The Age Curve

Overview

A myth-breaking book that will redefine who marketers see as their most valuable customers.

For years, marketers have held on to unwavering beliefs that have dictated how they market to their consumers. But the hard truth is that the changes we see in marketing and business are based on one undeniable factor—the size of the generations we are selling to. As each generation ages, what they buy and how much they buy will change. Each product and service has a "best customer? that sustains a business. As these customers grow up, the smartest marketers will stay ahead of them—and their money. In The Age Curve, marketing guru Kenneth Gronbach shows executives and entrepreneurs how to anticipate this wave of predictable demand and ride it to success.

Gronbach reveals how our largest generations, the Baby Boomers and Generation Y, are redefining how we market and how businesses can anticipate their needs more effectively. Complete with entertaining examples of companies like Apple who have perfected their strategies for building a loyal customer base, as well as those who haven't (Levi Strauss and Honda Motorcycle), this book will show readers:

• how to determine their best customers • how successful companies are earning the loyalty of Generation Y and cultivating allegiance to their products for years to come • why Generation X is a much less valuable market than any of us have been led to believe • and much more

Both shocking and compelling, The Age Curve will change the way companies look at their customers and how they market to them.

About the Author

Kenneth W. Gronbach (Haddam, CT) is a nationally recognized expert in the field of demography and generational marketing. He regularly provides counsel to Fortune 500 companies as well as large and small businesses across the U.S.

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Breakdown of the Generations

HEADLINE:A Snapshot of Our Nation's Generations:HEADLINE

The GI Generation: 56.6 million, born between 1905 and 1924. Immigration swelled their ranks to 70.4 million. The oldest living generation in the U.S., the GI Generation is defined by the Great Depression, their participation in World War II, and their enormous personal wealth—nearly $11 trillion—amassed through saving. Living longer because they can afford the best health care, GI members continue to wield influence. They hold board seats in major corporations and their campaign contributions got George W. Bush elected. They are the last of many generations characterized by racial and gender intolerance. The remaining GI Generation survivors—fewer than five million—are age 84 and over.

The Silent Generation: 52.5 million, born between 1925 and 1944. The smallest generation of the century, the Silent Generation lived in the shadow of the GI Generation. Despite the Korean War, the sacrifices of the Silent Generation have been largely forgotten. Just as the hardy GI Generation gave us the false impression that we are all going to live past 100, the remnants of this tiny generation will give us the false impression that the longevity trend has reversed. This generation will shut down the assisted-living industry. Surviving "Silents? are 64 to 83 years old.

The Baby Boom Generation: 78.2 million, born between 1945 and 1964. Born in abundance during post-war prosperity, the Boomers set out to change the world. Rebels for women's rights and racial equality, Boomers are surprisingly intolerant of those who don't think like them. As the Boomers march on, expect to see strong opposition to the religious right and the legalization of marijuana. Don't expect Boomers to stop spending beyond their means or get old without a fight. Still hip and cool at 44 to 63, these Babies aren't graying at warp speed—regardless of what the AARP says. Marketers have bet everything on the abiding presence of this huge active mass of consumers. Many forget that Boomers are steadily moving past their prime buying years.

Generation X: 69.5 million, born between 1965 and 1984. Pegged as "slackers,? Generation X is unfairly maligned because pundits fail to do the math. There are 11 percent fewer Gen Xers than Boomers. Yet, Gen Xers attended college at double the rate of Boomers. Given their education and their numbers, Xers have extremely favorable employment prospects. Oddly, marketers are persistently puzzled by this generation's diminutive consumption. The simple fact is: smaller generations buy less stuff than larger ones. The housing market is tanking because Xers lack the critical mass to buy up the Boomers' starter castles. Before long, Xers will torpedo Social Security. At 24 to 43, Generation Xers have rarely had to compete for advantages. They tend to be seen as arrogant.

Generation Y: 100 million (or more), born between 1985 and 2010. The products of pregnancy postponement, second and third marriages, and fertility drugs, these kids will stretch generational patterns to a full 25 years. Gen Y has an appetite for consumption five times stronger than its parents' generations. Because of their massive numbers and the small infrastructure left behind by the Xers, this generation will need to create its own world just as the Boomers did. Driven by necessity, Yers will become entrepreneurs and start a sea of businesses to meet their own needs. As a homegrown labor force of epic size, they will stop immigration cold and restore manufacturing. Gen Y has already redesigned the automobile and forced companies to act greener. This gigantic group of big spenders offers tremendous opportunities for forward-thinking marketers.

Adapted from THE AGE CURVE: How to Profit from the Coming Demographic Storm by Kenneth W. Gronbach (AMACOM 2008).

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About the Author

HEADLINE:About Kenneth W. Gronbach:HEADLINE

Kenneth W. Gronbach is a nationally recognized expert on demographics and generational marketing. He frequently speaks to groups of marketing professionals and regularly counsels Fortune 500 corporations as well as large and small businesses across the United States. He doesn't claim to have unlocked the secrets to a particular generation's psyche, or profess to have special language and strategies guaranteed to win unresponsive consumers. Instead, he shows his clients how to identify their "best customer? and calculate whether its buying power is expanding or shrinking by using the most obvious information: the number of U.S. Births from 1905 to 2005.

"Large and small generations, alternately moving and aging through the marketplace, determine many a company's success and failure,? Gronbach observes. "When a large generation, such as the Boomers, leaves the market and is replaced by a smaller generation, such as Gen Xers, sales are going to drop.? In the course of his work to get marketing professionals and business leaders to pay attention to this clear-cut concept, Gronbach was driven to write THE AGE CURVE: How to Profit from the Coming Demographic Storm (AMACOM 2008). "If you can understand the principles of shifting demography, you can forecast with uncanny accuracy what markets are growing and what markets are slowing,? Gronbach says.

Gronbach is the founder, president, and CEO of KGC Direct, a consulting firm specializing in direct marketing, growth management, and business turnaround. He was previously the president and CEO of KGA Advertising, a consumer products-focused advertising agency, which he founded and grew from zero billings to close to $40 million in 21 years. Before launching his career as an entrepreneur, he was Advertising Manager for Bob's Stores, which he helped grow into a retail chain from one store in Connecticut, and Director of Advertising for Volkswagen of America in Culver City, California. His many notable professional achievements include inventing the Jean Machine, a highly profitable retail jean vending system; creating the catalyst for a downtown renaissance in Middletown, CT by revitalizing a derelict inner city 1860's department store; convincing Tyson Foods to back out of a $16 billion acquisition of a red-meat processing business, on the strength of Generation Y's trend away from red-meat consumption; and implemented the introduction of a new line of Honda scooters into major metropolitan markets in the Northeast United States. He has authored one previous book, Common Census (2005), and his ongoing market research is often quoted.

Gronbach is a graduate of a California State University at Long Beach, with a degree in Communication and Public Speaking. He lives in Haddam, Connecticut, with his wife and two teenage daughters. A member of the Baby Boom Generation, he considers himself hip at age 60 and far from ready for retirement. "I am convinced that Boomers simply are not going to get old the way our parents got old,? he states.

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Press Release

HEADLINE:Why Generation Size Matters to Marketers:HEADLINE

SUBHEAD:and to Everybody with a Stake in America's Future:SUBHEAD

"When we hear a good idea we say, 'That's so simple and so obvious. Why didn't I think of it?' Ken's good idea—a brilliant recognition, really—is that the size of successive U.S. generations, and thus the differing number of people in specific age groups, is at the heart of the long-term sea changes we experience in economics, business, and society.?

—Benyamin B. Lichtenstein, Professor of Entrepreneurship and Management, University of Massachusetts, Boston

As everyone with any sense of business knows, selling any product, service, or idea ultimately depends on having enough customers to buy it. Yet, when it comes to targeting specific consumers—like the prime young adult buyers for jeans or motorcycles—marketers routinely fail to do the math of demand and supply. Lack of market research, lack of creativity, and lack of consumer motivation all get blamed when the real culprit is shifting generational numbers.

A respected marketing consultant and forecaster, Kenneth W. Gronbach believes that most of the country's struggling companies—and most generational-marketing gurus—are not paying attention to a basic fact: Smaller generations buy less stuff; larger generations buy more stuff. In THE AGE CURVE: How to Profit from the Coming Demographic Storm (AMACOM 2008), Gronbach shows corporate executives, entrepreneurs, and marketers how to anticipate and successfully adapt to predictable waves of demand using one piece of data: the U.S. Census record of the number of live births from 1905 to 2005. Focusing on each of the five distinct generations living in America today, Gronbach reveals how a generation's size, particularly in relation to the generation it follows, determines its collective personality and habits of consumption.

"Marketers seem to miss the fact that generation size is also market size,? Gronbach observes. "And marketers don't notice that aging and generational movement are absolutely consistent. We can't speed them up and we can't slow them down.?

Bringing a profound, commonsense perspective to the challenge of reaching and keeping core customers, THE AGE CURVE gives any business an edge on serving the changing needs of the two largest markets: the 78 million members of the Baby Boom Generation and the soon-to-be 100 million Generation Y (or Echo Boomers). Backed by hard facts and numbers, Gronbach shatters many trusted assumptions about consumer behavior and offers eye-opening insights into the imminent future of the United States. For starters, readers will discover:

• How the myth of the much-hyped "graying of America? may culminate in the collapse of the grossly overbuilt assisted-living industry (now ranging in age from 44 to 63, the Boomers won't be nursing home candidates for at least another 20 years).

• Why Gen Xers have been unfairly branded as unresponsive consumers and "slackers? (there are simply 11 percent fewer Gen Xers than Boomers)…and how this small group of young adults spurred the huge housing crisis and may seal the death of Social Security.

• Why Generation Y offers a massive opportunity for marketers (these kids are already consuming at five times the level of their parents' generations)…and how selling to this savvy group will require unique, personalized strategies and a commitment to being green.

Throughout, Gronbach offers entertaining examples of companies working to stay in front of the generational parade (Apple and Toyota, among the few) and companies stubbornly clinging to what worked yesterday (Levi Strauss, Honda, Wal-Mart, and the AARP, among many). He also reflects on the social implications of generational shifts, including Boomers' championing of racial and gender equality and what this will mean as they take seats on corporate boards and lead organizations.

A compelling argument for generational marketing looking simply at the numbers, THE AGE CURVE is a mind-transforming book with the potential to revolutionize the way companies view, connect with, and count their most valuable customers.

ABOUT THE AUTHOR:

Kenneth W. Gronbach is a nationally recognized expert on demographics and generational marketing. The founder, president, and CEO of a direct marketing company, he regularly counsels Fortune 500 corporations as well as large and small businesses across the United States. He has been featured in Advertising Age and Entrepreneur. He lives in Haddam, Connecticut.

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Review Quotes

"To gain an overview of the coming trend, begin by reading the entertaining, inspiring new book, "The Age Curve: How to Profit from the Coming Demographic Storm," by Kenneth Gronbach.? —Dr. Mildred Culp, "Workwise? syndicated columnist

"'The Age Curve' has one overwhelming reason to read and digest the book: it will make you re-think what you thought was obvious.? —Inland Empire Business Journal

"With a little guidance from 'The Age Curve,' readers will be better able to set their company on a path to future sales success.? —Houston Business Journal

"This lucid, well-written book is thought-provoking and accessible to a wide audience, and is especially valuable reading for business students and practitioners. Summing Up: Highly recommended. All levels.? —Choice

"Gronbach will inspire you to think beyond his examples, not only about what has already worked, but what also needs to be done in future." -- QRCA Views

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Excerpt

INTRODUCTION

There are sick empty feelings in your stomach, and then there are really big sick empty feelings. I had the latter. Our signature account of eight years, American Honda Motorcycle, had shipped the year's allotment of new 1986 bikes to the dealers two months earlier and a unique thing happened: nothing.

Our history with Honda had been nothing but successful up to this point. The formula was simple: Honda sent the bikes from Japan to a New Jersey warehouse, where they were distributed to the Northeast regional dealers, who prepped them and displayed them on showroom floors. As soon as they were displayed at the dealerships, the marketing and advertising kicked in and the customers bought them—all of them. Life was good.

But this was 1986 and the bikes did not sell. It wasn't that traffic was slow. There was no traffic. The folks at Honda asked, "Did you run the ads??

This is when the really big sick empty feeling kicked in. The bad news was that sales volume was dropping like a stone. The really bad news was that sales would continue to drop for the next six years until the decline amounted to an 80 percent free fall. Gulp. By 1992 most of the dealerships were ready to close, and we lost the account. No surprise there. The only consolation was that exactly the same thing happened to Yamaha, Suzuki, and Kawasaki. Someone had turned off the faucet and we didn't know who or why.

In mid-October 1996 I was reading the Hartford Courant's editorial section. The Hartford Courant is America's oldest newspaper in continuous publication. It devoted a full page to a sweeping indictment of Generation X and its noninvolvement in the political process. Bill Clinton was about to trounce Bob Dole. It seemed that the Xers (born between 1965 and 1984) did not vote or donate its resources at the same level the Boomers did (born between 1945 and 1964) when they first got involved in politics.

The implied laziness part bothered me. We had thirty Xers working at our agency at the time, and none were lazy. I asked our research department to review the voting habits of Generation X. Our research department checked. All the factors seemed equal on a per capita basis. Xers did vote. They did contribute to their political parties and they did participate in government. There were just fewer of them. In other words, the young Generation X voters actually cast fewer votes than the young Boomers when they were the same age not because they were lazy but because they were simply a smaller group.

Was this simple difference in the size of the Boomer generation and Generation X the answer to the motorcycle mystery? I reviewed U.S. Census Bureau data to find out, and indeed there were a lot fewer of them—11 percent fewer. There were 78 million Boomers and only 69 million Xers.

That moment of recognition changed my thinking from that point forward. Large and small generations, alternately moving and aging through the marketplace, determine many a company's success or failure. That moment changed the way I counsel my client companies. It spawned the shape of my public presentations. It gave birth to this book.

The core idea of this book is quite simple: Smaller generations buy less stuff; larger generations buy more stuff. When a large generation, such as the Boomers, leaves the market and is replaced by a smaller generation, such as Gen Xers, sales are going to drop. Please excuse the fact that I repeat this premise throughout my book, but I have found that people (executives, entrepreneurs, salespeople, marketers, advertisers, etc.) just don't accept this clear-cut concept until you beat them over the head with it. My intention is to show how the simple idea of generational size applies to an ever-widening variety of areas and convince readers to recognize it, believe it, and, most important, put it to use.

—Kenneth W. Gronbach

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Table of Contents

CONTENTS

FOREWORD XI

INTRODUCTION XV

A WORD FROM THE AUTHOR XVIII

PART ONE: THE PARADE OF GENERATIONS: WHY AREN'T MARKETERS PAYING ATTENTION?

1 The Generational Impact on Supply and Demand 3

2 Who Are These People? 11

3 Bell Curves, Pies, and Your "Best Customer? 19

4 Case Study: Detroit, Japan, and the Best Customers for Cars 25

PART TWO: THE OLDER GENERATIONS

5 Silent Virtues: A Small Group with Its Own Impact 37

6 Case Study: How the "Graying Of America? Myth

Will Take Down the Assisted-Living Industry 43

PART THREE: THE BABY BOOMERS: THE RADICAL-CHANGE GENERATION AND ITS IMPACT ON TODAY AND TOMORROW

7 The Boomers: Mass, Money, and Motivation 57

8 What Boomers Will Buy 65

9 Boomers Will Not Get Old 69

10 The Boomer Economy: Of Credit Cards and Gift Cards 75

11 Of Course You Can Afford It! 81

12 Social Security and Private Health Care: Dead But Not Buried 89

13 Wal-Mart Hits a Wall—A Great Wall 97

14 Media's Slow Death: The End of Marketing As We Know It 105

PART FOUR: GENERATION X: THE OUTSIZE EXPECTATIONS OF A SMALL GENERATION

15 Quit Picking on the Xers! 111

16 The Cause and Effect of a Small Generation 117

17 The X Factor: Where Have All the Workers Gone? 123

18 The Gen X Labor Shortage and the Impact on Direct Mail 137

19 Case Study: How Generation X Drove Motorcycle Sales off the Cliff 141

20 Case Study: Planes Stuck on the Ground—A Business Traveler's Tale 153

21 Case Study: The Death of a Discount Store 159

PART FIVE: GENERATION Y: THE GIANT ON THE HORIZON

22 Stop Looking in the Rearview Mirror! 165

23 The Great Y Ahead: More of Everything 179

24 Marketing to Generation Y 185

25 Case Study: No Leg to Stand On—A Levi's Footnote 195

26 Schools, Taxes, and the Future 201

27 Generation Y's Leading Legacy 209

PART SIX: THE GENERATION IMPACT OF SOCIAL ISSUES

28 The Bigotry Is Almost Gone—A Boomer's Perspective 219

29 Coming to America: Melting Into the World's Melting Pot 227

30 Macro and Micro Conclusions 237

APPENDIX A 243

APPENDIX B 247

APPENDIX C 255

APPENDIX D 259

INDEX 263

ABOUT THE AUTHOR 269

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