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Alphabet soup: Gen X, Gen Y, and Gen Z explained

Confusion about generational cohorts abounds: What separates Generation Y from X, and is Generation Z a thing? Where do Millennials fit?

If you’ve ever felt muddled by this alphabet soup of names…you’re not alone. The real frustration hits when it you realize that Gen Y consumers will earn 46% of income in the U.S. by 2025.[1] And unless you understand who they are and what they want, you won’t capture a dollar of their money. Furthermore, as one generation’s spending power decreases (i.e. Boomers) another is increasing.

People grow older, birthdays stay the same

A common source of confusion is age. Generational cohorts are defined (loosely) by birth year, not current age. The reason is simple: as people age, they change life stages. For example, a member of Generation X who turned 18 in 1998 would now be nearly 40. In that time, he or she cares about vastly different issues and is receptive to a new set of marketing messages.

As of 2016, the breakdown by age looks something like this:

  • Gen X = 37-52 years old (82 million people in U.S.)
  • Gen Y = 20-36 years old
    • Gen Y.1 = 20-26 years old (31 million people in U.S.)
    • Gen Y.2 = 27-36 (42 million peeps)
  • Gen Z = 2-20 years old (nearly 74 million)

You may be wondering why Millennials aren’t represented in this breakdown. They are. The term “Millennial” has become the popular way to reference both segments of Gen Y (more on Y.1 and Y.2 below).

Realistically, the name Generation Z is a place-holder for the youngest people on the planet. It is likely to morph as they leave childhood and mature into their adolescent and adult identities.

Why use letters at all?

It all started with Generation X, people born between 1961-1981, approximately. The preceding generation was the Baby Boomers, born 1946-1964. Post World War II, Americans were enjoying a new-found prosperity, hence the baby boom.

But the generation that followed this didn’t have a blatant cultural identifier. In fact, that’s the anecdotal origin of the term Gen X — illustrating the undetermined characteristics they would come to be known by. Depending on whom you ask, it was either sociologists, a novelist, or Billy Idol who cemented this phrase in our vocabulary.

From there it was all down-alphabet. The generation following Gen X naturally became Gen Y, born 1981-2001 (give or take a few years on either end). The term “Millennial” is widely credited to Neil Howe, along with William Strauss. The pair coined the term in 1989 when the impending turn of the millennium began to feature heavily in the cultural consciousness.

Generation Z refers to babies born from the mid-2000s through today, although the term isn’t widely used. This may signal the end of ‘alphabet soup’ (it does coincide with the literal end of the alphabet, after all). A flurry of potential labels have appeared, including Gen Tech, post-Millennials, iGeneration, and Gen Y-Fi, as dubbed in this Huffington Post post.

Why bother with splitting up Gen Y?

The Financial Brand has reported on three costly myths associated with Gen Y. In the article, Javelin Research used Gen Y.1 and Gen Y.2 to highlight an important distinction within the cohort.

People ages 20-26 (Gen Y.1) and ages 27-36 (Gen Y.2) are drastically different. Thus, marketing techniques and messages need to be tailored accordingly.

Not only are the two groups culturally different, but they’re in vastly different phases of their financial life. The younger group are financial fledglings, just flexing their buying power. The latter group has a credit history, may have their first mortgage and are raising toddlers. The contrast in priorities and needs is vast.

Marketing to them as a single cohort will not be nearly as effective as segmenting your strategy and messaging.

Why are the names important at all?

In practice, each generation label serves as a short-hand to reference nearly 20 years of attitude, motivations, and historic events. Few individuals self-identify as Gen X, Millennial, or any other name.

They’re useful terms for marketers and have a tendency to trickle down into common usage. Again, it’s important to emphasize that referring to a cohort simply by the age range gets complicated quickly. 10 years from now, the priorities of Millennials will have changed — and marketing tactics must adjust in step.

Whatever terminology you use, the goal is to reach people with marketing messages that are relevant to their phase of life. In short, no matter how many letters get added to the alphabet soup, the most important thing you can do is seek to understand the soup de jour for the type of consumer you want to attract.


[1] Javelin Strategy & Research, “The Three Costliest Myths About Gen Y,” May 2014