost 80 million members of Generation Y, which means that they will play a larger role in driving economic growth in America than the Gen X’ers.

Regardless of whether you are targeting these groups for marketing purposes or looking to hire new employees, it is critical that you understand the subtle characteristics and nuances of each demographic on the front end. There are plenty of books, articles and web based research to help you understand the best ways and methods to reach out to these groups for whatever purposes you have in mind. If you plan to market to these groups or manage a multi-generational workforce, your key to success will be understanding what motivates their behavior and leveraging that knowledge. Just remember, it won’t be business as usual and you won’t succeed if you are not prepared.

 What’s your take on this issue? Inquiring minds want to know. Comments are welcomed and encouraged. We are always looking for Baby Boomers with an opinion that don’t mind speaking out and can successfully complete a sentence.

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