Special report Agents of change: how young consumers are changing the world of marketing
Ian Spero and Merlin Stone
The authors
Ian Spero is Founder and Managing Director of Spero Communications Ltd, London, UK. E-mail:
[email protected] Web: www.sperocom.co.uk Merlin Stone is IBM Professor of Relationship Marketing at Bristol Business School (UWE), Business Research Leader with IBM UK Ltd, and Director, The Database Group Ltd., QCi Ltd., and The Halo Works Ltd. E-mail:
[email protected]Introduction
Traditionally, teenagers have been nurtured by companies to cement loyalty so that they will be valuable customers later. This is because suppliers perceive teenagers as valuable early adopters. Now the group is seen as a lucrative market in its own right, but as interests, consumer choices and a variety of experiences fracture the demographic, marketers need to look beyond demographics, numbers and media speak. The gap between a product being hyped (i.e. its popularity is exaggerated by its industry or the media) and its penetration into the teen market is bigger than the industry or media suggests. There are marketers who believe that teenagers aspire to be young adults, so by default will consume anything that is trickled down from working professionals. Wrong. Teenagers are aspirational, but consumer spending is strongly inuenced by peer group pressure and internally dened values not ash gadgets. Consumer choice is rich, but the gadget geek buying the latest wow innovation is a myth. This is continually proven by hyped products that are not adopted. The slow uptake of WAP and the realization that the industrys sheepish declaration that new MMS (multimedia messaging service) will dramatically fall short of forecasts over the next four years is clear indication. Conversely, low-tech SMS texting has dened a teen generation.
Keywords
Information society, Young adults, Customers, Marketing
Abstract
This paper looks at young adults relationship with digital media. From a commercial perspective the opportunity to deploy these channels to promote consumer recruitment and loyalty is very signicant indeed. However, consumer marketing companies will have to learn to meet the needs of this very discerning and highly cynical audience by combining the best creative ideas and strategies with a transformed approach to marketing sales and service, embodying the best of information and communications technology, reliably and securely implemented. Communication networks underpin this report. While teens complain that they have less public space to hang out in, they are making the online world their milieu, their domain where they develop personal relationships and where they play and learn new things. The conclusions cover not only the effect of current market drivers, but also emerging trends that will allow brands to better understand the behaviour of young adults, so as to establish more truthful binds with them.
Why agents of change?
We assigned the word agent to 12-16 year old teenagers, borrowing from the terminology used in articial intelligence development, where agents are decision-making entities within the software code developed to take decisions and rapidly create actions. Teenagers these days are precisely that: independent entities who, alone and with aligned peers, create their own rules of engagement and social behaviour. Overall, in todays society teenagers are still motivated by the same aspirations of previous generations: independence, privacy, ownership, status and peer pressure. The difference today is the new channels and content distribution that they use. The core value of the teen is to communicate and be heard. While teenagers complain that they have less and less public spaces to hang-out in, they are making the online world their milieu, their domain where they develop personal relationships with others and get closer to those who they admire and respect, the realm where they play and learn new things.
Electronic access
The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htm
Qualitative Market Research: An International Journal Volume 7 Number 2 2004 pp. 153-159 q Emerald Group Publishing Limited ISSN 1352-2752 DOI 10.1108/13522750410530057
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Agents of change: how young consumers are changing the world of marketing
Qualitative Market Research: An International Journal Volume 7 Number 2 2004 153-159
Ian Spero and Merlin Stone
Brands targeting young adults need to understand emerging behaviour to get closer to their target audience to establish more relevant and credible relationships with them. The main message of this article is work with them, allow your brand to harbour their current behaviour, values and attitudes. Teenagers need to do the talking, be the messengers not the marketers.
Beyond demographics, numbers and media speak
Marketers need to look beyond demographics, numbers and media speak. The digital world is the main environment where agents of change, teenagers, are located. This is where they play, work, learn and communicate. It is the arena in which a brand communicates with its young market. Most companies, however, under-explore, undervalue and underrate the digital world. The young are confronted with patronising, ill-conceived, generic attempts to engage them. In the valuable youth market, many brands ignore the benets that digital marketing channels offer them. The following trends highlight what a lucrative, exciting and ever changing marketplace the digital world has become.
A powerful consumer spending group Teenagers are a powerful consumer spending group in their own way, largely uninuenced by the very brands that seek to target them. The youth market is traditionally classied according to age. Familiar groupings have been 710 (tweens), 11-13 (young teenagers), 14-16 (teenagers), and 16+ (young adults). But, recently age segmentation has been replaced by less spurious identications. This is because age segmentation ignores everything that differentiates young people. This, in turn, patronises and turns off the youth market as marketers presume they know about these age groups. Instead, young people are being identied according to the very lifestyle traits they inhabit interests, behaviour, social maturity, location, wealth, ethnicity, upbringing, school, eating habits, gangs, gender and sexuality. These segments are based on social factors which prevents spurious statements being made about teenagers in any select age category. By using this level of sophistication and diversity, marketers can paint individual and accurate pictures of who these young people are. Lifestyle traits By using the lifestyle traits young people inhabit, marketers can paint individual and accurate pictures of who these young people are. Young people must be emotionally engaged. A brand will not succeed unless young people connect with the brand emotionally, allowing them to trust it. Unless brands allow young people to feel independent, empowered and free of moral judgments they will fail to sell to them. A brand with an emotional difference can potentially command a premium. To develop an emotional connection, a brand must allow young people to interact with it. This is where digital channels come to the fore. They allow interaction with an immediacy and vividness that no other channel can offer. Digital channels are not only a leading method of interaction. They are also very popular with young people. One in four young people aged 7 to 16 is estimated to have replaced the television with the Internet. The digital environment is where young people feel they can be themselves. An emotional difference A brand with an emotional difference can potentially command a premium. Young people are increasingly using and adapting what were the tools of the adult world (computers, Internet, mobile phones) not only to interact with their own worlds, but to create and structure their worlds. While gaming represents the most extreme example of a tool (computing) being taken over, the same phenomenon is
The digerati: the doers and thinkers who are at the frontier of the communication revolution
Ever-changing digital marketplace Teenagers inhabit a lucrative, exciting and everchanging digital marketplace that many brands ignore the benets of. The spending power exerted by teenagers aged 12 to 16 years old is overtaking that of their parents. They are responsible for a growing number of household purchases. In the UK, 12 to 16 year olds spend on average 3 billion a year. Total income of teenagers in Western Europe has increased 3.9 per cent from e14.7 billion in 1997 to e17.8 billion in 2002 according to Datamonitor in December 2002. This is a powerful consumer group spending in their own ways and largely uninuenced by the very brands that seek to target them. Many companies ignore the power of young money and the inuence young people have over their parents purchasing.
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happening to all media. This is because the newer tools are much more user-changeable than the older tools (mail, land-line telephone), where all customers could use them only within rules laid down by the providing companies. In the case of young customers, the speed of adaptation is so fast that it leaves suppliers breathless and often surprised. Patterns of adaptation mushroom and then wither away quickly, at a pace which is hard to understand, while new technologies are picked up quickly, provided that they observe the basic rules of economy (not too expensive), adaptability (quick, easy and cheap to adapt to user needs), technical pervasiveness (you can use them anywhere) and market pervasiveness (lots of people using them and therefore easy to establish your own network of connection). New technologies New technologies are picked up quickly, provided that they observe the basic rules of economy, adaptability, technical pervasiveness, and market pervasiveness. Pre-packaged solutions and singular marketing strategies do not attract teenagers. Traditional forms of media are incompatible with teenage behaviours such as online multi-tasking and managing vast amounts of information. Commercial TV viewing has seen a 36 per cent drop, music and magazine sales have slumped over the last two years, aided and abetted by music piracy and income being spent on mobile phone top-up cards. Key forces that drive these changes are listed here.
The 30-second ad The 30-second ad on the TV no longer satises a youth sector. Teenagers multi-task online and are learning to manage information overload. The 30-second ad on the TV no longer satises a youth sector used to accumulating and processing data streams. Leading brands such as Coca-Cola are pulling out of conventional ads, opting for splintered advertising across sponsorship, SMS, Internet and music downloads. The speed at which teenagers switch from one product to the next will dictate how online retailers grasp their imagination and attention. Online retailers need to think about whether their products will convince consumers that a switch or upgrade is worthwhile. Unless companies take heed, teenagers will freely choose between staying with an existing product, upgrading with an existing manufacturer, or migrating to a competitor and they will do this before existing suppliers can react. Attention economy The always on economy is dictated by a new understanding held by virtually all young people. They know that technology is omnipresent, which in turn instills a sense of omniscience. This new found mindset means teenagers expect and demand access to technology and information all the time, from anywhere, and in whatever format suits their lifestyle. Broadband use in UK households has risen by 60 per cent over the last six months, meaning that teenagers are online, for longer. The omnipresence of virtual space has meant that teenagers can participate in and switch off from communities. Creating characters on chat sites gives them the choice of getting in and out of roles being visible and invisible to community members at will. Blogging (logging online diaries) creates an always on, always out there, public personae. Online retailers must make their services ubiquitous in young peoples lives and seamless engagement with teenagers is the key. Seamless engagement with teenagers Online retailers must make their services ubiquitous in young peoples lives seamless engagement with teenagers is key. A total of 89 per cent of UK teenagers have never made a purchase online, but 29 per cent research products on the Internet before buying them at stores according to a market consultancy, Jupiter Media Matrix Research in September 2001. Limited payment methods have traditionally hindered teen spending online, although 79 per cent say that they would shop online and have at their disposal an income that rises faster than ination. From 5 per month two years ago, the
Forces
The future of online retailing The future of online retailing will depend on payment methods being easy and accessible to teenagers. The hype and excitement surrounding purchasing and using technology has died and a new attitude of practical realism prevails. Mobile phones, PDAs, PCs and digital TVs are increasingly seen as tools to help people get the most out of day-to-day living. Interactive technologies are not the playthings of the specialists. Online retailers should take note of the current acceptance and expectation teenagers have towards new technologies. They know it is everywhere, available in everyday locations. They should also bear in mind that teenagers are not excited about technology in the same way adults are. Teenagers have surpassed the overwhelming wow factor surrounding technology.
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average income from part-time jobs, pocket money and pester power is 50. Two in three UK teenagers have a bank account and payment methods such as Splash Plastic, and bankers debit cards, e.g. Solo, are the most popular. Micropayments can be made via a mobile phone (particularly successful in magazine SMS clubs and downloading ringtones and logos), in which the caller dials a number and is charged for the product through the cost of the call. Awareness of money management occurs (and is potentially misused) at a younger age. E-commerce awards the teen choice an increased independence. By way of example, buying customised furnishings for a 3D online apartment in a chat site such as Dubit Ltd (www.dubit.co.uk) are specic to the online environment and teenagers feel a greater part of the sites community. Paybuycash, a new payment system will offer complete anonymity for teenagers, as a cash card purchasable anywhere means that teenagers can spend freely online, with no registration. The system has been successfully used in adult material and gambling sites in Hungary in which anonymity is key and now sees applications being used for the teen market in the UK. It can exibly be used to buy product ringtones, music, games or to access exclusive digital entertainment services. Dubit.co.uk is a 3D community Web site and is now the largest community for 11-17 year olds in the UK. On the back of this success, Dubit is planning to roll out a debit card. Face to face Despite the potential of global communication, teenagers prefer to communicate with local online communities with a localised language (netspeak: a hybrid language of the written and spoken word). This parallels attitudes in the real world, although teenagers complain that public spaces are increasingly no-go zones and youth clubs have faced cutbacks. Evidence suggests that no technology or application has taken the place of face-to-face communication. Online retailers need to consider to what extent they integrate and use human interfaces, contact and branding within their proposition. Customers of all ages want mobility and exibility through the use of technology they also want a brand and service that has a human side to its offering. Community rules Between the ages of 12-16, peer group and individual identity are in development. Peer group relationships provide the framework through which teenagers develop self-sufciency and independence. Teenagers want to be seen as highly autonomous individuals, so hijacking cultures and
appropriating language are things teenagers do best (not marketers). Applications (such as SMS) and effective interactive strategies (such as viral marketing) enable teenagers to shape, modify and spread information. The following are emerging outcomes which mirror a changing society and culture.
Culturepreneurs
Applications and effective interactive strategies Applications and effective interactive strategies enable teenagers to shape, modify and spread information. Teenagers internally dene a product or application, determining its usage and patterns. Many see this as fashion-led, precarious and volatile as teenagers have voracious though shortlived appetites for the new. The truth of the matter is that teenagers push the boundaries of a product they play with it to the extent where they highlight the limits of what a product can achieve. Interactivity of Internet sites for teenagers is far more advanced in terms of functionality and accessibility than those designed for adults. This is because they are developed by and for a generation that intuitively moves beyond complicated functionality they use it and tell it how it is. Smart marketers bring teenagers into the early stages of a products development and enable the teen to do the developing. The early stages of a products development Smart marketers bring teenagers into the early stages of a products development and enable the teen to do the developing. A total of 70 per cent of UK teenagers said theyd choose texting over voice messaging, one in ve 13-16 year-olds use phones only for text messaging. Distinctions between adult and child, amateur and professional are in the process of falling apart. Teenagers are becoming the new authority when it comes to technological knowhow and applications. The mobile generation, who are used to mobile communications, omnipresent Internet access and immediate communication means, are leaping ahead of older generations. Despite an ageing population also taking the Internet by storm, teenagers will push and adapt to technology far quicker and easier than their older counterparts. Teenagers today are going to extend the boundaries of the Internet, mobile technology and the human-computer relationship. Their level of technological smartness is symbolised by their entrepreneurship, imagination and creativity. They know a hell of a lot more than most adults
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think they do. When todays teenagers become adults, the information and technology age will come into full swing. They are therefore an essential generation for online retailers to understand, engage and excite. Young authority Many companies produce software language so that teenagers can build new products. Giving over the tools of the trade enables teenagers to DIY whilst participating in R&D. Chat sites such as Habbo Hotel (www.habbohotel.com) and Spero Communications proprietary platform BigTime.tv due to be launched later this year in partnership with IBM and BT encourage creative expression. Teenagers create (and misuse) 3D private virtual rooms, altering layouts that are inuenced by interests. This also forms the basis for online retailers to change the concept of personalisation and customisation. My home page functions on Web sites need to be fully personalised that means offering all the tools and facilities that allow users to build their own environment. New ways of learning New ways of learning and self-taught programming skills transform the teen consumer to the producer. Rich marketing possibilities now exist across media. However, teenagers know when they are being sold to. Teenagers are much more in control of accessing, interacting with and digesting information. Consumer choice is rich. Rich marketing possibilities now exist across media with a high level of interactivity and teen ownership and a low level of top-down control. However, teenagers know when they are being sold to and providing the message is relevant, targeted and perceived as good value, lter out the sales speak. But the virtual world mirrors the real world and teenagers are especially at risk. The following trends outline the key mediums and methods of information retrieval, infotainment and recreational activity.
breaks or at night. It reafrms friendships, has been seen as a gift-giver, enabling intimacy, social inclusion and commitment. These rituals have always been played out, but immediate access, exibility and privacy are newfound considerations associated with the increased use of text messaging. Text is now integrated with traditional forms of media. O2, sponsors of Big Brother 3, said that 6.6 million text messages were sent into the show; 50 per cent of the total were for evictions (0.25 per message), 50 per cent were for ringtones, logos and news updates (1.50 per service). Publishing houses such as Emap have set up text clubs to generate revenue via premium rate phone calls and to provide readers with an exclusive service. Text clubs are offering customer databases to third party brands. Research has revealed that teenagers often prefer receiving SMS promotional messages to editorial content. Recent research shows that 92 per cent of Smash Hits Poptext members do not mind being targeted for third party advertising because its seen as a service, not as an advert, according to a Flytxt independent survey in August 20028. Text clubs such as Sneaks or Blisss offer two gossip messages per week charged at 0.25 per message. Evolving communities There are multiple possibilities to participate in online communities with specialist interests. Key is peer acceptance and the ability to share interests, through news groups, chat sites and gaming. Multi-user games played across the mobile and MMORPGs are community rich environments in which team playing underpins the game experience. The Web is perceived by many teenagers as virtual and therefore a remote experience supplying distant interaction with communities. With the increased use of pervasive games cross media, communication access from the Web and the mobile will converge. Peer group pressure is a key driving force in building and maintaining communities. Viral Marketing relies on word of mouth in the virtual and real world to spread a message and recommend a product. VM can also be introduced through real characters on chat sites, or downloadable cult quick-time movies. Chat The most visited teen sites on the Internet are chat sites. Chat sites such as U-boot use a hyperpersonal language: Netspeak. It isnt a revolution, nor will it kill language as is popularly believed gossip and slang, the craze of speaking backwards are old performance rituals. The chat room provides a domain in which written language is
Virtual living
Text Teenagers love to text. SMS has reached saturation point in the UK, though it shows no signs of diminishing. Private messaging and the relatively cheap cost compared with a mobile phone call have meant that text messaging is an extremely user-friendly medium. Texting is not primarily used as a location informer, nor is it exclusively used remotely. Teenagers text in the classroom, on
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seen in its most primitive, unedited state. Conversational content is rich, emotional and peer driven. In highly graphical, animated sites, such as Habbo Hotel and Dubit, there are opportunities for teenagers to cast off xed identities and creatively explore new selves. Many of the most popular sites have e-commerce facilities and saving opportunities so that money management is learnt as early as 12 years of age. Encouraging people to pay A high-quality product that is available across multiple services will encourage people to pay. A total of 38 per cent of teenagers go online to download music. Sites offering free downloads in the wake of Napsters collapse in 1999 mean that piracy, or le-sharing of MP3 downloads is on the increase. The most popular le-trading application, Kazaa, has been downloaded by 70 million people worldwide; thousands of pirated songs are available. Most piracy comes from Russia and China because its more difcult to enforce piracy legislation. Research shows that the slump in CD sales is not only because of teen spending on mobile phone top-up cards, but also due to pirated music. A total of 35 per cent of teenagers said they would download a song for free, whilst only 10 per cent said that they would buy the album, according to the Recording Industry Association of America survey in August 2002. Teenagers download music, burn CDs, then pass or sell them on. Sony Music, AOL Time Warner and EMI Group are trying to win users over to subscription-based services, but are failing to attract mass appeal. Industry believes that a high quality product that is available across multiple services will encourage people to pay. Many disagree and believe piracy is here to stay, typied by US collective Freenet who guarantee user anonymity, making prosecution of the organisers difcult. In the world of wired and wireless, digital media the ability to create, manage and distribute digital content to virtually any media is quickly becoming the industry standard for retail and entertainment enterprises. As more consumers turn to the Internet as a primary source for music and other lifestyle related media, brands are exploring new ways to distribute content directly to consumers in their homes, safely and efciently. Games Games are increasingly seen as a value-added benet to brands. The games industry is valued at $17.6 billion more than any other entertainment form. Games on sites such as Tango (www.tango.tv) and Nike (www.nikefootball.nike.com) use brands
to build prole, keep consumers online and on the site, create loyalty and collate data. Wireless games company Digital Bridges most successful mobile game is a Tamagochi-inspired Wireless Pets (www.gameskitchen.com/wireless_pets), in which virtual pet owners must look after their chosen creatures. Played on a WAP portal, games such as WP have notched up an equivalent of 136 years accumulated game play, with 10 million WAP user sessions.
Changing environments
Desk-top ICT Desk-top ICT (information and communication technology) integration within UK schools is growing rapidly. As space within the real world becomes constrained and controlled by private and institutional interests, the bedroom is increasingly an evolutionary microworld for the teen The messy out-of bounds bedroom may be just as messy, but it is evolving into a fully kitted infotainment zone with multi-channel TV, PCs, CD burners, iPods and Internet access. This allows most teenagers to surf, channel hop, text and e-mail from the comfort of their bed. It is common knowledge that teenagers rule the roost when it comes to understanding and adapting quickly to new technologies. Hence, when the teenagers of today become the adults of tomorrow, the ubiquitous technology they have grown up with, will spill over and populate the home. Adults of tomorrow will push the boundaries of technology usage. They will have the condence, the necessity and skill to assimilate mundane tasks with high-tech gadgetry. Online retailers should harness how teenagers integrate convergent technologies, and target the bedroom as an exemplary case of how best to channel multi medium entertainment.
The digital playground
Contact with the youth via education A total of 80 per cent of teachers are now condent in their use of ICT, targeted and measurable contact with the youth via education is no longer a myth but a certain reality. Viral marketing has always had a hidden place in the playgrounds of schools as youths seek to gain credibility with their friends. Indeed the playground has often been the place where their choices are formed because of the contact that they have with friends. Businesses are aware of this lucrative playing eld. With the governments
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Ian Spero and Merlin Stone
investment for reform and commitment to radical reform of the education system, business is not just being invited into schools, in some cases they are running schools. This new commercialism will bring the youth closer to retailers, brands and their products far more than ever before. With this change comes opportunity, but with opportunity comes responsibility. Any engagement must manage the brand reputation whilst enhancing the education process. This education is giving birth to a new generation and breed of young digital consumers with high expectations and the technical knowledge and skills to expect a more engaging digital experience. If companies are not aligned and in touch with education their products may well be left to gather dust on the shelf.
Personalised data that is sent by MMS will include video clips, photos and text. Kodak is experimenting with a service that will let users send televised digital photos to friends and relatives. UK teenagers have stressed a desire for data to be stored as memories: a diary told in text, image and video and stored separately from the phone. Whilst this functions the same as the family album or diary, ways of reading multimedia memory will transform the way that the past and the present is experienced. Online retailers will have their job cut out when attempting to deliver intimate data. Once again, using this trend depends on intimate data about the end user, and the proposed service or product. The benets of collaboration Engineers and designers still largely believe that products trickled down from young professionals to teenagers are the result of lower tariffs and cool marketing. But teenagers wont buy product that doesnt t into or enhance lifestyle. In the USA, mobile phone uptake has been slower than in Europe primarily because the tool is associated with parents. Engineers and developers who are inviting youngsters into early R&D stages, particularly issuing middleware programming tools, recognise valuable teenage input. The more collaborative and open-ended the market, the more likely is the adoption of technology. We live in evolutionary times. Teenagers are well positioned to be the agents of change manoeuvering from a Net-savvy generation to shaping a mobile lifestyle with relative ease. Remote learning, GPS systems and the shifting nature of environments will also mean that virtual and real space become interchangeable. Online retailers need to move into a market niche concerned with continuous and seamless cross platform media. However, retailers will not only have to adapt to subtle shifts in the way people interact and negotiate space, but will also have to learn to understand the lifestyles and mindsets of end users, before they enter their private headspace. If retailers position and design their applications correctly, sensitive to teenagers demands, idiosyncrasies and creative ideals, they will ultimately succeed.
Future impact
Turning content into revenue The possibilities of turning content into revenue will become a reality. The information highway, as well as uid communication networks, will become ever more sophisticated and charge tariffs applied according to the perceived value of information. Public and private forms of content will be intertwined; privacy will be a commodity to be bought and sold. Targeted solutions and value-added benets Applications that provide targeted solutions and value-added benets will increase. With saturation of hand-held phones and slow uptake of new MMS phones, funky applications that provide targeted solutions and value-added benets to the teen market (such as Java programming on mobile phones for gaming), will increase. Online retailers can apply this trend as applications, data and content will prevail beyond hardware. Reading multimedia memory Ways of reading multimedia memory will transform the way that the past and present is experienced.
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