Youth Inc.

Coming of age

The youth economy is burgeoning. Marketers are scrambling to keep pace with this confounding yet rewarding segment

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Published 8 years ago on Jul 07, 2012 Read
Illustration by Sahil Bhatia

When 16-year-old Sanay Mehta wrapped up his board examinations in March this year, his father offered him a trip to Dubai or Singapore. He had cousins at both places, neither of which he had visited. Sanay had worked hard the last year and his father was convinced this surprise offer would be well received. But the teenager declined and made a counter offer. Give him half of what the trip would have cost, in cash. The rest would go to his bank account. “Return air fare and an overboard shopping spree would have cost about ₹1 lakh. With my cash wad of ₹50,000, I wanted to buy a pair of football boots, an iPad and upgrade my phone to an Android,” says Sanay. The trip wasn’t all that attractive to him; he would rather take a gap year and go to Europe with friends a few years later than be babysat by an uncle and aunt in Singapore. His father, though shocked, agreed. “He was always going on and on about the foreign trips his friends took. Who knew football boots were more important?” he says.

The under-25 demographic constitutes roughly half the population of the country. Yet very little is understood of their culture and consumption behaviour. One reason is, of course, the lack of historical data. This is the first generation that’s grown up in liberalised India. From television to computers and now smartphones, this is also a group of digital natives who keep pace with their peers around the world on a second-by-nano second basis. All of this determines their aspirations and their consumption behaviour.

Marketers usually define the youth economy as the consumption market occupied by 15-25 year olds. It is a dynamic demographic, one that behaves far differently from the population they have so far marketed to. Ten years ago, an 18-year-old would have nagged his parents to buy a desktop computer that could be used by the whole family. The parent would have then asked around about the most reliable machine and the best after-sales and maintenance service. They would have eventually bought one they were sure would last a long time and could be easily repaired if a fault were to arise.

Big spenders

A quarter of youngsters' spend goes on eating out and entertainment

Today, the desktop itself is nearly extinct. The 18-year-old wants a laptop, one that will be used exclusively by him. He decides which one, by asking his friends, comparing models and prices online, and then presents his recommendation to his parents whose only job is to pay for it. He checks for a basic warranty: he’ll be replacing it with a newer model in three years, in any case. A lot, then, has changed in the past decade. And companies and marketers are scrambling to keep abreast of what the message should be and how it should be communicated.

Consuming giants

In essence, there is a triumvirate of reasons that makes this a market everyone wants. Foremost is the fact that they are tremendous consumers: their pocket money is multiple times what previous generations got and they’re not cagey about spending (see: The youth wallet). Then, certain categories of products and services cater exclusively to youngsters — think gaming products — and in certain others they are the largest chunk of buyers: sports apparel and footwear and fast food come to mind immediately. Second, they are strong influencers of brand preferences for people both younger and older. A 40-year-old may own one pair of sports shoes that he wears for morning walks as well as to the mall. But a teenager wears specific shoes for specific activities. “We recently had a football event and I watched the kids come in. They came in, changed from their regular shoes to football shoes. Some of them were coming from tennis practice. They were carrying tennis shoes as well as football ones. The kids are beginning to influence their parents as well, in this regard,” says Tushar Goculdas, brand director, Adidas.

The third is the logic of catch them young and watch them grow. This set of consumers will soon enter the workforce; if you are able to build brand loyalty with an 18-year-old, by the time he is 28 and well entrenched in the workforce; selling him a brand extension should be easier. “This is a generation that lives to shop,” says Rupen Desai, regional president, Asia Pacific, Lowe + Partners. “Shopping is increasingly perceived as a hobby by the youth.” They see no shame in spending and consuming and as their income levels rise, youngsters’ propensity to spend will rise with it. Not surprisingly, brands would like to hold their hand and walk with them every step of the way in that journey. 

The fact that a majority of marketing communication is addressed at the young is evident if you watch television for 30 minutes. Advertising to the youth falls under two categories. Some brands, such as mobile majors Airtel and Aircel, fast food companies such as KFC and apparel maker Levi’s see the young as the innermost circle in a target. Once they hit the bull’s eye, the message then flows outside in ripples. And because the origin began at the centre, as it moves outside it carries with it the attributes of being ‘cool, hip and relevant’ with it.

The other is the category where the product itself is exclusively consumed by the youth. Sportswear maker Adidas claims that 75% of its market is the 15-25 year segment. Of the remaining, 10% is occupied by the under-14 year olds. “So when I market to the youth, it isn’t that my message is targeted at the youth while my products are bought by all. My entire market is pretty much this demographic,” says Goculdas.

While the popular notion is that the youth is solely focused on instant gratification, marketers say that their buying behaviour does not bear this out. “They have got money and they are ready to spend it. But they never pass up a good deal,” says Homi Battiwala, director, PepsiCo India. “What we have noticed is that they always consume combos. The value they derive has to be either monetary or bundled with a great experience.”

The youth economy’s purchasing decisions are also made on the basis of how much of a head turner the product is. Price comes second, especially in the purchase of high-ticket items like motorbikes. “It needs to be understood the decision maker is the youngster and the money is paid by someone else,” says Roy Kurien, national business head, Yamaha Motors. Kurien recalls in 2007, when he was a zonal manager in Bengaluru, two young men of about 24 came and enquired about the R-1 bike, which cost ₹10.5 lakh at the time. “One said he was keen to be the first one in the city to own it. I said that could be a bit of a problem since it was available in Delhi and would take a while to get to Bengaluru. He just said, ‘Don’t worry. Since the bike’s available in Delhi, I will just get it airlifted.’ That is precisely what he did!” 

When it comes to gadgets, though, performance is as important as looks. And the demographic believes in doing its homework — youngsters follow a model of Ropo (research online purchase offline) for most purchases. “About 70% of our customers in this demographic; do their research online before buying. If they type “which is the best laptop” in Google, Lenovo has to come up,” says Shailendra Katyal, director, marketing, Lenovo India. There’s another influencer when it comes to purchase decisions — peer recommendations. Tadato Kimura, GM, marketing, Sony India, says in developed markets, “Young people do not want to use the brands their friends use. That is not an issue in India.” And that brings us to the most important aspect of this generation’s life.

Friends!

“If your friend jumps into a well, will you jump in too?” is perhaps a parental question as old as evolution itself. And while the answer might have been an embarrassed shake of the head earlier, it is now an emphatic ‘yes’. Young Indians today will do exactly what their friends do. Bharat Bambawale is the global brand director of Airtel, a company whose brand messages are predominantly communicated to the youth. The prime insight, he says, was on the eco-system of friendship. “The one message that came across clearly was, ‘Friends are not part of my life, they are my life’. As a father of two teenagers, I realise that my job is to pay the bills and stay out of their lives. They get all the support they need from their friends,” he says. It is based on this that the company launched one of its most successful advertising campaigns, the one that reminds you “har ek friend zaroori hota hai.”

For Airtel, this realisation also reflects in the nature of its revenues. A substantial chunk of the bills of this demographic is for communicating with each other. Sanay Mehta spends about ₹800-1,000 on an average on his mobile bill. And how much of this is calling friends? “All of it, of course!” he answers, shocked that a question like that even needed to be asked. Even the sale of mobile devices depends upon how well it is positioned to the requirements of this segment. Blackberry, for example, converted itself from a boring corporate image to one that appeals to “Blackberry boys” (and girls presumably) on the basis of its Messenger service. Youngsters, who didn’t really care very much about push e-mail and other Blackberry features, lapped up the gadget purely because they could chat with each other for free on the service. So much so that it even converted an acronym into a verb. “I’m BBM-ing” is an official and legitimate excuse for not doing something else, currently. Today’s youth are now not only connected, but rely heavily on technology to inspire, encourage exercise, track routines and expenses. The smartphone, in particular, has driven this — by becoming more friend than phone, says Desai.

Four-screen equation

Marketing to the young in the 1980s and 1990s was almost a cakewalk. There were so many gaps in what was desired and what was available that the consuming masses were willing to lap up everything. The role of the marketer was to inform and induce. Today, the key is not to try too hard. Sameer Suneja is the managing director of Perfetti India, the confectionary company that sells Mentos and Happydent. The important characteristics of the demographic, according to him, are that they think independently and have a do-it-yourself approach. They have a low threshold for boredom and, contrary to the traditional view, impatience is considered a virtue. “One of the key lessons we have learned is that we have to be relevant but not intrusive,” he says.

The other big difference is in the media through which this is communicated. For people who grew up in the 1980s and 1990s, television played a critical role in how they reacted to products and make purchase decisions. For the 15- to 25-year-olds of today, TV is an old medium. Today, with the pattern of media consumption changing, brands have to follow the youth. So while at home, they speak to them through the television and the internet, they get on the radio to accompany them on the commute, and then have to be visible in malls, bowling alleys and cinema halls. As a result, outdoor and radio advertising now account for a significant portion of the ad budget of companies targeting the youth segment. KFC, for example, spends about 10% of its ad budget on radio and outdoor advertising. The use, proportion and mix of these media are also constantly evolving. Even up until a year or so ago, companies were merely running the same advertisements across various media. Today, they are careful to fit the message to the medium. “When we launched our ad with Ranbir Kapoor, we made an entirely different video for YouTube. Earlier, the wisdom would have been to just have the same clip as the TVC on the net. Now all our campaigns have a separate and distinct Facebook and Twitter component,” says Battiwala.

The average urban Indian household has a minimum of four screens through which members flit through the day. This includes a couple of smartphones, a computer or laptop and a television. The challenge to the marketer is to be present in all four of these screens and present a uniform message through unique experiences. It is also a constant battle between the creative and the unknown.

Online marketing is so nascent that marketers worldwide still don’t know what works and what doesn’t. For instance in January this year, McDonald’s in the US ran a campaign on Twitter where it paid to appear on top of the Trends List through the #MeetTheFarmers. If you clicked on it, you were taken to videos that showed real farmers talking about their beef or their potatoes. The idea was to tell people that McDonald’s food came from real food sources. It was a huge hit all morning. By afternoon, McDonald’s decided to extend the story by creating a #McDStories where people could go and share their stories about McDonald’s. People began posting negative stories about their McDonald’s experience — about the food, the hygiene and service. In a couple of minutes, as it were, the campaign went from being a success to being a complete failure. There have been no such marketing disasters in India — yet — but it’s all too possible.

As far as social media goes, it is especially critical that you find a deeper engagement between the brand and the demographic. If you see somebody on Facebook or Twitter, they don’t go there to be sold to. They go to present an update on their lives or connect with friends. In that there is no natural space for a brand. The established protocol for TV is that your viewing will be interrupted by an advertiser. In social networking you don’t need to interact with a brand unless you want to. “Brands will have to be like another friend that the person wants to go and find out what’s going on with that guy. Then the message cannot be: ‘Buy this for ₹99’,” points out Bambawale. “That skill will be crucial to marketing to the youth. In that sense there is a lot we have to learn.” 

Companies whose products transcend age demographics are careful to launch specific models or features that attract the young. Nokia, for example, launched its Qwerty email device targeting the 18-25 group. The company is also very active online. “Facebook is a very effective way to connect with our audience. One key lesson has been that you should be in touch with them on an ongoing basis. You cannot afford to talk to them once a year,” says Viral Oza, director, marketing, Nokia India. In the last three years, the company has increased its online presence significantly. “Today, we have the largest number of unique visitors, the largest fan base on Facebook and the association with Kolkata Knight Riders has brought in a million fans,” says Oza.

Experience junkies

With the democratisation of information through the television and the internet, to be cool, it is no longer enough that you know about things. It is imperative that you have “done” them. Earlier this month, Chelsea beat Bayern Munich in the Champions League final. The excitement of the match was palpable even in India. Less than a week later, a bunch of children from India who had qualified and made the cut played a match in the same stadium in Munich, courtesy Adidas.

“For many years, these children will count it as one of the best experiences of their lives. The key to being a youth brand is giving them unforgettable experiences,” says Goculdas. Even though there is no numeric evidence to back this up, Goculdas is certain that these children will not just be loyal to the brand but will also influence their peers and nudge them towards his brand — Adidas. 

The youth economy is populated by experience junkies. The brand connect has to go far beyond just the product or service. “The biggest challenge in catering to this audience is the lack of brand loyalty and that is very tough to address. The question is how do you get them to stick to your brand? The process gets difficult since it is determined by aspirations, increasing number of options and the pressure from the peer group,” says Atul Gupta, vice-president, sales and marketing, Suzuki Motorcycle. That’s where niche experiences come into play. When Airtel launched its music service, it needed to take the idea beyond just making music available on the phone. So it tied up with artists such as Sonu Nigam and Hariharan to be available at the Airtel music studio. Listeners could call in and talk to them, ask them questions about the songs. Some listeners could even meet the singers in-person at the studio.

In order to get the youth to consume, it is imperative to package it with an experience. And the stage at which the youth is involved in the process has also shifted significantly. Marketers call it co-creation. These potential consumers are lured in right from the point of creating the advertising campaign. Their ideas are used to determine where the campaign will head. And as far as possible, they are involved in the actual creation of the campaign. For example, a brand creating an anthem throws the information online and gets singers and musicians to make the music, and videographers and editors to edit it. This finally goes on television. So a large chunk of people are part of the campaign even before it has actually begun. Add this to the peer influence and the effect of the campaign is quickly viral.

The experience phenomenon is also the key behind the noticeable rise in surge of interest in football. While cricket still remains the number one game in the country, most large advertisers are exerting a definite pull in promoting football in India. Since its early days for the game here, brands are bringing in top names in European football like Chelsea's Didier Drogba and David Monk and allowing fans to engage with them closely. And the target group is lapping it up. 

The best example of how it is all comes together is in Pepsi’s T20 football campaign. It’s an actual tournament played in a cage, with high adrenaline footballing action that lasts for 20 minutes. The winning team will be coached by Didier Drogba and the finals of this tournament will be played against Indian cricket stars. The campaign started online, with videos on YouTube and information on Twitter and Pepsi’s Youngistan website before it hit other media. It’s a world that is far, far removed from the basic marketing and advertising principles taught in B-schools even as late as a decade ago. “This group craves experiences and status that will set them apart from the rest. So get ready for niche, one-off branding experiences that ensures off the radar impact,” says Desai.

Us versus them

Youngsters everywhere are the same and aspirations are geography independent. While urban youth may be a little ahead of the curve, sales in semi-urban and rural areas are fast catching up. They follow the same trends and desire the same brands and designs. Even five years ago, a mobile advertisement for the rural sector meant picking a stripped-down phone (remember the Nokia with the torch?) and showcasing that to the rural youth. There used to be a catch-up time, concedes Nokia’s Oza, but even that has reduced. Demand for mobile phones in smaller towns is even greater than large cities, according to him.

Katyal agrees that the small-town story is very big. “Often, the hunger in Tier-2 cities is higher than in urban areas. Theoretically, you assume that in a smaller city they will buy the ₹20,000 laptop and not the ₹70,000 one. The notion that the premium end sells more in cities is not necessarily true,” he says. And often, smaller towns are leapfrogging stages and moving directly to the latest technology. “Earlier we used to look at data and say ‘urban consumer’ and ‘rural consumer’. That is something we have completely thrown out of the window. There are aspirers everywhere,” says Battiwala. The fact then is that the willingness to spend is just as present in non-urban India.

Cynics might view the youth economy merely as hype. The real wallets are with the parents, is their logic. But truth is, the youth economy has significantly influenced every aspect of consumption — how, where and what we shop. And yet, more tectonic shifts are still to come.

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