I Know Where You’re Coming From

Financial services marketing professionals are constantly seeking ways to identify and refine appropriate target market segments for their offerings. Their ongoing goal is to narrow the focus of product/service marketing efforts to the most receptive groups in order to reduce costs and increase positive response rates.

Database marketing has played an important role in systemizing the segmentation process and introducing a higher degree of science to the art of marketing. Database marketing may not, however, be applicable or available in all cases. There is another highly effective segmentation approach that can help marketers focus marketing resources where they will achieve greater returns, with or without database support.

Birds of a Feather

Early in the last century, social scientists created the concept of “cohorts” or groups of people born in a particular period of time and bound together by shared experiences and historical events. The premise is that people shaped by a particular series of influences share a common value system. As a result, members of different generations react very differently to the same stimulus.

Influences that shape generational perspectives and behavior can arise from many elements or events—e.g., cultural, economic, technological or political. Every generation has comparable rites of passage as they pass through a given life cycle. However, the events that distinguish those formative experiences change from generation to generation and create the basis for a set of associations and responses that help shape common generational values. The chart below cites a number of formative year influences for major generational groups.

Examples of Generational Influences
Category	Seniors (born before 1943)	Baby Boomers (born 1943–1960)	Gen-X (born 1961–1981)	Gen-Y (born 1982-1997)
Event	Civil Rights	Vietnam	9/11	Global Warming
Fast Food	Automat	Drive-In	McDonald’s	Red Bull/Power Bars
In Touch	Mail	Phone	E-mail	IM/Text
Sports	Babe Ruth	Muhammad Ali	Michael Jordan	Tiger Woods
Night Talk	Jack Parr	Johnny Carson	Dave or Jay	Stewart/Colbert
Media	Radio	Network TV	Cable TV	Internet
Music	Sinatra	Beatles/Elvis	Madonna	American Idol
Comedy	Bob Hope	Lucy	Seinfeld	Adam Sandler
Crime	Capone	Manson	McVeigh	Columbine
Dow	200	800	1,000	10,000
For Kids	Howdy Doody	Sesame Street	Mr. Rogers	Barney
Movies	Gone With the Wind	Godfather	Animal House	High School Musical
Fads	Pogo Stick	Hula Hoop	Cabbage Patch	Pokémon
TV	Ed Sullivan	MASH	Dallas	Reality TV
Glamour	Betty Grable	Marilyn Monroe	Farrah Fawcett	Paris Hilton
Heart Throbs	Clark Gable	Paul Newman	George Clooney	Justin Timberlake
Hosts	Arthur Godfrey	Dick Clark	Oprah	Ryan Seacrest

While financial marketers should consider the compelling generational orientation of their target markets when refining messaging and value propositions, they should also be aware of the potential pitfalls. The most common mistake is an over-reliance on demographic profiling, a process that ignores the strong values of generational cohorts. For example, many demographic studies assume that people entering a certain age group will display the same preferences and behaviors as those who preceded them. Savvy marketers, however, recognize that, even though the priorities of Baby Boomers will change as they reach their sixties, they will not mimic the behavior of the last generation of retirees.

Smart financial marketers also realize that they have their own particular generational perspectives that must be put aside if they are to make sound decisions regarding marketing strategies or product/service development for another generational cohort. While it is extremely difficult for marketers to remove personal values from these types of judgments, it is critical if they are to develop effective marketing initiatives. It often means the difference between connecting with the target market and misjudging it entirely.

The Bottom Line

Good marketing is about satisfying the needs and wants of target markets. Generational cohorts can provide marketers with unique insights concerning the biases, priorities and preferences of market segments. The resulting information can inform the decision-making process and help marketers develop targeted campaigns that will resonate with their target markets.