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IDENTIFYING MARKET SEGMENTS AND TARGETS | CHAPTER 8 219

Body Works, or to trade down, such as Best Value Inn, Kohl’s, Dollar that work for recession-minded lifestyles” while still preserving a
General, and IKEA, are optimally positioned to deliver the value modern desired experience. Mintel cites as examples Starbucks VIA Ready Brew
consumers seek.The remaining firms, occupying the middle market and coffee, a new, home-based Starbucks experience that’s more affordable
lacking the economic, functional, and emotional value modern con- than coffee at one of the company’s outlets, and Tide TOTALCARE,
sumers are searching for, will see their market share shrink as they get which enables users to obtain certain dry-cleaning-type results at home
“trapped in the middle.” Traditional grocers and department stores are with prices below those of professional dry cleaners.
already suffering, with market share declines of 30 percent and 50 per-
Sources: Michael J. Silverstein, Treasure Hunt: Inside the Mind of the New
cent, respectively. Consumer (New York: Portfolio, 2006); Jeff Cioletti, “Movin’ on Up,” Beverage
Market research firm Mintel observes that consumers have also World (June 2006), p. 20; Michael J. Silverstein and Neil Fiske, Trading Up: The New
been “trading over” by switching spending from one category to an- American Luxury (New York: Portfolio, 2003); Linda Tischler, “The Price Is Right,”
Fast Company, November 2003; Sarah Mahoney, “Top Consumer Trends: Trust,
other, buying a new home theater system, say, instead of a new car. In Control, . . . Playfulness,” Marketing Daily, September 4, 2009; David Orgel, “Quality
the recent economic downturn, consumers were “making substitutions Trumps Quantity in New Product Releases,” Supermarket News, May 25, 2009.

GENERATION Each generation or cohort is profoundly influenced by the times in which it
grows up—the music, movies, politics, and defining events of that period. Members share the same
major cultural, political, and economic experiences and have similar outlooks and values.
Marketers often advertise to a cohort by using the icons and images prominent in its experiences.
They also try to develop products and services that uniquely meet the particular interests or needs
of a generational target. Here is how one bank targeted Gen Y consumers.

PNC’s Virtual Wallet PNC’s Virtual Wallet In early 2007, PNC bank hired design consult-
ants IDEO to study Gen Y—defined by PNC as 18- to 34-year-olds—and help develop a
marketing plan to appeal to them. IDEO’s research found this cohort (1) didn’t know how to
manage money and (2) found bank Web sites clunky and awkward to use. PNC thus chose
Consumers have been “trading
to introduce a new offering, Virtual Wallet, that combined three accounts—“Spend” (regu- over” to Tide TOTALCARE to
lar checking), “Reserve” (backup checking that garners interest), and “Grow” (savings)—with a slick obtain dry-cleaning type results
personal finance tool. Customers can drag money from account to account on one screen. Instead at home.
of seeing a traditional ledger, they view balances on a calendar that displays estimated future cash
flow based on when they are paid, when they pay bills, and their spending habits. Customers also
can set a “Savings Engine” tool to transfer money to savings when they receive a paycheck and
get their account balances by text messages. Despite offering subscribers financial returns that
were nothing out of the ordinary, PNC was able to sign up 20,000 mostly Gen Y consumers within
the first few months. 18

Although the beginning and ending birth dates of any generation are always subjective—
and generalizations can mask important differences within the group—here are some
general observations about the four main generation cohorts of consumers, from youngest
to oldest. 19
Millennials (or Gen Y) Born between 1979 and 1994, Millennials, also called Gen Y,
number 78 million with annual spending power estimated at $187 billion. If you factor in
career growth and household and family formation, and multiply by another 53 years of life
expectancy, trillions of dollars in consumer spending are at stake over their life spans. It’s
not surprising that market researchers and advertisers are racing to get a bead on Gen Y’s
buying behavior.
Also known as the Echo Boomers, these consumers have been “wired” almost from birth—
playing computer games, navigating the Web, downloading music, connecting with friends via
instant messaging and mobile phones. They have a sense of entitlement and abundance from
growing up during the economic boom and being pampered by their boomer parents.Yet they
are highly socially conscious and concerned about environmental issues. They are selective,
confident, and impatient.