Five demographic megatrends are now driving business success. What you sell, who you sell to and how you sell it is being disrupted by these megatrends. Companies like Apple and Netflix that align with these megatrends are realizing explosive customer growth. Companies like McDonalds and your local cable company are struggling with these demographic mega-shift and their ability to retain customers. Here are the five demographic megatrends that are driving 21st Century business success:
1. Multicultural Consumers. Today there are 120 million multi-cultural consumers. They represent almost 40% of all U.S. consumers. http://www.nielsen.com/us/en/insights/reports/2015/the-multicultural-edge-rising-super-consumers.html This trend will accelerate. By 2044 it is estimated that the majority of consumers will be multicultural. Today’s multi-cultural consumer is younger than the average consumer. They are trendsetters in a number of product areas including food, fashion and entertainment. Media savvy, they rely heavily on smart phones and their social network in making a purchase. They are a key demographic group for new family formations. No business can ignore this customer segment and expect to achieve sustained revenue growth.
2. Millennial Generation. In 2015 this generation passed the Baby Boomer Generation in terms of employment. By 2017 they will exceed the Baby Boomer Generation in annual buying power. The Millennial Generation is also the most diverse generation in America’s history as well as the most educated. They demand product and company authenticity. This authenticity is gained not by what a company says but by what their customers and work associates say about them and their products. The key to truly engaging a millennial generation customer is to offer them a product that is cool with a purpose. http://www.earth2017.com/win-millennial-customers-cool-purpose/ Patagonia and TOMS (formerly Tom’s Shoes) are companies that the Millennial Generation align with in terms of being cool with a purpose.
3. Diverse Families. The days of Ozzie and Harriet symbolizing the American family are over. What defines a family is being redefined. One major change is that single women now lead 40% of households. On the one hand women control almost 80% of household spending. On the other hand single parent households have the largest percentage of kids living in poverty. LGBT families are growing and today have almost a trillion dollars in annual spending power. Another major change is the increase in multi-generational households with more Millennial Generation children living with their parents as they struggle with school debt and starting their careers during the Great Recession. There is also the beginning of a potential megatrend where aging Baby Boomer Generation parents move in with their children.
4. Connected and distracted consumer. The American consumer has never been more connected and distracted. We are on information overload. Multi-tasking is the norm. Connectivity is now a necessity and for the Millennial Generation connectivity can be more important than owning a car. The connected but distracted customer is a marketing challenge facing every business. The path to gaining the consumer’s attention now requires strong social media engagement. This engagement is increasingly be sourced through smart phones. Conversion is the new sales path for selling products.
5. Healthy consumer. Health is now the number two concern among consumers with the economy still maintaining its top position. Moms now demand a food revolution where the safety of their loved ones is a precondition for what they buy and who they buy from. The Millennial Generation, led by a cohort group called urban sophisticates, have an intense focus on buying sustainably sourced foods. They were the ones who began buying from Chipotle and have deserted McDonalds. Another mega-change is that 47% of consumers now snack as a meal replacement. http://www.nielsen.com/us/en/insights/news/2015/new-america-new-consumers.html?cid=emNewswire-Newsletter We now buy more food at bars and restaurants than at grocery stores.
Your Bottom Line
Marketing is in a customer-driven revolution. The smart phone has displaced the TV as the most viewed screen. Consumers are displacing their viewership of TV advertising with streaming video and social media engagement. Mass advertising is being Balkanized into targeted messaging reflective of America’s growing diversity in culture and family definitions. The Millennial Generation is not the Baby Boomer Generation but younger. They have different buying parameters. They ground their evaluation of a company and its product based on what other consumers post online. The health conscious consumer is ignoring marketing messages in search of transparent answers to their food safety questions.
There are now two divergent paths for winning customers. One is price promotion. This is the marketing path of continuous discount coupons and mailers. It is the path to lower margins and price wars with competitors that damage brand value. Even Walmart, the 20th Century’s price discount leader, is struggling with a strategy where competitors like the Dollar Store and Amazon can steal market share through aggressive price discounting.
The other sales path is built on offering more sustainable products. 85% of consumers say they will buy the more sustainable good or service versus the less sustainable good or service if the price is just equal. SolarCity and Tesla are two high profile examples. But Unilever, a traditional consumer product company, is proving that sustainability sells. 50% of their sales are now sourced from their Sustainable Living product line.
A common thread among the demographic megatrends is the consumer search for products that align value with their values. Sustainable best practices are proven to deliver the authenticity that consumers seek. They are proven to lower cost and therefore increase price competitiveness and profit margins. These best practices align with the 21st Century’s key demographic groups including healthy consumers, the Hispanic community with its affinity for the environment and the Millennial Generation that leads the nation in believing global warming is manmade. Sustainability is the proven path for winning customers across demographic silos. It is the path to business success in a 21st Century increasingly defined by its demographic diversity and megatrends.
About the author
Bill Roth was the First Green Business Coach for Entrepreneur.com. He is the founder of EARTH 2017, a website posting economic analysis on disruptive trends impacting communities and businesses. Roth is President of NCCT, a consulting company that coaches CEOs and business owners on pricing and marketing best practices proven to win the millennial generation, and their moms, as customers. Follow Bill on Twitter @earth2017