Are Generation Y (Millennial) consumers brand loyal and is their buying behavior affected in an economic recession? A preliminary study.

Author:Lodes, Megan
Position:Report
 
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  1. INTRODUCTION

    This paper examines the concept of brand loyalty and the characteristics of the generation known as the Millennials. Brand loyalty is defined as the biased behavioral response expressed over time by a decision-making unit, with respect to one brand out of a set of such brands, and is a function of psychological processes (Jacoby and Chestnut, 1978). The Millennial Generation is the generation of individuals that were born starting in 1982 and began attending college in 2000 (DeBard, 2004).

    Recent research (Caplan, 2005; DeBard, 2004; Ritchie, 1995) on the Millennial Generation has shown that marketers are constantly striving to understand the Millennials' buying behavior and brand loyalty patterns. And with the onset of an economic recession, marketers should understand if and how the current recession has affected college students.

  2. LITERATURE REVIEW

    The majority of research that has been conducted on Generation Y has actually proclaimed Generation Y to be a misnomer, as it indicates that Generation Y is merely a continuation of Generation X. Instead, researchers today prefer to call the generation born since 1982 as the Millennials (Beirne and Howe, 2008). Starting in 2000, when the Millennials began attending college, they began to be studied by researchers and marketers to determine the generation's overriding characteristics. Millennial college students are the most racially and ethnically diverse, as enrollment of women and minorities has increased while enrollment of white students has decreased (DeBard, 2004). Millennials make long-term plans, believing they are capable of accomplishing anything. However, Millennials expect high grades to mark their achievement but will only do what is expected of them to get those high grades (DeBard, 2004). While older generations lament the ever-increasing usage of technology by the Millennials, this technology is just a tool used by Millennials to fulfill their desire of being part of a community (Beirne and Howe, 2008). Millennials are also considered to be sheltered and both expect and want rules to be clearly communicated and properly enforced (DeBard, 2004). It is evident that Millennials like to follow rules, as violent crime by teens has fallen by 70%, teen pregnancy and abortion has fallen by 35%, and consumption of tobacco and alcohol is lower than ever before. Millennials believe in the benefits of community service, participating in elections, and working for companies that give back to the community (Beirne and Howe, 2008). Unfortunately, it has also been found that Millennials are studying less and are not as concerned about important issues, such as the environment or race relations (Sax, 2003).

    Because Millennials are wealthier than previous generations, marketers understandably want to learn how to market to this generation. While Millennials are trusting of certain authority, they are skeptical of advertising that is targeted to them (Kapner, 1997). Because Millennials value products for their necessity to their lives, they dislike advertising because it often causes them to buy things they do not need. Millennials question the truth in advertising and believe marketing to be misleading. They believe that advertising leads to higher product price, which conflicts with their desire for the lowest price possible (Beard, 2003). Even though Millennials are wealthier than previous generations, they describe themselves as "poor college students", so marketers should not position their products as a luxury if they want Millennials to buy it (Phillips, 2007).

    Research that has been completed on Millennials and the concept of brand loyalty has resulted in two conflicting theories. The first is that Millennials are not brand loyal consumers. A study done by K. Ritchie showed that they are less brand loyal than previous generations due to the constant bombardment of promotions (Ritchie, 1995). Phillips (2007) stated that Millennials believe themselves to be reasonable, price-oriented consumers who are not influenced by an attraction to a certain group of brands. Millennials value price and features as the most important attributes of a product, instead of brand name. Millennials want products that match their lifestyle or personality, which is why brand is of almost no importance (Caplan 2005).

    The second is that Millennials are brand loyal consumers. Brands will become bigger than ever, as Millennials identify the idea of a big brand as being a return to community. Millennials are loyal to brands whose products not only provide for the individual but also for the community as a whole (Beirne and Howe, 2008). Millennials are committed to a brand as long as it provides for their needs (DeBard, 2004).

    The current economic recession is presently a source of great concern as marketers attempt to determine the current buying behavior of consumers. Consumers are changing their buying behavior and greatly decreasing their overall spending (Creamer, 2008). Consumers have been coined as "recession shoppers" as they utilize the Internet more than ever to find the best possible price (PR Newswire Association LLC, 2009). Consumers are also saving more than ever before (Crutsinger, 2009). Products that were low price already are subject to brand switching, due to the consumer's low involvement. Advertisers of these types of products must emphasize the benefits of the brand (Creamer, 2008).

    Marketers are trying to do as much as they can to preserve brand loyalty. Marketers have attempted to create an emotional attachment with their customers, believing that once customers become attached, they will not switch to another brand, regardless of price (Hamilton, 2009). Unfortunately, consumers are more likely than ever to become brand switchers, especially to private labels, as they look for lower-price alternatives to what they normally purchase. Customers are abandoning brand loyalty and experimenting with different but cheaper brands. It...

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