Consumer Behavior of Gen X and Millenial Costumers Regarding Perfume Industry

Introduction

“A good fragrance is really a powerful cocktail of memories and emotion” (Jeffrey Stepakoff, 2011).

The understanding and selection of fragrances involve complications. It is not only simply choosing a fragrance for specific purposes such as party fragrance, job fragrance or casual fragrance for daily life, but requires the desire of expressing personality or personal emotion. In this study, consumer preferences and consumer behaviour toward fragrance products between two generations including Millennials and Generation X is going to be identified and discussed. Accordingly, it is possible to analyze the approached information to consumer behavior through observational learning (as known as operant learning) and examine how perfume brands developin products can transform the acquiring behaviors between Millennials and Generation X.

The fragrances market is designated by an abundant line of products including mass perfumes, prestige perfumes or niche perfumes, however, this study focuses only on luxury perfume brands providing premium perfumes.

Perfume Industry Insights

Since the beginning of civilization from the ancient Egyptians and China, there has been a wide usage of perfumes and fragrances. Today, consumers have realized their demand for wearing perfume every day. According to the scientific aspect, this demand connects to the top level of Maslow’s Hierarchy of Needs which is Self-Actualisation.

The increasing demand for perfume has been shown by the global industry’s statistics throughout recent years. Figures 1 and 2 illustrate that the global perfume market size worth roughly USD 41 billion in 2018 with a CAGR of 4% from 2014 to 2018 and is expanding at CAGR of 3. 8% in the next five years, expected to be value about USD 49 billion in 2023. (Marketline, 2019)

In Euromonitor‘s Global Fragrances report, it is said that the year of 2013 witnessed the domination of premium fragrances with more than half of the total market value and the perfumes for women was the biggest proportion with more than sixty percent valued USD 15. 6 billion (Euromonitor, 2014)

Although in 2013, the Western EU maintained its dominance in fragrances, Latin America will gain its top position by 2018, together with the Middle East and Africa. They will be the key drivers of growth over 2013-2018, rising to 4% and 7% CAGRs respectively. However, Latin America will remain highly oriented towards the mass segments, generating nine in ten of value gains over the period from 2013 to 2018 while a 40% value rise in premium fragrances will be generated by MEA over the same timeframe. Western Europe and North America will continue to be the leading markets for luxury fragrance, achieving US$ 16. 1 billion in 2018, or roughly six in ten of total sales.

Generation X and Millenials

Identifying the distinctive characteristics of Generation X and Millennials is crucial to understand comprehensively before distinguishing the process of perceiving new things of these two groups.

First, about the age range, generation X are generally those born between 1965 and early 1979, giving them an age of between 40-54 in 2019. Whilst Millennials, also known as generation Y, are the demographic cohort following generation X. They were born in the early 1980s as starting birth years and the mid-1990s to early 2000s as ending birth years, putting them within a 20-35 range. The identification of the age range for gen X and Millennials is required to understand the consensus of consumer behaviours for both groups.

The second manner that needs to be discussed should be spending power. In comparison with Millennials, Generation X is a small but mighty demographic cohort. Gen Xers are known to enter the middle age and being at the peak of their career with high earning power but remain practical budgeters. Millennials are much more likely to spend their spare cash on unique activities and prioritise their experiences, which can be very wide-ranging. The fundamental characteristic here is that Millennials normally expect a certain quality of life and pursue it despite their reduced means.

Third, turning to technological matters, people from Generation X can use the internet in their daily lives for most tasks, but mainly for practical purposes. Gen Xers still can be targeted in many ways as they are technology-savvy and use both online media and traditional platforms including email and television. They are industrious and quickly adapt to new technology. On the other hand, Millennials have been instrumental in the digital transition for many brands. As a demographic, they prefer to shop online daily rather than conventional methods like store browsing. Therefore, to clarify any differences, it is this and its effect on consumer behaviour that should be further examined.

On top of that, Generation X has a high degree of brand loyalty as they lean towards repetitive buying behaviours. They can be quite faithful and cautious to their favourite brands if they feel genuine and trustworthy. This is not the case for Millenials as they perform greater behaviours of brand switching. Such characteristics can be used in the study of consumer behaviour in the luxury perfume industry and the observational learning theory in Generation X and Millennials.

Observational Learning Theory

The theory that has been chosen to examine further consumer behavior between Millenials and Generation X in the luxury perfume world is observational learning.

Observational learning describes the learning process by watching the outcome of other’s behaviour, retaining the information, and then later replicating the behaviours that were observed. The process of imitation is also referred to as modeling as a great deal of learning happens indirectly. Depending on the positive/negative reinforcement, an observer’s behavior can be affected by future behavioural actions whether one may engage within specific activities. The more similar the model to the learner, the more likely for people to follow the examples. According to Bandura, for observational learning to happen, there are four key processes: attention, retention, production, and motivation.

How Generation X and Millennials Learn

Within the luxury perfume industry, marketing is very important as the transmission of a fragrances’ smell is not always describable. Therefore, many companies decide to put a lot of effort into marketing strategies including the use of high-profile celebrities in advertising campaigns to dominate the market (Marketline, 2013). Looking to the Dior's campaign, JOY by Dior – The new fragrance, they have successfully created favorable thoughts to appeal Millennials’ market by utilizing influencer. They use the principles of observational learning to make their customers notice their products through YouTube, a social platform. It is very important to target Millennials as they are mostly social shoppers. The choice of Jennifer Lawrence as the face of Dior to promote the product helps introduce mainly Millennials, who are well familiar and have intimate connections with the celebrity. Just looking at the comments section on Dior’s official account, the advertisement has somehow motivated their audience to purchase and the desire to emulate just because of peer-to-peer influence and attractiveness that Jennifer Lawrence has portrayed without knowing the scent or price of the product.

Concerning technological habits, Millennials are more likely to pay attention to social media influencers more frequently than Generation X, who are more hesitant to explore beyond established online platforms and not so influenced by influencers (Mintel, 2019), which can be demonstrated in the section above. Millennials are more likely to watch YouTube videos for searching for shopping purposes rather than traditional platforms of marketing which is more common with Generation X. According to Mintel, 48% gen X who access YouTube are far off the 76% of younger Millennials and 68% of older Millennials also access this site regularly (Mintel, 2019). This figure can, therefore, lead to Millennials observing and imitating influencers, enticing them to buy the fragrances. On the other hand, it would not have had the effective expected outcome when applying to gen X and possibly lead to them not completely processing the message.

Turning to the Calvin Klein advertisement posters, they have created visually engaging images about the luxury perfume. Calvin Klein has gone through different approaches to Dior, the effect it has for mass marketing means that more people will observe, relate and understand the advert, suggesting that it is for everyone. As advertisements do not emit fragrance and luxury perfume cannot be marketed by a text that breaks down the notes and the construction of a formula, it has tried to trigger the need of customers through observation. The ad shows the masculinity and bold attitude of men, as well as a social norm that women should submit to a man. It gives out the direct gaze, creates intimacy and relationship between the reader, making them involved and provoke the desire inside them. This intentional advertisement is to encourage modern, career-oriented men to buy the fragrance if they want to feel confident and masculine. Calvin Klein also offers the same advert to target female with sensuality, contrary to male's one but with similar messages.

This kind of message is suitable to approach gen X as they are familiar through mass marketing advertising such as TV ads, advertorials in magazines and in-store promotional campaigns, who do not regularly use the social platform. They experience lower familiarity with the internet means that they consequently have less experience within this industry. Additionally, it shows gen Xers are largely resistant to mass-market advertising as they are less knowledgeable, and it causes them to seek out what they know and rely on the credibility and brand reputation.

However, acquiring a new perfume brand or a new product line of a familiar brand is not simply an information data processing process according to observational learning theory. It is many times more complex and is a combination of different methods of receiving information. The diagram below will briefly assess the receipt of information about fragrances of Gen X and Millennials through the learning theories including behavioral learning and cognitive learning.

Conclusion

To sum up, by understanding the differences in characteristics between Gen X and Millennials, the consumer behaviours of people in these two groups are somehow predictable. When interpreting their behavior by applying Observational Learning Theory, it is clear that their established characteristics are exposed obviously.

In a specific context of consumer behavior which is the world of luxury perfumes, the theory of Observational Learning seems to be more optimal for Millennials because of some analyzed characteristics. In the case of Joy from Dior ad, the familiar song about joyfulness is recalled to have a stronger impact on Generation X, while the use of the beautiful image of the influencer, Jennifer Lawrence, seemed to attract young people of Millennials.