Defining Gen Y

Tracy D. spends her weekends surfing online, hanging out with friends, text messaging on her cell phone, watching TV and movies, and shopping (with many of these activities occurring simultaneously). A high school senior in suburban New Jersey, she doesn’t have much free time. Not that she minds. She has been programmed since she was a toddler, from play-dates and soccer practice to sleepovers and after-school SAT prep courses.

Tracy hasn’t been spoiled as much as she has been indulged, by baby- boomer parents eager to expose her to the best of everything. She’s had input into the buying decisions of her family for as long as she can remember. Her parents have given her a good deal of freedom, but they are never out of touch. She calls her mother several times a day—just to say hi and see what’s up—and text- messages her father equally often. As she looks ahead to college, she is amazingly confident about who she is and in her relationships. “I plan to stay connected,” she said, “to my friends and family back home.”

While Tracy is not a composite, she very well could be. Technologically adept, unfailingly optimistic and connected online, she is representative of a generation that is poised to overtake the baby boomers in terms of its size and marketing clout. While there is no definitive consensus regarding the birth dates that define Generation Y, who are also commonly referred to as millennials, most demographers agree on a 1982 to 2000 range. Various estimates put the group’s size at 80 million to 100 million. For retailers that have long cast their fortunes with the boomers, Gen Y is a wake-up call to a new type of consumer, one that expects information to be tailored to its individual needs and delivered digitally. Having had spending power and influence in buying decisions from an early age, Gen Y consumers are media-and brand-savvy. They can quickly see through the hype and are attracted to authentic brands.

“For millennials, being fake is worse than being uncool,” said Nita Rollins, director of thought leadership, Resource Interactive, Columbus, Ohio, an interactive agency that helps companies optimize the digital experience.

Gen Y is racially and ethnically diverse, and much less homogeneous than the boomers. It is a group born in the age of the Internet (as opposed to television), which drives both diversity and connectedness. These and other changes have significant implications for retailers.

Gen Yers respond to marketing differently than their parents. They are most likely to be moved by messages in the places they frequent, such as online and cable TV, than by traditional advertising and brand communications. Grassroots marketing, local events, unusual promotions, online efforts and pop-up stores will catch their eye and help build brand support.

“Millennials are redefining the customer journey online and off,” Rollins said. “They will respond to brands that make the effort to engage them and their social networks as equals in the brand experience.”

One of the most important things for retailers to know about Gen Y, according to Rollins, is that its members are perpetually connected to each other.

“They constantly share opinions, influence and validate each other,” she said.

From texting to podcasting to posting on MySpace, GenY lives in a technology- infused environment that allows it to stay connected 24/7. The mobile phone is this group’s lifeline; 81% of teens either own or use a mobile phone and they rarely turn it off, according to Resource-Interactive. E-mail is increasingly a communication form of last resort.

Gen Yers let everyone into their world, and their lives often include dozens to hundreds of online friends that they access through a vast network of social-networking sites. A recent PEW Internet Project study showed that 55% of 12- to 17-year-olds have a profile online.

“Retailers have to learn how to market to a community and tap into millennials’ social networks,” Rollins said. “They also need to leverage the tendency of millennials to consider the opinions of their friends when making a purchase.”

Because they are in constant communication, the influence of peers is more important than that of traditional cultural authorities, such as brand advertising.

“The best way for retailers to permeate this chain of influence is by cool, or viral, tools that facilitate the sharing of consumer-generated content,” Rollins said. “Also, all retailers should be using or at least testing permission-based or user-initiated mobile-cell campaigns.”

Here are some additional insights from Resource Interactive on Gen Y:

Multi-tasking: Gen Y is busy. Multitasking comes naturally to this generation, which consumes media at unprecedented rates.

“Millennials process information five times faster than older adults,” Rollins said. “This has to be factored into your strategies. To get their attention, offer ever-evolving merchandise stories. Also, make sure your brand is easily searchable on its site and the Web. Allow full zoom and invite involvement.”

Gen Y is good at filtering out messages and media that it feels are not relevant. They have zero tolerance for intrusive ads. Humor is a big draw.

“If you don’t want to get filtered out, make sure your messages are fun and entertaining,” Rollins said.

Creativity: Gen Y likes to think of itself as highly expressive. It will seek out creativity and products that show some individuality. “It’s a paradox because they are quite assimilative,” Rollins said. “But limited editions and product exclusives appeal to them.”

Immediacy: As a generation accustomed to getting what it wants when it wants it, Gen Y values immediacy. Long waits for merchandise are anathema.

“Retailers should think about allowing for in-store pick-up and payment for goods bought online,” Rollins said. “Or they should provide economical overnight or second-day shipping, which is about as long as Gen Y cares to wait.”

Gen Y also wants instant access to information. Online ratings by their peers are important to them.

“Consumer-generated online reviews are a must-have,” Rollins said, “with the reviews organized by affinity type. They care most about what their peers think.” Gen Y is optimistic and self-entitled, a by-product largely of indulgent parenting. Nearly one-third, according to an MTV poll, believe they will be famous. They think their opinion counts and want to be involved in brand decisions.

“Campaigns that suggest the next phase of the brand could be you…that allow you to share personalized online ads with your friends, all tap into this,” Rollins said.