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Upside, Profiting from the Profound Demographic Shifts Ahead

By Kenneth W. Gronbach

I went to school at California State University at Long Beach. With 35,000 students, it was a great place to remain anonymous. Ironically, I was recruited out of the graduate program by Volkswagen of America, Inc. This was my first real taste of marketing and the automobile business. I loved it, but I didn’t love Southern California, so I moved back to my home state of Connecticut and opened a retail advertising agency.

Twenty two years ago I sent our advertising agency’s one man research department on an assignment to find out why Generation X, born in the U.S. between 1965 to 1984, was so maligned by the United States press. They were in the media’s cross-hairs because they simply did not measure up to the performance levels of the Baby-Boomers, born 1945 to 1964, that preceded them. The tipping point for me was a full page editorial in a major Connecticut newspaper late in October of 1996 during the Clinton/Dole presidential election battle. Generation X was indicted for deficiencies in voting, giving, volunteering and running for office. A bunch of lazy slacker couch potatoes! How could they possibly be the future of the United States? I wanted to know. I wanted facts.

My researcher was ready with his report at the end of the week. He was armed with Census data, Bureau of Labor Statistics research, CIA Fact Book information and a menacing U.S. Live Birth Chart from The National Center for Health Statistics.

So, what is the bottom line? The net, net? Will Generation X ever perform at the level of the Boomers? His answer was clear. “No.” So there you have it, a generation of under achievers. I concluded, “So they are lazy.” I said. Again his answer was unassuming, “No, there are simply fewer of them. Nine million to be exact, 78 million Boomers compared to 69 million Gen Xers born over comparable 20 year periods.” It took a few minutes for this profoundly modest information to sink in and then explode in my brain.

I imagined two NFL teams in a playoff game. One was allowed to have the standard 11 players on the field and the other was limited to 9 players. The team of 11 player trounced the team of 9 and the play by play announcers were criticizing the team of 9 for their poor athleticism.

This information, a revelation really, solved a decade long mystery at our Middletown, Connecticut based advertising agency, KGA. During the early 1980’s KGA Advertising enjoyed a very profitable relationship with a signature client, American Honda Motorcycles. We represented 140 Honda Motorcycle dealers in Honda’s Northeast U.S. Region. We sold thousands of Honda motorcycles using really cool radio and television ads. However a strange thing happened in 1986. We ran the ads in April and no one responded. It was like someone or something had turned a faucet off. We panicked and so did Honda. What was going on? Kawasaki, Suzuki and Yamaha motorcycle dealers were experiencing the same issue. In sharp contrast the anachronistic dinosaur of a motorcycle, Harley Davidson, was experiencing a sales spike. Go figure. By 1992 sales for the Japanese motorcycle brands had fallen 80%, yes, really. And 95% of the Japanese motorcycle dealers closed, including Honda dealers. Our 1996 calculations showed that our very narrow Japanese motorcycle market, men 16 to 24, had been exited by the Baby Boomers and then populated by the diminutive Generation X. The demographic kiss of death.

Where else did this information lead? Did the diminutive Generation X close public schools in the U.S.? Yes! Did Gen X commit less crime because there were fewer crime committers in their generation? Yes! Did consumer products suffer softer sales because there were fewer consumers in Generation X? Yes! Did immigrants seeking opportunity pour into the United States because Generation X could not supply the critical mass of workers to meet the needs of the Boomers? Yes! Is the small Gen X population creating issues for health insurance, Social Security and The Internal Revenue Service? Is the Pope Catholic?

The real irony to this profound understanding of the marketing power of demographics and human analytics is that it remains the step child of popular science and understanding. Take a look at the viewership on YouTube of any videos relating to Demography. No million sellers there. Why? You got me.

The above is just the tip of the iceberg, the beginning of the understanding of the power of shifting demographics and human analytics. It has been 22 years since my AHA moment in 1996 but demographics is the gift that keeps on giving and now reaches every part of the globe. We discover new implications all the time. Vladimir Putin won’t leave The Ukraine anytime soon because Russia’s shrinking population is old, sick and drunk. Putin needs to annex 50 million healthy Ukrainians to save Russia.

So what is the new big story for the United States? 86 million Generation Y/Millennials, born 1985 to 2004, will change everything. They are finally moving out of their Baby Boomer parents’ basements and starting households. They will throw away all those trophies they didn’t deserve, get married and yes, have 2.2 kids. At our current rate of travel, the United States is about 25 million housing units short of our needs. So unless we expect Generation Y to sleep in tents we need to build, really build. Will this precipitate a housing/construction spike? Like you can’t imagine.

Demographics? It continues to be a fun and exciting ride.

Kenneth W. Gronbach is president of KGC Direct, LLC and author of the current book, “Upside: Profiting from the Profound Demographic Shifts Ahead“ and the bestselling book, “The Age Curve: How To Profit from the Coming Demographic Storm”.  Go to www.kgcdirect.com to hire Ken to speak or buy his books.