A new consumer audience is taking centre stage as Generation Z begin to come of age.
Generation Z were born between 1995 and 2009. They are a cohort that is more populous and influential on consumer spending than any generation before them.
But any retailer, manufacturer or service provider simply planning to reuse whatever marketing strategies they have developed for Millennials in order to sell to this new generation needs to think again.
Generation Z are a group with their own values, preferences and behaviours – with attitudes towards technology, finance and spending that are distinctly different from previous generations.
Here we briefly explore 4 key ways Generation Z are distinct from their Millennial forerunners – and the implications for consumption and marketing strategies in the post-digital realm.
The distinct behaviours of Gen Z need to be understood by companies and marketers for two important factors:
By 2020, Generation Z will be the largest group of consumers globally. They will account for 40% of consumers in the US, Europe and BRIC countries and 10% in the rest of the world*. Companies that don’t engage with Gen Z successfully could rapidly lose market share.
* Source: Booz Co
Some of them may only be 9 years old, but Gen Z already have huge spending power. In the US, Gen Z currently have $200 billion in direct buying power but $1 trillion in indirect spending power by influencing household spending*. Gen Z's advanced digital knowledge and ability to assess factors such as price and availability from a young age make them increasingly influential in family spending decisions.
* Source: IBM
To market to and connect with Gen Z effectively, companies need to understand the attributes that make them different. We have identified four important ways that Gen Z differ from their predecessors.
If Millennials were digital pioneers, then Generation Z are the first true digital natives – not knowing a time without technology at their fingertips. This has led to an expectation of seamless, on-demand connectivity that companies must be able to accommodate.
Source: Barclays Research
Generation Z are the most marketed-to children of all time. As such, their shorter attention span should be viewed not as an inability to concentrate but rather as a sophisticated filter evolved to help them seek out relevant content faster and more precisely than any generation before them.
Source: Vision Critical, Altitude
Generation Z may be avid consumers. But the 2008 global financial crisis, the experience of older siblings struggling to find work and a sense of global instability are driving a renewed focus on personal resilience, financial conservatism and hard work – with online opportunities leading the way in unleashing Gen Z’s earning potential.
Source: Barclays Research
Generation Z have been made aware of international affairs from a young age thanks to a 24-hour news cycle that relentlessly pushes out information. Meanwhile, their unprecedented access to travel, culture and ideas has led them to put a high value on diversity in all its forms.
As a result, they're ready to use their collective voice and buying power to champion those brands that reflect their values – and challenge those that don’t.
Source: Millennial Marketing
Brands and businesses need to move fast to be ready to serve Generation Z when this group reaches consumer dominance in the early 2020s.
But companies also need to take the time to understand the idiosyncrasies of this cohort: Gen Z have an ultra-short attention span, but are hungry for authentic content; they are sceptical of financial institutions, yet want to save and be financially independent; they are immersed in social media, but also want to have a positive impact in the real world.
The time to engage Generation Z is now. But only those companies that genuinely grasp Gen Z’s particular behaviours, values and priorities are likely to meet with success.