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Private Client Summit 2009: The New Consumer Mindset
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The Consumer Mindset
of
Incoming College Students and their Parents
March 17, 2009 Private College Summit Focus on post-economic crash
Primary Sources
2
Millennialgeneration.org Campusprogress.org Generationsatwork.com
Terminology: Students
Many terms used for generation which includes those entering college over next 4 years
• • • • Generation Y Millennials Echo Boomers iGeneration • • • • Trophy Kids Trophy Generation Generation Next Generation Why
3
Common market research definition: those born 1977-2000
Terminology: Parents
A few terms used for generation that includes parents of those entering college over the next 4 years
• • • • Baby Boomers Boomers Matures Generation Jones
U.S. Census Bureau definition: those born during the demographic birth boom between 1946 and 1964.
4
Overall Consumer Mindset Shifts
The Economic Backdrop Affecting All Generations of Americans
Decadent overspending built an economic house of cards
“The country was suffering from “affluenza.” “Much of the …boom in consumer spending [came from] people who, even in good times, could not afford the things they were buying.”
“A working mother [said], ‘I feel slightly sick at our decadence.’”
“Too many of us…tend to worship self-indulgence and consumption…[It] does not satisfy our longing for meaning.” 6
Many never learned responsible money management
“ [The Millennial] generation [should] be less greedy,…[and] behave a little more sensibly [with money].” “Consumers struggling with credit card bills learned the simple wisdom of not buying something until we've saved for it.”
“The idea of saving up for what you buy, that’s what you did when there weren’t any credit cards,”
“[Millennials] have grown up in a world where credit has always been cheap and easy and available. …there is no precedent for frugality.”
7
Overspending is now considered “tacky” by many
“At times like this, you don’t want to be as conspicuous …It’s really rude.” “[There’s] a desire for more simplicity and less flash”
underground. Wealthy consumers are asking for plain bags at places like the Hermès boutique in 8 Manhattan”
“Bling is going
“Marketers are scrambling to remake their advertising so products seem affordable and sensible rather than indulgent and fabulous.”
Frugal is chic and “green”
“The lower-spending shopper of 2008 …is evidence of a ‘new frugality’ or a ‘saving is cool’ mentality,” “It’s a whole new reassessment of values” “[Since the crash] we have managed to characterize consumer shock as frugality chic.”
“Americans are showing an enthusiasm for thriftiness not seen in decades.”
“The new frugality saves money, but it has other upsides. Biking and walking are obviously healthier than driving. Hand-me-downs keep old clothes out of landfills a while longer”
9
Fear is now universal
“[There is a] fear of not having enough money, [or] losing it … in the stock market …[the] poor and rich alike…suffer from fear.” “According to a ComPsych Corp. poll, 92% of employees are tossing and turning at night, plagued by financial worries and a feeling of helplessness. About 1 in 3 obsess about the rising cost of living or credit card debt, while 14% fear not being able to make mortgage payments.”
“Another index… in these economically turbulent times is the ‘anxiety index’: It goes up when markets go down…”
10
Significant, almost-overnight changes in consumer behavior
“…some of us are going without luxury goods, …[and] others are going without fulfilling our doctors’ prescriptions.”
BEFORE
“…the daily trade-offs [people] are making — more pasta and less red meat, more video rentals and fewer movie tickets — amount to an important shift in consumer behavior”
AFTER
“Recessionistas, as they're called, swap clothes with friends or take up knitting.”
“If restaurant meals strain the budget, more families are learning to cook--sometimes with food grown in their own backyards.”
"What I [am] really trying to do is to match [my spending] to my actual needs"
11
Trading down is the new game in town
“The trend toward frugality is sweeping along even wealthier Americans… The well-to-do are ‘making lists, they’re planning, they’re comparison shopping, they’re starting to think more strategically,’”
“The New Frugality emphasizes stretching every dollar…bypassing the fashion mall for the discount chain store, buying secondhand clothes … or store brands.”
“Consumers are learning that we can always get something for much less.”
12
Credit of all kinds has been demonized
“Credit-card offers came in the mail like confetti, and we used them like there was no tomorrow.”
“[In the old economy] something for nothing became the order of the day.”
“Over the past few decades…the American way to pay for things — from wars to … flatscreen TVs … [was] with money that wasn’t there.”
“A coalition of consumer advocates, public policy groups and academics wants to creat[e] a national campaign much like the one used to curb smoking.”
13
Shifting Attitudes of Millennials
Compelling messages molded Millennial attitudes
Catered to and targeted: Nickelodeon, Baby Gap
“You’re special”
“Leave no one behind”
Trophy for showing up Tolerance, diversity
“We’ll take care of it for you”
Scheduled and micromanaged
“Serve your community”
Required volunteerism U.S. problem: selfishness
Interdependent on family, friends, teachers
“Connect 24/7”
“Achieve now!”
Best preschools College agents
15
Millennial have unique generational characteristics
Confident:
raised on self-esteem Focus on greater good, volunteerism, sustainable environment
Civic minded:
Inclusive:
life should be fair to all and diverse
expect fun, creative environments and balance
Hopeful:
technology seamlessly integrated
Wired:
achievement expectation + structured scheduling
Goal oriented:
Short attention span
16
Expect a lot of feedback for their work; are multitaskers
“I come first”
• Clear priorities: ME • School-life balance is imperative • High value placed on self-fulfillment • Realization that life is short and time is valuable • Don’t like to stay too long on any one assignment • Reduced resources means spending more selectively expectation that “it better be a great experience”
17
“I can have it all”
• Strong sense of entitlement • Strive for the quality of life only known by rich and famous • Wanting the best and thinking they deserve it • Driven and ambitions • High expectations • Expect instant gratification
18
• Clashes with current economic realities
Millennial interest in education is up; ability to pursue it is down
Increasing interest in enrolling in higher education during economic downturn
Weakening family purchasing power and decreasing loan options curb their ability to actually pursue it
19
Education is becoming a cost / benefit decision
• Millennial students are already buried in debt • Parents still the primary source of funds for many • By age 25 many have debt > next 5-10 years of total income •For many, college ≠ “getting ahead”
20
•Millennials have a make-money mentality that colors their views of education
Creative solution: Transfer Strategy
• Low cost community college for basic coursework • Transfer plans to a “better name” school • Degree and resume only list the “better name” school • Large universities benefit from this strategy • Typically more opportunity for transfer • Often requires repeating some courses, which generates revenue
21
Creative solution: ROI Strategy
• Students choosing practical areas of study • Looking for college to offer a higher likelihood of employment • Less interested in the “college experience” or prestigious name • Want skills in something they’re interested in and a meaningful income
22
Creative solution: Work-StudyMulti-tasking Strategy
•Millennial students who work 10-12 hours a week get better grades •Benefit from the discipline •“Daylighting” is on the rise: Millennials secretly work two “jobs” per shift • Fluent muti-taskers; seamlessly “toggle” back and forth with their technology • Especially likely with low-challenge school work or jobs
23
“If I can’t get it here, I’ll go somewhere else”
24
“I want to make a difference”
• Want to be important and make an impact on the world • Grown up in a diverse world because of gains made by earlier generations • They’re political and online in large numbers • Use their collective power to change this democracy and ensure fairness to all • “Give back” strategies are becoming a viable alternative / addition to traditional education and employment
25
Mounting Pressure to Succeed
• Overwhelmed by
• • • Limitless possibilities Dream to maximize their achievements Their now-dwindling resources
26
Expect to leverage technology in everyday life
• Look to technology to solve problems; help them do more with less • “Textbooks are so 20th century”
• Some schools pre-loading iPods with video tutorials • Looking for fit with their always-on lifestyle • Care less about information than knowing where to find information
27
• Want and expect different ways of learning and creative ways to save money
Baby Boomer Parents
Baby boomers bring a new perspective in parenting
Protective Concerned with safety and security Involved Children on a pedestal Well educated and intelligent Want to help their kids achieve Demanding “Superdads”
29
Savvy consumers who believe their kids should have their “fair share”
Boomers ensure their children grow up safely and well treated
30
Boomers have created close relationships with their children
31
Child-centric parents experiencing “kidskickness”
32
Still believe that higher education is the key to success, even now
• Many parents advising their children to ride out the unhealthy economy by going to or staying in school • Parents and older siblings out of college facing bleak job market • “Might as well get an education” • Older children in school are taking longer to graduate to avoid job search
33
No matter the income bracket, many Boomers feel desperate
• Tarnished credit is limiting many parents’ ability to finance college • Reaching out for economic assistance and financial education • Utilizing pawn shops and high-interest loans as other options dwindle • Uptick in counseling • Many unable to provide child the financial safety net they once could
34
As competition mounts, targeting the parent and student is critical
35
Summary and Conclusions
• Millennials and their parents come as a “package” • Shrinking resources have created some fundamental shifts in attitudes of both groups
• Education is a means to and end, not a goal in itself • Not about prestigious name, but job prospects and ROI • Going to school and staying in school is a viable stop-gap measure for many if they can afford it • Others are looking at non-traditional routes to their goals, like “giving back” strategies
36
• Relying on parents as a financial safety net may not be the secure option it once was
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