Monday, April 21, 2014

Demographics and Software Sales

The major changes that we have seen in US economics, business, and society are due to the size of successive US generations, and the corresponding different number of people in each age group.  So says Kenneth W. Gronbach, author of the 2008 book "The Age Curve - How to Profit from the Coming Demographic Storm."

Gronbach knows that his theory simplifies a very complex subject. But he has crafted a convincing argument for much of the rising and falling of specific companies and market trends.

microISVs are correct to focus their efforts on their immediate marketing issues. Trends are also important, as they might provide the "missing piece to the puzzle" that explains surprising successes.

Here are Gronbach's definitions of the five generations currently in the US marketplace:

  • GI Generation - the 56.6 million Americans born between 1905 and 1924
  • Silent Generation - the 52.5 million Americans born between 1925 and  1944
  • Baby Boomers - the 78.2 million Americans born between 1945 and  1964
  • Generation X - the 69.5 million Americans born between 1965 and 1984
  • Generation Y  - the 100-or-so million Americans born since 1985

Gronbach equates Generation Y to "more of everything." Gen Y is the greatest opportunity for marketers, based purely on the numbers.

When it comes to buying consumer goods - and that includes consumer software for computers and telephones, Gen Yers want everything now. They're going to face a lot of competition in the workplace, and their source of income is not a certainty. Many will become entrepreneurs - and need both education and software to be successful. There will be huge opportunities for software developers.

Gronbach believes that manufacturing will return to the US. Gen Y will provide the huge workforce needed to support this new trend in manufacturing. By creating goods here, US companies can quickly make changes that parallel Gen Y's changing fads and preferences. And US-based manufacturing will eliminate overseas shipping costs, which will continue to rise.

America will get greener as Gen Yers dominate the marketplace.

Age-for-age, dollar-for-dollar, individuals in Generation Y consume about 500 percent more than their parents consumed at the same age. I guess iPods, laptops, cell phones, and DVD players all cost money.

Consumer brand-names are less important to Yers. They don't watch television much, and traditional marketing won't be as effective. That, of course, is great news for software developers, who have already figured out how to market on the Internet.

Loyalty, retention, and frequent-flyer-style programs will become more and more important.

Again, Gronbach admits that his theory oversimplifies. But these are issues that microISVs need to think about as they do long-term strategic planning.

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