Patrick Schwerdtfeger is a motivational speaker who can speak about demographic forecasting and generational marketing at your next business event. Contact us to check availability. The full transcript of the above video is included below.
Full Video Transcript:
Hi, and welcome to another edition of Strategic Business Insights. Today we’re going to talk about demographics and generational marketing. I recently read a book called The Age Curve. It’s called The Age Curve. It’s a fantastic book—I recommend it to anybody—and we’re going to talk about some concepts that were laid out in a lot more detail in that book, so check that out. It’s called The Age Curve.
So here’s the deal. Today in America there are basically five generations that are living today or some part of the generation is still alive today; arguably six, but we’ll get to that later. The oldest are the GI Generation. These are the people who fought in World War II. So they’re pretty old. Most of those people have died off by now. Only about 5 to 7% of them are still alive. Most of them have passed away. But it was quite a large generation. It was quite a large generation, largely because of immigration.
But below that is the Silent Generation. My parents are part of the Silent Generation. They were born in the thirties, mid-thirties, and this went all the way up to 1944. This is when they were born. After that is the Baby Boom Generation. They were born 1945 to 1964. At that time, it was the biggest generation in American history, 82 million people at its peak 82 million people. Today, there are only 77 million left, again because people pass away. As time passes, some people die for whatever reason. So today there are about 77 million baby boomers left.
Underneath that is Generation X. I am Generation X. My parents are in the Silent Generation. So we’re skipping, right? We’re skipping a generation because that’s just the way—if you think about 20-year generations, that’s generally how it works. So Generation X was born between 1965 and 1984. I was born in 1971.
After that is Generation Y. Generation Y (also called the Millennials), they’re the children of the baby boomers. And the baby boomers was a big population, and they had a bunch of kids. So Generation Y is the biggest generation in American history. It’s bigger than the baby boomers. It’s coming up to a hundred million people. So there’s a huge generation in Generation Y, and that’s basically from 1985 to 2004. Some people like to extend it culturally to 2010. In fact, the book that I mentioned extends it to 2010. But when I said arguably six generations—I’ve mentioned five so far—and if you think that at 2005 or 2010 the next generation, which has yet to be named, began, then that’s just starting and those are very young children today.
But let’s talk about the dynamics. So we’ve got the GI Generation, which was fairly large; the Silent Generation, which was very small, it’s like 59 million people, smallest generation in the last 150 years; then we have the baby boomers – it was a huge generation; then we had Generation X – that was smaller, 11% smaller than the baby boomers; then we had Generation Y, which is big again; and then the next generation, let’s ignore that for now. But this is fascinating.
So let’s say for example Harley Davidson motorcycles. Harley Davidson motorcycles have had 20 years of very strong sales. Why is that? It’s because their primary buyer—again, all ages of people buy Harley Davidsons, but it’s a bell curve. So people are a certain age on average. Well, their sweet spot in terms of age is right around 45 to 55 years old, or let’s say 40 to 55 years old. Well, the youngest of the Baby Boom Generation is like 48 years old today, and the oldest is 68 years old. So they’ve had a very strong 20-year period of sales, but now it’s starting to taper off because Generation X, which I’m a part of, is 11% smaller. It’s fascinating.
Now, meanwhile, the Japanese speed bikes, the crotch rockets or whatever you call them, real fast sports motorcycles, that category has had 20 horrible years. Why? Because their peak age is people who are like 20 years old, let’s say 18 to 25 or 26. That’s their sweet spot, a much younger demographic. Well, the Baby Boom, they were 20 years old like 30 years ago. Meanwhile, Generation X is smaller, so that whole market came down. So it’s been a real struggle. But now it’s back on a tear again because Generation Y is coming along. That’s a huge generation, and they’re going right into that sweet spot of buying those motorcycles now. So that’s increasing.
In other words, you can predict when certain product categories that are known to be purchased at certain points in a person’s life are going to grow or shrink depending on the demographics. This is all data that you can get in the US Census Bureau. It’s public information.
Let’s take another example of demographic marketing. These young Generation Y, the oldest Generation Y people are 28 years old. So Generation X is smaller—that’s what I’m a part of—and then it goes much higher and there’s this big surge of people. Imagine an army of people on the horizon running our way. They’re coming right at us. What are those people going to do? The oldest ones are 28. What do people do when they’re 28? They start getting married. So all of a sudden, we can expect 20 years of growth in the engagement ring category. People are going to be buying engagement rings. People are getting married. We know this is coming. Spence Diamonds or whatever, those companies are going to do very well. Their market is going to grow as a result of this surge.
What else are people going to do when they first get married? They’re going to have kids. They’re going to have children. So what are we going to see probably in three, four, five years from now? We’re going to start to see an uptick in toy sales. Toy sales are going to start to go up. Baby clothes, diapers – all those categories are going to grow. And the baby boomers, which are the parents of Generation Y, so Generation Y’s children are the grandkids of the baby boomers. Baby boomers are going to shower these kids with lavish toys. There’s going to be a huge growing market for expensive lavish toys for kids, and it’s going to be targeting baby boomers who are going to be buying these toys for their grandkids.
Now, here’s another one – this one’s fascinating – Walmart. Walmart’s perfect customer is a 47-year-old married woman with multiple children. Now, obviously again, different people shop at Walmart, but their target market, their ideal customer, is a 47-year-old married woman with children. The youngest baby boomers are 48. So Walmart’s had this 20-year surge of population growth going into their stores, but now their perfect customer is in Generation X, the oldest Generation Xers. So it’s 11% less. So right now, with the financial crisis and so on, because Walmart obviously has great prices they’ve done quite well, but we can also expect Walmart to have some challenges coming up. There are going to be some challenges coming because their pool, their ideal market customer, that pool of people is now 11% smaller than it’s been for the last 20 years for them.
And then finally, these baby boomers, they’re all getting older. They do have some money. In fact, the GI Generation, which are the old ones, the ones who fought in World War II, those people who are retiring, they have an enormous amount of wealth. Still, just in that top 5-7% who are still alive, there’s still a lot of wealth there waiting to be transferred down through inheritance to their children. Their children are the baby boomers. So there’s wealth coming to some of the baby boomers.
So what are these baby boomers going to start buying? Well, we can expect, like for example, mattresses. These baby boomers all have sore backs, as many of us do when we get older. We have sore backs. There’s going to be a growing market in luxury mattresses, 5000-, 7000-dollars mattresses, and it’s already here. You can already go and see these mattresses. Look for it on the Internet. You can see mattresses that are 7000 dollars, 9000 dollars for a mattress. That market is going to grow as baby boomers get older.
And the most interesting one of all is the seniors’ facilities. Seniors’ facilities are being built like crazy by all kinds of different companies because they’re expecting a surge of people because our population is aging. But the fact is that those people, those baby boomers, are nowhere close to old enough to actually go into these seniors’ facilities yet. The oldest baby boomers are only 68 years old. So they’re retiring, yes, but they’re not old enough to go into these senior living facilities. The people who are going to the senior living facilities are my parents, which are in the Silent Generation, and that’s a very small generation.
So the truth is our population is aging and those seniors’ facilities will be busy, but not for the next 15 years. Next 10 to 15 years, those senior living facilities are going to be really struggling. There aren’t that many people who are in the right age bracket to go into their facilities. So we have to wait probably 10, 15 years before—it’s just like the medical situation. As people age, obviously they need more medical attention. And it is coming, but the baby boomers are still pretty healthy people. They’re still pretty young. The oldest one is 68. Let’s say the average is 58 years old. People are still pretty healthy at 58 years old. They only really start getting sick in their 70s quite often population-wide. So that’s still 10, 12 years away.
So these things are fascinating. I really encourage you to look at demographics and look at the swells and valleys of the population, not just in America but in Europe or other parts of the world. Many parts of the world there are lots of young people growing up, so we can predict what’s going to happen as those people age because it’s happened here. And if you’re in marketing or if you’re an executive of some kind where you have to do future planning or strategic planning for your products or services into the future, you can map out whether or not that market’s going to be growing or shrinking based on demographic information. Take a look at it. It’s powerful, powerful stuff.
Thanks for watching this video. My name is Patrick, reminding you as always to think bigger about your business, think bigger about your life.
Patrick Schwerdtfeger is a keynote speaker who has spoken at business conferences in North America, South America, Europe, Africa, the Middle East and Asia.