Until now, “Generation Y” has been a cash cow for businesses of all sorts. Having a reputation for hoarding high-tech gadgets and engaging in regular retail therapy, has made Americans age 18-34 prime targets for sales and marketing campaigns.
However, Gen Y’s enthusiasm for unabashedly running up debt may be coming to an end as the last of the group, usually identified as those born between the late 1970s and the early 1990s, officially enters adulthood. Those are the findings of a new survey that finds Gen Y is experiencing financial stress and is having difficulty obtaining credit.
Nearly 30 percent of people in this age group report having difficulty managing their spending and 35 percent have borrowed money from friends or family members, the survey, conducted by Western Union, found. Additionally, half of Gen Y respondents reported feeling increased stress about financial obligations in the last six months and more than one in three said their financial situation has worsened in the last six months.
Almost a third of those surveyed have been turned down for a loan or line of credit. Though, credit does not seem to be a major concern for this group as 60 percent said they have not seen their credit score in the past year, and 44 percent have never seen their credit score.
Gen Y’s difficulties are in contrast to other survey respondents, many of whom are seeing positive changes in their financial situation including less impact from economic challenges such as changes in credit card limits and increased interest rates, a declining need for spending cutbacks, and decreased shopping at “discount” retailers, the survey found.
This newly acquired financial concern doesn't have to spell the end of marketing to Gen Y, however. Florida State University marketing professor, Ronald Goldmith, suggested a few ways businesses can strategize to continue to market to this group and anyone else who's done some recent belt tightening.
- Offer private brands as substitutes for the national brands
- Develop new products that would offer value to the customers.
- Add additional value to a product, perhaps in the form of a service such as free delivery
- Reduce prices, perhaps by bundling or offering larger quantities at the same price or offer easier payment terms
- Offer more coupons including the use of m-coupons (mobile coupons delivered to cell phones and other electronic devices)
- Promote the product to family members to purchase as gifts for the cash-strapped Gen Yers
- Promote more heavily and change the promotion mix to stress use of social networking media
- Start loyalty programs