The era before Facebook, YouTube and Twitter may feel like a distant memory for most of the population. However, there's an emerging generation that actually can't even remember a world without social media. This demographic cohort is known as Generation Z, and they're set to have a major impact on the consumer market. Advertisers and marketing professionals are bracing to find ways to define and understand these tech-savvy individuals, who represent roughly a quarter of the population.
As the successor to the Millennial generation, Gen Z includes those born in the mid-1990s and later. While this demographic has already lived through two recessions, they're coming of age during a renewed period of economic growth. This has led them to be more liberal with their wallets. Generation Z is already contributing about $44 billion to the economy. By 2020, nearly a third of Americans will belong to this emerging consumer generation.
Defining Characteristics of Gen Z
Characterizing an entire demographic is never an easy task. Nevertheless, Gen Z has already started to show some distinctive traits of growing up in the digital age. Younger people are generally more entrepreneurial in spirit and comfortable with self-learning. They also have a knack for multi-tasking and creating their own individual footprint. A typical teenager will have no problem sending a text in between watching a Snapchat video and reading a blog.
On the other hand, living in a world of constant updates has also made this demographic more fickle and less focused. If a product or service isn't fast and available right away, they will move on to another option. Brand loyalty is certainly a concern with this younger generation.
So, what can brands do to build lasting relationships with these consumers? Gen Z believe and rely on brands to shape their world. They are gravitating toward companies who are adopting transformation-centric strategies, offering a transforming experience to their customers. Brands who do this are becoming essential parts of their lifestyles. We're seeing emotional connections developing with the apparel brands they wear, the food and beverage brands they consume, even the streaming platforms they favor.
As one of the lead (Gen Z!) stars of Stranger Things, Caleb McLaughlin, said in his acceptance speech at the 2017 MTV Movie and TV Awards, “Like, literally, where would we be without Netflix? When you’re having a bad day, what do you do when you go home?" To which he answered in unison with a majority of the audience, "Turn on Netflix.” Netflix isn't just a source for movies for this generation. It's taken on a bigger role (among others), providing consolation for their "bad day."
Offering a product or service is no longer enough to satisfy the demands of this upcoming generation. Businesses will have to think of the bigger picture value they can bring in terms of enhancing and transforming their consumers' lives.
Not Just Another Millennial Generation
While the connection to technology and the demand for experiences may make members of Gen Z seem a lot like Millennials, there are some notable differences between the groups. A Millennial, someone born between 1980 and 1996, can remember when it still took a phone line to get connected the Internet. For the most part, these individuals are not as dependent on social media and the web. However, older people are more likely to click on Internet ads.
Millennials also remember when layoffs and home foreclosures were commonplace. Facing these economic hardships has made them more attracted to sales and bargains. Conversely, a member of Gen Z is more likely to splurge on a purchase and use a smartphone to shop. It's no wonder brand merchandising is growing as a popular, profitable revenue stream to add to a business model. Brands are finding more and more value in investing in curating a collection of high quality merchandise and apparel to offer to their audience, as these young consumers are willing to spend more on products from their favorite brands if they find that those products enhance their every day lives.
The oldest members of Generation Z are just now entering college. While their purchasing power of is still relatively low, they will soon be the fastest-growing demographic in the marketplace and workforce. This younger cohort is also much more culturally diverse than past generations. Businesses would be wise to consider this diversity when trying to market to the younger generation.