Comparing the Spending Habits

of Millennials to their Baby

Boomers Parents

By: Jennifer Holloway, Harrison Klee, Danielle Lehner, Han Zhou, Adrian Avalos

26 April 2018
Loyola University Chicago

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 Retailers are no longer meeting the needs of their ever changing consumers, in this case,

the Millennial generation. Instead of adapting to the habits of this relatively new generation,

companies are seemingly blaming them for their disruptive behavior across all industries. This

business problem stems from the Millennial generation’s unfamiliar spending habits which often

focus on the economy, technology, food, education, and online shopping habits. Marketers must

be able to target the generational differences to attract and retain the Millennial consumer, which

could be challenging as Millennials are more diverse than the Baby Boomers generation in both

ideas and race and ethnicity.

This ability to market to different generational consumption habits is critical since there

are seventy-six million Baby Boomers, seventy-two percent of whom are white and eighty-seven

million Millennials, fifty-six of whom are white. As the largest age segment of the global

population, as well as being vastly diverse and young, the Millennial generation poses a

significant dilemma for companies to sell their products efficiently and effectively. In this paper,

we will discuss the ways in which companies can differentiate products as well as proposed

advertising techniques, will be that marketers can use to better appeal to the Millennial

generation based on their unique preferences and diverse needs and wants.

Three significant challenges that companies face when attempting to sell to Millennials

are the sharing economy, generational confidence, and technology. First off, the sharing

economy is a new model that is most apparent in businesses such as Airbnb, Uber, Alibaba, and

Facebook. Millennials are key contributors to this sharing economy especially in ride and home

sharing. The sharing economy, a new phenomenon that emerged with the Millennials, was

unseen before with older generations except for a very small offering of services like timeshare

homes.This economy has placed a heavy emphasis on renting and sharing services with friends,

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 2

family and even strangers, instead of buying and owning their own things like cars, homes, and

hospitality. Even though Millennials are known for being the most substantial consumers of this

segment of the economy, according to a study conducted by Mintel, 30 percent of Millennials

reported that they haven’t engaged in the sharing economy in the past twelve months. Whether

this is a lack of need or lack of exposure, it poses a serious problem for companies trying to

market to Millennial consumers, when they believe sharing economy is wanted, but data shows it

is not used as often as they expect.

Companies must acknowledge the potential growth of the sharing economy, but also

keep in mind the Mintel statistic that 30 percent have not engaged in the sharing economy in the

last twelve months. This discrepancy in consumers poses a challenge as resource allocation must

be more effectively divided to meet the diverse wants from this huge segment of the market, and

strategy must be able to adapt in a quickly enough to not be outdated or surpassed by other

innovative ideas. If companies can develop a strategy to interact with this technology, the sharing

economy algorithms match marketers to marketing campaigns which helps provide good service

and quality to the consumers, increasing awareness and customer retention, and therefore

growing the company’s revenue and overall bottom line. The challenge remains because of the

shift away from traditional marketing and into a technologically collaborative form of marketing.

If this form of marketing is adopted, it could ultimately help companies with the influx of

consumer data gathered through the technology of the sharing economy.

The use of the sharing economy in many Millennials can be contributed to the difference

in generational confidence, and therein lack of in this young and populous generation.

Millennials are less confident than Baby Boomers in handling personal finances, cooking meals,

and up-keeping their homes, which is why the sharing economy is more preferable (Mintel).

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 3

Millennials feel less confident in large purchases, showing they would rather rent than own a

home, and take Uber rather than buy a car. This generational difference is a cause for reinvention

of strategy and poses many opportunities. Brands can target this discrepancy as well as target

their products and services towards Millennials, knowing with certainty that they need help with

these skills. By partnering with places to address Millennial weaknesses, entering into food or

online education services, brands could both engage with underserved consumers and grow

brand awareness. Many companies have already created partnerships that help reach this

demographic, like older companies and restaurants using online ordering or delivery services,

using more and more technology to be effective with Millennials. Some companies have already

taken the step in providing educational services, like those in finance, by offering it free through

an app. Companies like Acorn allows free investment strategies and a handled portfolio, as well

as free tips to saving money. More companies should transition into these advertising practices

via social media platforms, smartphone apps, and interactive technology. These mediums of

information flow are most effective with Millennials and most commonly used. As a suggestion,

we believe that showing advertisements and sponsoring videos, brands will be more likely to

engage with consumers in a new, constructive manner that follows a native marketing approach.

Millennials are the largest generation in the United States, surpassing the previous largest

generational segment, the Baby Boomers. The oldest segment of Millennials are now parents,

with the tail end consisting of younger Millennials just now finishing up school and/or joining

the workforce (Mintel). In 2017, Millennials range between the ages of 23-40, entering the prime

earning and spending years of their lives.

In the next few years, millions of Millennials will be making major life decisions such as

buying a home, getting married, and having kids. These large decisions will likely alter purchase

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 4

patterns impacting every industry. Based on our research, the Millennial generation is open to

trying new products and services, but less so with traditional institutions and services,

demanding innovation and more technology. As this generation makes major life decisions, their

already disruptive purchasing behavior will have an even higher level of unpredictability.

However, the amount of financial power carried by the Millennial generation cannot be ignored,

forcing companies to adapt their tendencies even if that means they must completely redefine the

way they sell.

The most pronounced difference between Millennials and Baby Boomers is their

shopping experience, which has transitioned from a traditional brick-and-mortar experience to

the online servicescape. As anticipated, Baby Boomers prefer physicality - the ability to see and

touch products before purchase. Millennials, on the other hand, prefer to use technology in their

pre-purchase behavior (on-going research) all the way through to the post-purchase (leaving

online reviews for others to see). Statistics show that 40.7 percent of Millennials shop online at

least once per week, compared to 16.4 percent of Baby Boomers using technology for shopping.

This also correlates with the statistics showing that 36.8 percent of Millennials have shopped on

a mobile phone in the past year compared to only 4.8 percent of Baby Boomers.

The two generations are similar in their purchase process but differ vastly in their

execution. Millennials place strong importance on technology for selection (reviews and places

of purchase), where Baby Boomers will use a more traditional consumption process, involving

trips to a store or a face-to-face discussion with another individual. Millennials are doing 80

percent of their research prior to ever talking to someone (Salesforce). Therefore, companies

need to move away from structured decision-making processes that once worked with the Baby

Boomer Generation, and into one that fosters a more inclusive and collaborative appeal to the

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 5

Millennial consumers. With Millennials doing the vast majority of research before talking to

anyone, this collaborative approach needs to be present in the form of banner ads and keywords.

Company advertisements must appear soon after an idea is conceived or must occur before the

search process even begins for consumers. Companies need to shift from only having a

traditional physical servicescape to offering a continuous, online environment to constantly serve

the Millennials.

The selling model that revolved around the traditional ABC’s of sales (always be closing)

has now become the modern ABC's (always be collaborating). 50.5 percent of Millennials say

they are extremely loyal to their favorite brands, and this loyalty is hard fought since Millennial

consumers expect brands to go far beyond the bottom line and focus on quality, customer

experience, and social good (Forbes). The Millennials demand major emphasis on brand content.

This content must be consistent, relevant, and polished with the ability to transfer device to

device seamlessly. The ongoing engagement between Millennial consumers and brands is a

major difference between Millennial and Baby Boomer consumers.

The advent of technology has created the ability for this occurrence to take place. A

humorous example of current engagement is a twitter encounter between a teenager and Virgin

Trains. Adam Greenwood, 16, was traveling from Euston to Glasgow on Virgin Trains and

realized there was no toilet paper in his stall. Greenwood tweeted about this occurrence, copying

in the Virgin Trains twitter account. Virgin Trains responded and dispatched a member of the

train staff to help Greenwood (Daily Mail). This level of engagement was unfathomable, let

alone possible, for Baby Boomers. It is a great example of the current and constant interaction, as

well as the role technology now plays in marketing and consumer behavior.

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 6

 According to a study conducted by Bernstein analytics, Millennials eat the largest share

of their meals in restaurants than any other generation segment; 2.3 percent of the time for

Millennials compared to Baby Boomer’s 1.8 percent. This 2.3 percent amounts to about once

every other week. Additionally, Millennials are also spending less time preparing food and using

fewer coupons than Baby Boomers. This generational consumption change has forced grocery

stores to offer more prepared meals, restaurants to expand their to-go menus, and given rise to a

multitude of delivery apps and online ordering options. The $56 billion catering industry is

capitalizing on this change with companies such as Chipotle and Panera Bread leading the way,

by offering fresh and semi-healthy fast food in a world of unhealthy options (Business Insider).

Millennials have changed their eating habits from Baby Boomers with a focus upon convenience,

something that has been shown numerous times to be easily fixed with rebranding products and

positions in the marketplace, as well as an increase use of technology to foster the convenience.

Technology has both influenced Millennial habits and established new ones. In turn, this

increase of technology is reconfiguring each industry as it adapts to consumer habit changes.

Millennials are less likely to watch their diet than average but are on par in terms of exercise.

Millennials seem to prioritize exercise over diet. According to a study by Simmons Research, 25

percent of Millennials watch their diet because they want to watch their weight (Mintel). In

comparison, nearly 35 percent of Baby Boomers want to lose weight; however, the difference

between generations is the emphasis placed on diet and exercise in order to lose weight. A

portion of this disparity between diet and exercise may result from the fact that 13 percent of

Millennials claim to be too busy to eat a full meal whereas this is not the case with Baby

Boomers (Mintel). However, the Baby Boomers are leading the population in rates of obesity

and therefore need to lose the weight, whereas Millennials are part of a health conscious society

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 7

where maintaining their weight is crucial and exercising is more of a hobby and thing to do

rather than a necessity.

The United States healthcare industry is used primarily by seniors and will serve the

increasingly aging US population which includes the Baby Boomer generation. The three top

concerns of United States healthcare have to do with cost; cost of health insurance, cost of

healthcare services and cost of prescription medication (Mintel). The aging US population is

forcing the healthcare industry to revamp which offers an opportunity for companies to

reposition themselves not only to appease the needs and concerns of the Baby Boomers but also

Millennials. This opportunity focuses on repositioning hospitals from places of sickness into

places of health and wellness that offer guidance. The healthcare industry has the opportunity to

appeal to both generations because overall their needs overlap in this industry. Everyone needs

health care, however, between generations, the type of healthcare needed differs.

A greater access to consumer health data and an emphasis upon instruction versus

correction appeals to both consumer generations as the costliness of healthcare is dealt with. The

growing mentality of preventative health versus correction reduces cost, reduces time, and

improves overall wellness which benefits healthcare companies as well as Baby Boomers and

Millennials. The generations are happy, and the healthcare companies seize the demographics

more successfully.

Millennials are the most educated, most indebted generation in United States history.

Expected by society to receive higher education and saddled with the burden of ever-increasing

tuition, Millennials have looming debt that no other generations before truly had to deal with.

Average college tuition has jumped 157 percent in the past twenty years. Millennials with

college degrees are 16 percent more likely to have credit card debt than those without college

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 8

degrees and this debt does not come without consequences (NBC News). The purchasing

behavior of Millennials is influenced by this debt contributing to the rise of the sharing economy,

lowering their purchasing power in the economy in comparison to Baby Boomers. This accrued

debt forces Millennials to participate in the sharing economy, sharing rides or renting homes,

instead of purchasing them.

This change has seriously impacted the economy as home buying reverberates to

additional spending on furniture, repairs, and household equipment. A recent study conducted by

the Federal Reserve Bank of New York estimated that “as much as 35 percent of the decline in

young American homeownership from 2007 to 2015 is due to higher student debt loads”

(Bloomberg). The increase in tuition cost coupled with the increased usage of technology has

altered the economy and the ways in which companies market the consumers. This overlying

reality has led to half of Millennials stating that they would give up the ability to vote in the next

two presidential elections in exchange for loan forgiveness according to a survey by Credible

(CNBC). The reality of this situation is a well-educated generation, stifled with debt, are not able

to fully consider long-term investments as they deal with their debt in the short run. This not only

affects their own purchasing patterns, but also the purchasing patterns for nearly the entire

economy and makes it more challenging for companies to market towards them.

According to a survey conducted by Mintel, Millennials opt for entertainment over all

else if forced to choose. Social networking, video services, and video sharing services top the

list. This shows that entertainment takes precedence over food or transportation services, giving

companies a crucial space to understand and compete for access to the Millennial generation.

Another area of interest in targeting Millennials is social media. The Millennial generation has

greatly extended the use and impact of social media platforms using them to engage with brands,

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 9

find jobs, and connect with friends. Knowing this, companies can position their products and

services on social media platforms in ways that may have been thought of as unsuitable in the

past.

Baby Boomers change channels during commercials at three to four times the rate of

Millennials, “many millennials polled understand the necessity of ads and aren’t bothered by

them. That number leaps from 46 percent to 75 percent when the content they’re viewing is free”

(Forbes). The use of technology and social media has developed a ‘culture of multitasking’

wherein Millennials are switching between devices rapidly and searching through so much more

content than the Baby Boomers even had access to. Brands must divide advertising across

multiple platforms and extend their reach across channels which may actually prove beneficial if

the advertisements are following from one device to the next. This content must be tailored to

Millennial preferences however and focus on recommendations. According to Hubspot data, 71

percent of people are more likely to make a purchase if the product comes recommended by

others (Forbes). Theoretically, this is great, but the implementation of it is a bit more complex.

Brands need to utilize social media influencers and present consumer generated content to better

appeal to Millennials. This style is well accepted and demonstrates engagement of brands with

consumers and willingness to present itself in a realistic form, especially if a consumer's own

content is featured.

Engagement trumps promotion and brands are realizing they must be sincere in their

efforts. In the same way as search engine optimization, quality and honesty in content and brand

interaction define the successfulness of a company. Companies must use research on Millennials

and then use a trial and error system in order to find the most impactful form of engagement. For

a generation that has reacted positively to tracking data, remote work, and personalized

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 10

advertisements, companies have no other choice than to keep trying and adjusting until this

generation ages and possibly becomes more steadfast in their trends. But since Millennials are so

critical financially and incredibly diverse, companies must be able to pivot strategies quickly and

stay up to date unlike in past traditional marketing campaigns.

Traditional marketing strategies used with the Baby Boomer generation are no longer

effective with the Millennial generation whose consumption habits are extremely disruptive. The

expanse of technology has placed an emphasis (on take off) online purchasing, brand

engagement, and transitioned the marketplace to new forms such as the technology-enabled

sharing economy. Millennials are the most educated, most indebted generation in history, but are

also the largest generation and just entering their prime spending years, emphasizing the

importance on why effective marketing strategies need to be quickly sought after to fully serve

and understand this generation. Companies are adopting strategies to enhance engagement,

improve consumer interaction technology, and develop great content all to keep their consumers

buying and using their products.

Companies must now place much greater weight upon adaptability as technology and its

influence on consumption is constantly changing. Companies need to be versatile and willing to

change market positions in an instant, following the fad of viralness that only lasts days in the

eyes of Millennials. Big data and the age of information need to be completely utilized and data

tracking on consumers need to be critically analyzed so that companies can be a step ahead of the

consumers and be able to determine what the next trend is, instead of just keeping up and going

with the flow as they have been. The ability to be adaptable to the rapid changes in wants and

needs through technology and new marketing strategies will allow for companies to truly supply

what the Millennial generation demands.

Comparing the Spending Habits of Millennials to their Baby Boomers Parents 11

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