In this paper the author investigates the extent to which generational theory shapes sustainable and impactful marketing strategies within the X5 Group, a leading Russian food retail company, and evaluates the strategic relevance of generational theory in contemporary marketing.
Keywords: generational theory, marketing strategies, segmentation.
Introduction
In the fast-paced world of retail, staying relevant requires a deep understanding of the customer. With multiple generations shopping under one roof, businesses like the X5 Group, which owns the popular Pyaterochka grocery chain, are increasingly turning to generational theory for guidance. This framework posits that individuals born in the same era — such as Baby Boomers, Gen X, Millennials, or Gen Z — develop shared habits and values shaped by the events and trends of their formative years. This article examines how well this theory holds up in practice at X5. Can tailoring marketing based on generational traits genuinely improve customer loyalty and campaign success, or is it more effective when used alongside behavioral data and digital interaction patterns? To answer this, the research combines internal company data with external sources to evaluate marketing outcomes across different generational groups.
Theoretical Framework: Generational Theory and Practical Applications
Generational theory, popularized by Strauss and Howe, divides society into cohorts characterized by distinct behavioral patterns and values. While influential for providing a structured way to think about long-term consumer trends, its real-world application is best understood through contemporary research. Katunina and Kashtanova's 2023 research offers crucial insights into how these generational differences manifest in digital marketing. [1, pp. 106–110]
Their experiments revealed clear generational divides in engagement. In one study, Gen X responded more strongly to direct call-to-action content (prompting likes, comments, shares) than Gen Y (Millennials), whose engagement was often limited to quick «likes». A second experiment focusing on viral, peer-driven content showed the opposite: Gen Y responded much more strongly, with subscription purchases rising substantially, highlighting their tendency to seek group belonging and trend alignment. A third experiment on banner advertising found Gen X had a higher click-through rate (CTR) of 2.3 % compared to Gen Y's 1.3 %, a difference attributed to Gen Y's digital nativity and use of ad blockers.
From this we can deduce that the effectiveness of generational marketing increases when digital content is aligned with the psychological triggers of a specific generation. These findings confirm that generational theory has practical applications: Gen X prefers direct prompts and traditional ads, while Gen Y responds to viral, social content. However, the research also highlights a key limitation: some effects may stem from technological environments rather than deep-seated values, and oversimplification can occur without considering local socioeconomic contexts.
Company Background and Generational Segmentation at X5 Group
X5 Group operates over 24,000 Pyaterochka stores across Russia, serving over 20 million customers daily. [2] The company's success is built on sophisticated consumer segmentation, which aligns closely with generational cohorts. X5 primarily identifies three groups: young families, older adults, and single professionals, each with distinct preferences.
Let’s organize this information in the table below:
Table 1
Consumer Segmentation at Pyaterochka
|
Consumer Group |
Characteristics |
Key Marketing Approach |
|
Young Families |
Price-conscious, need convenience |
Discounts, family-oriented products |
|
Older adults |
Less use of technology, value traditional shopping |
In-store promotions, loyalty programs |
|
Single Professionals |
Prefer quick purchases, digital preference |
Online ordering, quick checkout |
X5’s explicit tailor of its strategies allows it to target most of the generational preferences. Let’s look at image 1:
Fig. 1. A variety of communication channels with the X5 audience [2, p.15]
– Generation Z (born 1997–2012): Targeted through social media campaigns and sustainability initiatives.
– Millennials (born 1981–1996): Engaged via mobile apps, online shopping, and convenience-oriented services.
– Generation X (born 1965–1980): Reached through value-driven loyalty programs and personalized promotions.
– Baby Boomers (born 1946–1964): Catered to with traditional in-store services and print advertising.
This approach appears effective. In Q3 2023, X5 reported a 22.9 % revenue increase to RUB 796,236 million and a 85.7 % rise in net profit, alongside significant store expansion, suggesting that generationally informed strategies contribute to financial success. [3, p. 1–3]
The 7Ps and Data-Driven Marketing
Viewing X5’s strategy through the 7Ps marketing mix demonstrates how generational theory is operationalized. Product assortments are adapted with eco-friendly options for Gen Z and traditional staples for Boomers. Price sensitivity is universal, but value promotions resonate with older shoppers, while app-based discounts engage the young. Place is a key differentiator, with Boomers preferring stores and younger cohorts using online delivery. Promotion is where generational insights are most critical, utilizing gamification for Gen Z and loyalty cards for older groups.
The People , Process , and Physical Evidence elements reinforce credibility. Customer service, seamless app functionality, and store design are all tailored to generational expectations. For instance, stores feature self-checkout kiosks for tech-savvy generations while maintaining staffed checkouts for those who prefer human interaction.
This entire strategy is underpinned by data-driven marketing planning. The cornerstone is X5’s Customer Value Maximization (CVM) system, a sophisticated platform that uses machine learning to deliver hyper-targeted promotions. [7] The CVM integrates generational data with purchase history and channel preferences, orchestrating monthly campaigns to millions of loyalty-card holders. Its greatest strength is fluidity; it can dynamically reassign a customer’s segment if their behavior changes, thus mitigating the rigidity of pure birth-year classifications.
Effectiveness, Limitations, and the Path to Sustainable Strategy
The application of generational theory has yielded measurable gains for X5. Personalized digital offers have driven conversion uplifts among younger cohorts, while in-store personalization has sustained growth in older segments. Campaigns using combined generational and behavioral data achieve higher coupon redemption rates than untargeted promotions.
However, the approach has significant limitations. Over-reliance on generational cohorts can lead to stereotypes and overlook intra-generational diversity. For example, not all Gen Z consumers prioritize sustainability over price, especially in Russia's economy. Similarly, the assumption that Boomers avoid digital technology is disproven by X5’s data showing their active use of apps for practical tasks.
Table 2
Challenging Generational Assumptions
|
Generation |
Assumption |
Reality |
|
Gen Z |
Only care about sustainability |
In practice, Gen Z consumers — particularly in Russia where economic volatility affects daily decisions — often exhibit a more pragmatic mindset, carefully weighing price and quality over abstract environmental ideals. This generation, as noted in MTS's generational theory research, prioritizes financial literacy and practical utility, reflecting the broader societal pressures they face in a fluctuating market environment. [4] |
|
Boomers |
Avoid digital technology |
2024 DataReportal in partnership with We are social and Meltwater published a report that shows that 71.5 % of older consumers (55–64 years old) are active users of online shopping platforms. [5, p. 43] |
|
Millennials |
Prefer experiences over products |
While many millennials seek meaningful experiences, they are also aware of economic constraints. Affordability and practicality remain central to their purchasing decisions. In regions where inflation impacts day-to-day spending, even the most brand-conscious Millennial may choose a discount over a premium product if it means staying within budget. |
|
Gen X |
Brand-loyal shoppers |
This generation often shops switching brands for better value or convenience, particularly during economic downturns. |
This highlights that consumer behavior is dynamic, while generational theory is static. True sustainability requires balancing generational insights with real-time behavioral and economic data.
Conclusion
In conclusion, the exploration of generational theory within the X5 Group’s marketing strategies reveals both its potential and its pitfalls. The theory provides an invaluable foundational framework for segmentation, enabling targeted messaging and channel-specific outreach that resonates with broad audience profiles. The high internet penetration in Russia (around 90.4 %) makes generational targeting particularly actionable in the digital space. [6]
However, generational theory is not a universally predictive tool. Its effectiveness is maximized only when it is not applied in isolation. For marketing strategies to be truly sustainable and impactful, generational insights must be integrated with behavioral analytics, real-time economic data, and a flexibility that allows for individual and societal shifts. For X5, the future of marketing lies not in rigid categorization, but in a thoughtful, evolving approach that balances theoretical generational insight with empirical observation, ensuring campaigns remain meaningful and effective for all consumers.
References:
1. Katunina, Irina V., and Valeria E. Kashtanova. «The Application of Generational Theory to Digital Content Management». Technology and Entrepreneurship in Digital Society, 7 Nov. 2018, Financial University, Moscow. TEDS-Conference.org, Publishing House «Real Economy», 2018, pp. 106–10, doi:https://management-science.ru/site/public/elfinder/TEDS_Proceedings.pdf.
2. X5 Group. X5 Media — единое окно рекламных и аналитических возможностей X5. X5 Dialog, 2024, dialog.x5.ru/connect/wp-content/uploads/2024/05/X5-media-1.pdf .
3. Shekhterman, Igor. X5 reports 22.9 % revenue growth in Q3 2023 7.8 % adj. EBITDA margin pre-IFRS 16. 2023, x5.com/wp-content/uploads/2023/10/x5_q3_2023_financial_results_eng.pdf .
4. Nekipelova, Anastasia. «Generational marketing: как брендам взаимодействовать с представителями разных поколений». МТС Маркетолог, 28 June 2024, marketolog.mts.ru/blog/generational-marketing-kak-brendam-vzaimodeistvovat-s-predstavitelyami-raznih-pokolenii?utm_referrer=https %3A %2F %2Fwww.google.com %2F .
5. Digital 2024 April Global Statshot Report. DataReportal, We Are Social, and Meltwater, 24 Apr. 2024, datareportal.com/reports/digital-2024-april-global-statshot?rq=2024.
6. Digital 2024: The Russian Federation. DataReportal, We Are Social, and Meltwater, 23 Feb. 2024, datareportal.com/reports/digital-2024-russian-federation.
7. X5 Group. Тренды. X5 Dialog, 2021, dialog.x5.ru/connect/wp-content/uploads/2021/08/Prodvizhenie-tovara-out.pdf .
