Bus and Motor Coach Library

Understanding the Boomer Generation - Part 1

Author – Lisa Nelson (2003)

This is the first in a series of three articles written by Lisa Nelson, NTA Director of Research and Education, at the direction of the NTA Strategic Development Council. The publisher wishes to thank the NTA and author Lisa Nelson for kindly allowing us to share this series of articles with our readers. This first part of this Series, sourced from NTA’s  Current Assessment Report 2002 (CAR), defines the consumer segments that make up the Boomer generation.

The Baby Boom cohort is defined as those born between 1946 and 1964. 

In the past few years, market analysis of the baby boomers has become more sophisticated.  Many researchers have noted that looking at the baby boomers as a single cohort fails to recognize the group's diversity, and that understanding differences among different segments of baby boomers is critical to engaging them as consumers.

While the Baby Boomer MAP provided some data specific to either younger or older boomers, various boomer segments were not explored in detail.  Some different approaches to segmenting the Boomers are described below. These segments will be referenced whenever possible throughout this CAR to highlight differences in attitudes, priorities, demographics, etc. between the various segments.

The most common way to segment the market is to divide it in two based on birth year.  This method yields two boomer subgroups: the leading-edge boomers, born from 1946 to 1954 and currently 47 to 55 years old, and the trailing-edge boomers, born between 1955 and 1964 and currently 36 to 46 years old.

Yankelovich Monitor divided the boomers into three distinct cohorts, also based on birth year, in its 2000 study "Dissecting Boomers": leading boomers, born 1946 to 1950; (23 percent of all boomers); core boomers, born 1951 to 1959 (49 percent of all boomers); and trailing boomers, born 1960 to 1964.  These different groups revealed different attitudes and priorities.  

AARP's 1999 study Baby Boomers Envision Their Retirement: An AARP Segmentation Analysis divided Boomers into five segments based on attitudes and behaviors relating to retirement: the Strugglers, the Anxious, the Enthusiasts, the Self Reliants and Today's Traditionalists.

Demographics: The 1998 Baby Boomer MAP recognized 85 million American and Canadian Baby Boomers.

Psychographics: Despite real differences between younger and older boomers, the two groups share some key psychographic similarities. 

"Simply put, the Baby Boom generation experiences crowds wherever it goes, whatever it does," according to Cheryl Russell, demographer and boomer expert.  David Stewart of the University of Southern California's Marshall School of Marketing notes that younger and older boomers "share a common child-centric time of upbringing" not experienced by Generation X..  The shared values of the younger and older boomers include a belief in a meritocracy, respect for knowledge and a lack of respect for authority, according to Ken Dychtwald, president of Age Wave.  Stephen Kraus, a partner at Yankelovich Partners, says that younger and older boomers share a mindset characterized by individuality, emphasis on youth and self-absorption.
Author David Brooks' discussion of the "Bobo" (burgeoisie bohemian) culture offers another way of understanding the aging boomer mindset.  Brooks observes: " . . . now the boomers must confront the anxieties of affluence: how to show - not least to themselves - that even while climbing toward the top of the ladder they have not became all the things they still profess to hate.  Some once had “QUESTION AUTHORITY” bumper stickers on their vans, but find themselves leading management seminars.  In college they read sociologists who argued that consumerism is a sham; today, they're out shopping for $3,000 refrigerators.

"These boomer elites don't despair in the face of such challenges.  Founding Web-page design firms, they find a way to be artists and still drive a Lexus.  Building gourmet companies like Ben & Jerry's or Nantucket Nectars, they've found a way to be dippy hippies and multinational corporate fat cats.  Turning university towns like Princeton and Palo Alto into entrepreneurial centers, they have reconciled the highbrow with the high tax bracket.  Dressing like the dot-com jockeys in worn chinos, they've reconciled undergraduate fashions with upper-income occupations."

Leading-Edge Boomers:
- Began coming of age in 1963, the start of a period of profound dislocations that still haunt our society today.  It ended shortly after the last soldier died in Vietnam.  The Kennedy presidency seemed like the natural extension of continued good times, of economic growth and domestic stability.  It represented a liberated and early transfer of power from an older leader to a much younger one. 
- The Kennedy assassination, followed by that of Martin Luther King and Robert Kennedy, signaled an end to the status quo and galvanized a very larger boomer cohort just entering its formative years.  Suddenly the leadership (LBJ) was no longer 'theirs,' the war (Vietnam) was not their war, and authority and the establishment which had been the bedrock of earlier cohorts disintegrated in the melee of the 1968 Democratic National Convention in Chicago.
- However, the Boomer I cohort continued to experience economic good times.  Despite the social turmoil, the economy as a whole, as measured by the S&P 500, continued an upward climb.  The Boomer I cohort wanted a lifestyle as least as good as they had experienced as children in the '50s, and with nearly 20 years of steady economic growth as history, they had no reason not to spend whatever they earned or could borrow to achieve it.
- The Boomer I cohort still heavily values its individualism (remember they were and are the "Me Generation,") indulgence of self, stimulation (a reflection of the drug culture they grew up with), and questioning nature.  Marketing to this cohort demands attention to providing more information to back up product claims and to calm skeptical concerns.  And these boomers prize holding on to their youth".

Trailing-Edge Boomers:
- The external events that separate the Boomer I from the Boomer II cohort were less dramatic than The Depression or World War II, but were just as real.  They were composed of the stop of the Vietnam War (it never really ended - just stopped), Watergate (the final nail in the coffin of institutions and the establishment), and the Arab Oil Embargo that ended the stream of economic gains that had continued largely uninterrupted since 1945.
- By 1973, something had changed for a person coming of age in America.  While faith institutions had gone, so had the idealistic fervor that made the Boomer I cohort so cause-oriented.  Instead, those in the Boomer II cohort exhibited a narcissistic preoccupation with themselves which manifested itself in everything from the self-help movement (I'm OK - You're OK, and various young and aging gurus imported from India) to self-deprecation (Saturday Night Live, Mary Hartman, Mary Hartman).
- The change in economic fortunes had a more profound effect than is commonly realized.  Throughout their childhood and as they came of age the Boomer I cohort members experienced good times; their expectations that these good times would continue were thus reinforced, and the cohort mindset formed at that time can be seen today in a persistent resistance to begin saving for retirement.  Things had been good, and they were going to stay good - somehow.
- For the Boomer II cohort, the money mindset was much different.  The Oil Shock of 1973 sent the economy tumbling: the S&P 500 lost 30% of its value between 1973 and 1975!  At the same time, inflation began to resemble that of a banana republic.  During this time, the real interest rate (Prime minus the CPI) hit a record low of -4%.  In those circumstances debt as a means of maintaining a lifestyle makes great economic sense.  And a cohort with a 'debt imprint' will never lose it.  Boomers II are spenders just like the Boomer Is, but for a different reason.  It's not because they expect good times, but because they assume they can always get a loan, take out a second mortgage on the house, get another credit card, and never have to "pay the piper."
- If the attitudes of the youngest boomers seem familiar to marketers, that's because many of the attitudes that younger boomers hold are similar to those typically associated with Generation X, observes Cheryl Russell, demographer and Baby Boomer expert . . . older Boomers got the best education housing and jobs, and “their shadow fell far down into the age structure, making things difficult for those even 10 years younger than the youngest Boomer.”

 According to sociologist Jonathan Pontell, younger boomers are different enough from older boomers as to constitute another generation entirely.  He identifies those born between 1954 and 1965 as "Generation Jones."  The carving out of this "niche" generation provides another way of understanding the psychographic differences between younger and older boomers.  Powell offers the following as a map to understanding these differences:

In a February 2001 American Demographics article, Alison Stein Wellner notes that while the baby boom generation has been the subject of much analysis by market researchers, the black boomers have almost gone unnoticed - which is to say that they have been lumped together with white boomers.

Those Wellner quotes argue that "while black Boomers may have shared the same formative experiences that have defined the Baby Boom generation - the Civil Rights Movement, Vietnam, etc. - over time, they have responded to these events differently from whites. . . . While white Boomers have moved beyond some of the social values that defined their generation, black Boomers continue to hold on to those values today."  

One reason for this, according to Wellner, is that "growing up in a world of segregation and racism created attitudinal nuances that are not always present among white Boomers."  Wellner also notes that black boomers participated in a radical transformation of black educational opportunities.  The parents of black boomers were "the last undereducated generation of black Americans," said Wellner.  In 1940, 42 percent of all blacks had less than a fifth grade education, and only 8 percent had completed high school.  By 1990, 78 percent of blacks had earned at least a high school diploma.

Howard Buford, president and CEO of Prime Access, Inc., a New York City-based ethnic marketing firm, says that "Black Boomers tend to view products and services as not being 'for them' unless they have a specific reason or invitation to use the product and service, because in the past, they were not included." 
Cause marketing may be the most effective way to reach black boomers, according to Alonzo Byrd, vice president and head of the African American communications department at St. Louis-based communications firm Fleishman Hillard, Inc. 

And what causes are they eager to support?  Results of the 2000 National Opinion Poll by the Joint Center for Political and Economic Studies show that while education is the top political concern for all races, more blacks (16 percent) than whites (7 percent) view crime, violence and drugs as top concerns. 
Fourteen percent of blacks identified employment-related problems as the most concerning issue, compared with only 4 percent of whites.  Whites were more likely to view family values, political corruption and the Clinton scandal as the most pressing concern of the time.

Importance of religion (compare to what's said about this in 1998 MAP) - targeting pastors rather than targeting black boomers directly.

Income, Savings and Spending Patterns:
According to Yankelovich Monitor study “Dissecting Boomers”:
- Trailing boomers are the most likely to say they like to plan 5 to 10 years ahead (66 percent), compared with 49 percent of leading boomers.
- Three-quarters (75 percent) of leading boomers say they're better off than their parents were at their age, compared to just 54 percent of trailing boomers.

AARP's 1999 Study, Baby Boomers Envision Their Retirement: An AARP Segmentation Analysis, divided Boomers into five segments based on attitudes and behaviors relating to retirement.  Following is a list of each segment's key characteristics, as well as the percentage of U.S. Boomers comprising each segment:

The Strugglers (9 percent) - This is the lowest income group of the five segments; its median household incomes is almost $30,000 below that of the average Boomer.  More females (64 percent) than males (36 percent) make up this group.  The Strugglers are saving almost nothing for retirement because they don't have any money to save.  Most in this group report little optimism about their later years.
The Anxious (23 percent) - This group has a median household income of approximately $10,000 below the Boomer average, but its members try to save some money for retirement.  The Anxious are not, however, optimistic about their financial well-being when they retire - many expect that they won't be able to stop working.  This group also reports anxieties about health care coverage during their later years.
The Enthusiasts (13 percent) - This group is extremely optimistic about their retirement years.  In fact, Enthusiasts do not plan to work at all during retirement; they plan to have both the money and time to spend their retirement in recreational pursuits.

The Self Reliants (30 percent) - The largest segment identified by the study, this group has the highest income and educational levels, and thus the resources to save aggressively for retirement.  Unlike the Enthusiasts, however, the Self Reliants plan to work at least part time after retirement because of the "interest and enjoyment that work provides."

Today's Traditionalists  (25 percent) - This group has a higher level of confidence and less uncertainty toward Social Security and Medicare than the other Boomer segments.  More specifically, Today's Traditionalists are confident that both Social Security and Medicare will be available when they retire.  However, this group plans to work and to rely on Social Security and Medicare during retirement.

 According to a 1999 Scudder Kemper Investments survey, 62 percent of boomers carried credit card debt, compared to less than half of those from the swing generation and a third of those from the World War II generation.

Nearly three-quarters (74 percent) of baby boomers say they plan to do, or are currently doing, some kind of paid work in retirement, according to a study by Scudder Kemper Investments.  This compares to 54 percent of the swing generation and an even smaller 34 percent of the WW II generation.

Another study of how workers plan to spend retirement, this one conducted by the John J. Heldrich Center for Workforce Development, provides additional boomer insights.  According to results, 46 percent of boomers plan to work part-time for enjoyment.  An additional 12 percent plan to start their own business, 11 percent plan to volunteer, 11 percent plan to work part-time for income, 12 percent plan not to work at all, and 3 percent plan to work full-time for pay.

Greater diversity of income within black boomer segment than baby boomer cohort at large.  About 36 percent of black Boomer families are married-couple families that make up the majority of the black middle class.