Session Purpose and Focus Explore generational differences of potential importance to marketing Discuss what we know about the generations Examine ways to address generational differences and particular needs of the people in the market C 2008 All Rights Res. RECP, Inc. 1 Why Bother? Perception of colliding generations Dissimilar values and idiosyncratic styles Misunderstanding, resentment Importance of sense of identity and self Beliefs, assumptions, and values shape and influence what we buy and how C 2008 All Rights Res. RECP, Inc. 2 Approaches to understanding generational differences Generational research How the particular period in which you matured influences your beliefs, values, assumptions Developmental research Effects of maturation within particular socio-cultural contexts on psychological, intellectual, and social characteristics C 2008 All Rights Res. RECP, Inc. 3 C 2007 RECP, Inc. All Rights Reserved 1
Generational Marketing 2008 What is a Generation? Generation is defined as, the average period between the first of one generation and that of the next All people born and living at about the same time A group of people born about the same time who share the same historical experiences, beliefs and attitudes C 2008 All Rights Res. RECP, Inc. 5 Factors that define a Generation A generation s identity is a state of mind shaped by Family life Gender roles Important institutions Politics Religion Culture Lifestyle Views on the future We are most influenced by our learning years. C 2008 All Rights Res. RECP, Inc. 7 Generations today World War II Generation (1914 1924)** Silent Generation (1925 1945)** Vietnam Generation (1946 1955)** Me Generation (1956 1965)** Endangered Generation (1966 1980)** Millennium Generation (1981 1996)?????? Generation (1996 - ) **Hutchinson (1999) based on Sheehy 1995 C 2008 All Rights Res. RECP, Inc. C 2007 RECP, Inc. All Rights Reserved 9 2
Generational Marketing 2008 Reflections What do I now know about: Generational differences? Boomers and Silents as buyers? How can I use this information to more effective address their needs? C 2008 All Rights Res. RECP, Inc. 11 If you don t think generation makes a difference, think of this example How and where did Kennedy die? Veterans and Baby Boomers would say gunshots in Dallas, Texas. Generation X remembers a plane crash near Martha s Vineyard, Massachusetts. Millennials might say Kennedy who? C 2008 All Rights Res. RECP, Inc. 13 Silent Generation Silents (AKA Builder Generation, Veterans, Traditionalists) Born before 1946 C 2008 All Rights Res. RECP, Inc. C 2007 RECP, Inc. All Rights Reserved 14 3
Silent Generation Values Hard work Organization Hierarchy Tradition Logic Family Honor Respect for authority Consistency, uniformity Discipline C 2008 All Rights Res. RECP, Inc. 15 Boomers Boomers (AKA Baby Boomers) Born between 1946-1964 C 2008 All Rights Res. RECP, Inc. 17 Boomers Values Fairness Optimism Team orientation Personal Growth Personal Gratification Service Family Personal Approach Youth Work Ethic Involvement Consensual Leadership Recognition of Achievement C 2008 All Rights Res. RECP, Inc. 18 C 2007 RECP, Inc. All Rights Reserved 4
Generational Marketing 2008 Generation X Generation X (AKA Baby Busters, Post-Boomers, Thirteeners) Born between 1965-1985 C 2008 All Rights Res. RECP, Inc. 20 Gen X ers Values Diversity Self-reliance Questioning Authority Thinking Globally Balance Techno-literacy Fun Informality Pragmatism Family Entrepreneurial Spirit C 2008 All Rights Res. RECP, Inc. 21 Nexters Generation Nexters (AKA Net Generation, Millennials, Generation Y, Nintendo Generation) Born between 1985-2000 C 2008 All Rights Res. RECP, Inc. C 2007 RECP, Inc. All Rights Reserved 23 5
A Re-presentation of NAR Research and Research by the RECP C 2008 All Rights Res. RECP, Inc. 24 The Baby Boom Generation Started in 1946, when the number of American births jumped by 20% from the year before. Between 1946 and 1964, 78.2 million Americans were born. Birth rate settled down in the mid- 1960s for Gen X C 2008 All Rights Res. RECP, Inc. 26 The Genesis of the Generation The Increase in Total Fertility Rate Expected Births per 1,000 Women during their Child-Bearing Years 4,000 3,600 3,200 2,800 2,400 2,000 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970 C 2008 All Rights Res. RECP, Inc. 27 C 2007 RECP, Inc. All Rights Reserved 6
The Baby Boom Generation In 2008... -About 1 in 3 adult Americans are Boomers -The oldest Boomers are turning 62 -The youngest are turning 44 C 2008 All Rights Res. RECP, Inc. 28 The Baby Boom Generation In 2008... -About 1 in 3 adult Americans are Boomers -The oldest Boomers are turning 62 -The youngest are turning 44 Nearly half are in their 40s so retirement isn t imminent for most Boomers C 2008 All Rights Res. RECP, Inc. 29 Housing and the Baby Boomer: An Insightful Perspective C 2008 All Rights Res. RECP, Inc. 30 C 2007 RECP, Inc. All Rights Reserved 7
Baby Boomers Today 77 million Baby Boomers 39 million women & 38 million men 35% of all US adults are Boomers 42% of US homeowners are Boomers Boomers: 73% White, non-hispanic, 12% Black, 10% Hispanic & Asian May 18, 2006 Source; U.S. Census Bureau Baby Boomer Segmentation All Adult U.S. Baby Boomers=76,696,960 Never Homeowner (12%) Financially Comfortable INFLUENTIAL Financially AMERICAN VOTERS (70%) VOTERS well-off N = 207,487,283? 4 Financially Uncertain 43% C 2008 All Rights Res. RECP, Inc. 33 Boomer Household Characteristics Baby Boomer Households Non-families, 5% Single persons, 20% Other families, 15% Married couples, 60% May 18, 2006 Source; U.S. Census Bureau C 2007 RECP, Inc. All Rights Reserved 8
Boomer Household Characteristics Boomer Families with Children by age 100% 80% 60% 40% 20% 0% 13% 30% 67% 30% Age 42-49 Age 50-60 Children <18 Children >18 May 18, 2006 Source; U.S. Census Bureau Average Boomer Household Income Average Boomer Household Income ($75,700 vs $60,500 US aver.) $80,000 $78,000 $76,000 $74,000 $72,000 $70,000 $68,000 $78,300 $77,000 $75,200 $71,600 Age 42-44 Age 45-49 Age 50-54 Age 55-60 Affluent ($100k+) Boomer households are 55% of all US affluent households 3/4 of all Boomers & nearly 9/10 of affluent Boomers live in single family dwellings May 18, 2006 Source; U.S. Census Bureau Baby Boomers and Homeownership Agree or strongly agree with the statement: 100% 80% 60% 40% 20% 0% 96% Owning a home is a good investment 65% Important to pay off home loan quickly 58% OK to buy with small down payment 13% OK to buy most expensive house I can C 2008 All Rights Res. RECP, Inc. 37 C 2007 RECP, Inc. All Rights Reserved 9
Generational Marketing 2008 Baby Boomers Future Plans Boomer's ideal retirement plan 35% 30% 25% 20% 15% 10% 5% 0% 33% 26% 17% 1 Both work & Never work leisure for pay again Work parttime Start own business 7% 7% Work fulltime Other 47% of Boomers say they re financially strong, but 53% say they re weak C 2008 All Rights Res. RECP, Inc. 38 Boomer Homeownership 78% Own their primary residence C 2008 All Rights Res. RECP, Inc. 41 The Role of Homeownership Share of Household Net Worth The equity in the typical Boomer s primary residence accounts for 40% of their net worth. For middle-income Boomers, it s 50%. C 2008 All Rights Res. RECP, Inc. C 2007 RECP, Inc. All Rights Reserved 42 10
Household Net Worth Median Homeowners Renters $233,100 $21,200 The typical Boomer homeowner has a net worth more than 10 times greater than the typical Boomer renter. C 2008 All Rights Res. RECP, Inc. 43 Attitudes about Housing Percentage Agreeing remember this! 96% 65% 58% 13% Homeownership is a good financial investment It s important to pay off a home loan early I m comfortable buying with a very small down payment It s a good idea to buy the most expensive home I qualify for C 2008 All Rights Res. RECP, Inc. 44 Boomers and their Realtors C 2008 All Rights Res. RECP, Inc. 45 C 2007 RECP, Inc. All Rights Reserved 11
60% used a realestate agent for their last home purchase. C 2008 All Rights Res. RECP, Inc. 46 60% used a realestate agent for their last home purchase. 79% used a real-estate agent for the last home they sold. C 2008 All Rights Res. RECP, Inc. 47 Services Buyers Want 23% Represent my interests and coordinate with other parties C 2008 All Rights Res. RECP, Inc. 48 C 2007 RECP, Inc. All Rights Reserved 12
Services Buyers Want 23% 1 Represent my interests and coordinate with other parties Manage the closing process, from start to finish C 2008 All Rights Res. RECP, Inc. 49 Services Buyers Want 23% 1 1 Represent my interests and coordinate with other parties Manage the closing process, from start to finish Explain all contracts, forms and agreements C 2008 All Rights Res. RECP, Inc. 50 Services Buyers Want 23% 1 1 Represent my interests and coordinate with other parties Manage the closing process, from start to finish Explain all contracts, forms and agreements 1 Negotiate on my behalf C 2008 All Rights Res. RECP, Inc. 51 C 2007 RECP, Inc. All Rights Reserved 13
Services Buyers Rate as Least Important Follow-up after closing C 2008 All Rights Res. RECP, Inc. 52 Services Buyers Rate as Least Important Follow-up after closing Provide support through emotional decisions C 2008 All Rights Res. RECP, Inc. 53 Services Buyers Rate as Least Important 3% Follow-up after closing Provide support through emotional decisions Help finding a mortgage lender C 2008 All Rights Res. RECP, Inc. 54 C 2007 RECP, Inc. All Rights Reserved 14
Services Buyers Rate as Least Important 3% 3% Follow-up after closing Provide support through emotional decisions Help finding a mortgage lender Provide regular feedback and progress reports C 2008 All Rights Res. RECP, Inc. 55 Services Buyers Rate as Least Important 3% 3% 5% Follow-up after closing Provide support through emotional decisions Help finding a mortgage lender Provide regular feedback and progress reports Determine housing affordability C 2008 All Rights Res. RECP, Inc. 56 Services Sellers Want 17% Help establishing the right asking price C 2008 All Rights Res. RECP, Inc. 57 C 2007 RECP, Inc. All Rights Reserved 15
Services Sellers Want 17% 1 Help establishing the right asking price Represent my interests and coordinate with other parties C 2008 All Rights Res. RECP, Inc. 58 Services Sellers Want 17% 1 12% Help establishing the right asking price Represent my interests and coordinate with other parties Show my home to interested parties C 2008 All Rights Res. RECP, Inc. 59 Services Sellers Rate as Least Important Follow-up after closing C 2008 All Rights Res. RECP, Inc. 60 C 2007 RECP, Inc. All Rights Reserved 16
Services Sellers Rate as Least Important Follow-up after closing Provide virtual tours to market my home C 2008 All Rights Res. RECP, Inc. 61 Services Sellers Rate as Least Important 3% Follow-up after closing Provide virtual tours to market my home Provide insights about competing properties C 2008 All Rights Res. RECP, Inc. 62 Services Sellers Rate as Least Important 3% 3% Follow-up after closing Provide virtual tours to market my home Provide insights about competing properties Provide regular feedback and progress reports C 2008 All Rights Res. RECP, Inc. 63 C 2007 RECP, Inc. All Rights Reserved 17
Services Sellers Rate as Least Important 3% 3% 5% Follow-up after closing Provide virtual tours to market my home Provide insights about competing properties Provide regular feedback and progress reports Provide advice on critical issues C 2008 All Rights Res. RECP, Inc. 64 Implications Buyers and sellers both want and expect service from their Realtors C 2008 All Rights Res. RECP, Inc. 65 Implications Buyers and sellers both want and expect service from their Realtors They re not looking for emotional support C 2008 All Rights Res. RECP, Inc. 66 C 2007 RECP, Inc. All Rights Reserved 18
Implications Buyers and sellers both want and expect service from their Realtors They re not looking for emotional support They don t want information they can find themselves C 2008 All Rights Res. RECP, Inc. 67 What Boomers Want in Retirement C 2008 All Rights Res. RECP, Inc. 68 Location of Primary Residence Where Boomers Reside Today... Urban Areas Suburbs Small Towns Rural Areas Today 2 37% 20% 20% C 2008 All Rights Res. RECP, Inc. 69 C 2007 RECP, Inc. All Rights Reserved 19
Location of Primary Residence... And Where They d Like to End Up Urban Areas Suburbs Small Towns Rural Areas Today 2 37% 20% 20% Retirement 12% 25% 30% 33% C 2008 All Rights Res. RECP, Inc. 70 Preferred Amenities Features Boomers Will Look For Lower Cost of Living Near Family Access to Quality Health Care Better Climate Near Body of Water Share of Respondents 38% 38% 38% 37% 36% C 2008 All Rights Res. RECP, Inc. 71 Preferred Amenities Features Boomers Will Look For Near Cultural Offerings With Family On a Golf Course Access to Education Share of Respondents 18% 9% 3% C 2008 All Rights Res. RECP, Inc. 72 C 2007 RECP, Inc. All Rights Reserved 20
Boomers Financial Attitudes C 2008 All Rights Res. RECP, Inc. 73 Working Beyond Age 65 Boomers Current Expectations Likelihood of Working All Baby Boomers 4 C 2008 All Rights Res. RECP, Inc. 74 Working Beyond Age 65 Boomers Current Expectations All Baby Boomers 4 42-49 year-olds 50-60 year-olds Likelihood of Working 46% 37% C 2008 All Rights Res. RECP, Inc. 75 C 2007 RECP, Inc. All Rights Reserved 21
Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty 43% 37% 17% C 2008 All Rights Res. RECP, Inc. 76 Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty 43% 37% 17% C 2008 All Rights Res. RECP, Inc. 77 Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty 43% 37% 17% 5 have some work to do! C 2008 All Rights Res. RECP, Inc. 78 C 2007 RECP, Inc. All Rights Reserved 22
Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty All 43% 37% 17% C 2008 All Rights Res. RECP, Inc. 79 Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty All 43% 37% 17% 42-49 38% 38% 19% C 2008 All Rights Res. RECP, Inc. 80 Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty All 43% 37% 17% 42-49 38% 38% 19% C 2008 All Rights Res. RECP, Inc. 81 C 2007 RECP, Inc. All Rights Reserved 23
Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty All 43% 37% 17% 42-49 57% -- or almost 3 out of every 5 younger Boomers 38% 38% 19% C 2008 All Rights Res. RECP, Inc. 82 Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty All 43% 37% 17% 42-49 50-60 38% 38% 19% 46% 35% 1 C 2008 All Rights Res. RECP, Inc. 83 Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty All 43% 37% 17% 42-49 50-60 38% 38% 19% 46% 35% 1 C 2008 All Rights Res. RECP, Inc. 84 C 2007 RECP, Inc. All Rights Reserved 24
Financial Situation How Boomers Describe Themselves Well Off Comfortable Making Ends Meet Having Difficulty All 43% 37% 17% And at 49%, older Boomers aren t doing much better 42-49 50-60 38% 38% 19% 46% 35% 1 C 2008 All Rights Res. RECP, Inc. 85 Financial Goals Percentage Agreeing 65% It costs too much to truly retire C 2008 All Rights Res. RECP, Inc. 87 Financial Goals Percentage Agreeing 65% 4 It costs too much to truly retire I expect to work after becoming eligible for Social Security C 2008 All Rights Res. RECP, Inc. 88 C 2007 RECP, Inc. All Rights Reserved 25
Social Security: Workers per Beneficiary 1960 5.1 C 2008 All Rights Res. RECP, Inc. 89 Social Security: Workers per Beneficiary 1960 5.1 Today 3.3 C 2008 All Rights Res. RECP, Inc. 90 Social Security: Workers per Beneficiary 1960 5.1 Today 2032 3.3 2.1 C 2008 All Rights Res. RECP, Inc. 91 C 2007 RECP, Inc. All Rights Reserved 26
Reaching Their Financial Goals How Can Boomers Do It? C 2008 All Rights Res. RECP, Inc. 92 Reaching Their Financial Goals How Can Boomers Do It? C 2008 All Rights Res. RECP, Inc. 93 Real Estate Wealth As a Share of Total Assets 40% 30% Real Estate 20% 10% Stocks 0% 1994 1997 2000 2003 2006 C 2008 All Rights Res. RECP, Inc. 94 C 2007 RECP, Inc. All Rights Reserved 27
Real Estate Wealth As a Share of Total Assets 40% 30% Real Estate 20% Stocks 10% 0% 1994 1997 2000 2003 2006 C 2008 All Rights Res. RECP, Inc. 95 Real Estate Wealth As a Share of Total Assets 40% 30% Real Estate 20% Stocks 10% 0% 1994 1997 2000 2003 2006 C 2008 All Rights Res. RECP, Inc. 96 Real Estate Investments Share of Net Worth excluding Primary Residence More Than 10% of Net Worth Share of Respondents 16% C 2008 All Rights Res. RECP, Inc. 97 C 2007 RECP, Inc. All Rights Reserved 28
Real Estate Investments Share of Net Worth excluding Primary Residence More Than 10% of Net Worth to 10% of Net Worth Share of Respondents 16% 7% C 2008 All Rights Res. RECP, Inc. 98 Real Estate Investments Share of Net Worth excluding Primary Residence More Than 10% of Net Worth to 10% of Net Worth Zip, Nil, Nada, Nothing Share of Respondents 16% 7% 77% C 2008 All Rights Res. RECP, Inc. 99 Real Estate Investments Share of Net Worth excluding Primary Residence More Than 10% of Net Worth 3 out of 4 Boomers have no investment properties to 10% of Net Worth Zip, Nil, Nada, Nothing Share of Respondents 16% 7% 77% C 2008 All Rights Res. RECP, Inc. 100 C 2007 RECP, Inc. All Rights Reserved 29
Equity in Primary Residence Among Boomer Homeowners $24,999 or less $25,000 to $49,999 $50,000 to $99,999 $100,000 to $149,999 $150,000 to $249,999 $250,000 or more Share of Respondents 15% 15% 19% 15% 16% 19% C 2008 All Rights Res. RECP, Inc. 101 Equity in Primary Residence Among Boomer Homeowners $24,999 or less $25,000 to $49,999 $50,000 to $99,999 $100,000 to $149,999 $150,000 to $249,999 $250,000 or more Share of Respondents 15% 15% 19% 15% 16% 19% Median Equity All Boomer Households $100,000 C 2008 All Rights Res. RECP, Inc. 102 Equity in Primary Residence Among Boomer Homeowners $24,999 or less $25,000 to $49,999 $50,000 to $99,999 $100,000 to $149,999 $150,000 to $249,999 $250,000 or more Share of Respondents 15% 15% 19% 15% 16% 19% Median Equity All Boomer Households $100,000 Boomers Earning at Least $100,000/yr $150,000 C 2008 All Rights Res. RECP, Inc. 103 C 2007 RECP, Inc. All Rights Reserved 30
Key Results Boomers have a strong attachment to homeownership Boomers want professional services from their Realtors Boomers are likely to keep working well into their retirement years Adding investment real estate to their financial assets could provide Boomers with additional financial security C 2008 All Rights Res. RECP, Inc. 108 Think About Your Clients Use this information to help understand their needs to meet their objectives! C 2008 All Rights Res. RECP, Inc. 109 C 2007 RECP, Inc. All Rights Reserved 31