‘Millennials on steroids’: Is your brand ready for Generation Z?
Through a special arrangement, presented here for discussion is a summary of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
Born between the mid- to late-1990s and 2010, Gen Z is coming of age in the era of Instagram, coming of age post-the Great Recession, and coming of age when an African American president and multiple women running for the title is a political reality.
It’s still early days for Gen Z, but already one defining characteristic is abundantly clear: This generation is WiFi enabled. If the Millennials are the "digital natives" — so named because of their comfort and seemingly innate facility with digital technology — then this age bracket might be the "internet-in-its-pocket" generation, according to David Bell, professor of marketing at Wharton.
"The big difference between this generation and others is the fact that kids today carry personalized computers around with them in their pockets all the time," he says. "They can exchange information, communicate and share ideas, and [companies and brands] have 24/7 access to provide them with opportunities to shop."
Photo: RetailWire
While Millennials don’t remember a world without computers, Gen Z does not know a world without constant, immediate and convenient access to the web. Their ease with digital technology presents both opportunities and challenges for the companies that want to reach them. On one hand, companies have a lot more information about these young people whose digital footprints are rich with data, although marketers are still challenged on what to do with that information.
There’s another problem, too, says Keith Niedermeier, an adjunct professor of marketing at Wharton. Gen Z is elusive. "Traditionally, brands love to target people in their teens, despite their lower purchasing power, because they want to lock in loyalty early in the game," he notes. "However, the conventional wisdom now is that Generation Z is fickle, harder to reach and harder to lock in.? As a result, there seems to be a lot of inaction inertia on the part of companies."
Companies may have to put more resources toward managing and influencing opinions online to build exposure, brand awareness and loyalty. Yet members of Gen Z are not wedded to any one form of internet-enabled self-expression.
The fragmented media use presents a challenge for companies trying to reach members of Generation Z, says Prof. Niedermeier. "It’s not easy to get to them in a mass way," he says. "They use so many different social networks and they’re also highly influenced by others’ opinions and word of mouth, which makes it much harder to spin a brand story."
Discussion Questions
Do you see greater challenges for retailers and brands attempting to reach Gen Z versus Millennials? What obvious and less obvious challenges will this more digitally rooted generation present?
Poll
BrainTrust
Max Goldberg
President, Max Goldberg & Associates
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
Every new generation presents challenges for retailers and marketers. Why should the next generation be any different? The problem for marketers is that they have yet to get a handle on Millennials and digital media. They have yet to crack the code of effectively using the Internet to create brand loyalty. Until they stop using social media to sell and start listening to their customers, marketers will face confusion with Gen Z.
I believe that Gen Z holds vast potential both financially and brand equity-wise for those willing to acknowledge, embrace and address who they are and what they represent. If done correctly, Gen Z will give you both their hearts and their wallets for years to come. A recent study done by FITCH found that Gen Z is diverse yet tribal, digital natives yet guarded, expressive yet open minded and shrewd yet optimistic. They have an attention span of eight seconds so it is imperative to make your point quick and meaningful. They will support brands that stand for something meaningful (Tom’s Shoes, Finish It). They live in a shared economy and value experience over ownership.
Gen Z are too street smart and savvy to be swayed by traditional promotional and advertising tactics. Any brand or retailer that does not address this future buying group will be marginalized and left behind. They want to help and repair the world and will support any brand that consistently demonstrates this shared value in their actions.
Retailers who are used to mass channels like television are going to have to work a lot harder in the digital age. Tools that can coordinate social media messages across multiple venues are going to be a must, along with some serious “voice of the customer” insights. This can only be a good thing for the industry.
Gen Z versus Millennials represents a different set of challenges because each grows up in a different context and desires to stand apart from the last generation. Some research from the U.K. suggests that unlike Millennials, Gen Z is a conforming bunch already plotting their future yet they want to stand apart and favor unique brands.
The whole idea of locking them into a brand constellation as teens has become an entirely outdated concept. Marketers will need to go where Gen Z goes, and that is all over social media especially visually rich and video-heavy channels such as YouTube and Instagram. And don’t dare tell them that they can’t change the world, members of Gen Z are the ultimate in individuality and far less likely to be wooed by marketing messages.
Gen Z will be easier in some ways then Millennials were. Why? They operate in hordes, just like real zombies do. I have, oops, HAD a couple Zs in my camp and this was the way that they operated. They also are not just used to technology they are addicted to it: from hand-held devices to consoles that house their core entertainment — video games.
For retailers the Z Challenge will be one of locking onto trends that the hordes are most likely to follow, grabbing your chunk of the wallet, and getting out. It is a new type of PROMO. Having a true HALO character in your store for a sale will draw them in and they will spend. Apparel that is similar to some worn on The Walking Dead will sell. Last, having store associates use Nintendo-looking cases vs. straight iPads will hit the social network fast!
Gen Z: the new Z Nation (on every Friday evening on Syfy channel — yes they watch this show too!)
Every generation has its “personalty.” We all understand the different generations, so there is no excuse to not take advantage of this information. Furthermore, recognize that this is the current and future customer. If you choose to do business the way you’ve always done business without adapting you become a dinosaur. And we know what happened to dinosaurs.
If what Prof. Niedermeier says is true and it is “much harder to spin a brand story” with Gen Z, then maybe it is time to stop “spinning brand stories” and instead simply be authentic. I believe authenticity will be highly valued by this generation that has to sift through all the digital noise to find brands/information/products with relevance and meaning. Authentic brands tend to rise above the noise and are ripe for that word of mouth Gen Z is apparently already becoming known for.
On a side note: I’m curious about the generation after Gen Z. (What do we even call them?) My three year old is very much into YouTube and Netflix. Of course there are no ads on Netflix, and with YouTube he presses “Skip Ad” nearly every time, even if the ads are for toys, snacks and such. The rare occasions we watch network TV, he tunes out the ads all together. (When I was a kid they had my full attention!) I’m already seeing the “I don’t have time for ads” attitude, and he is three. As a mom, I am proud. As a marketer, I am wondering how we will reach him in 15 years! I don’t know the answer but I am pretty sure authenticity will play a dominant role.
The material challenge at hand for many large retailers remains actually enabling their business models to meet growing customer expectations to buy product where and when they want to, and in turn, having the logistic and inventory capabilities to fulfill orders per customer preference, etc. Getting all that accomplish can then be the foundation to meeting the more nuanced demands and preferences of both these digitally rooted generations (Millennials and Gen Z).
In terms of retail attitudes, the biggest disparity we see in any demographic now is age. Young people, forget what you call them, have very little infinity for stores, period. Unless it’s a brand that is already hot online, the physical environment is an afterthought for them. This does not smell good for many staid/huge brands here in the US. The era of “warehouse” is now the era of “warehouse in your hand” — no need to actually go to one.
To us, the changes that are going to have to occur in physical retail are the biggest challenges caused by young people that we’ll all be faced with in the coming decade. Digital is the tool, young people are the cause and better stores will eventually be the effect.
Today’s internet traveler is bound to discoveries limited to the roads they use. Very few people of any demographic culture are capable of surfing the net without using the controlled limits of free third party search engines. Remove the shackles of any or all of these search engines and you will find yourself smack dab in the middle of an e-commerce village or a social media gathering of uselessness.
Maybe creating a search for product info, product pricing, product availability and product community posters and blogs is an answer for the time honored consumer practice of letting someone else do it for them. Facebook, Twitter, Alibaba, and Google and the rest are not getting it done for businesses and maybe not even their own. It is up to businesses to make the change instead of waiting to be liked or found.
Yes it’s a much bigger challenge for retailers and brands going forward. Beyond the Gen Z behaviors and preferences, the channels to reach Gen Z are also changing rapidly.
This constant change in channels, sales and retention techniques — web, marketplaces, mobile, Netflix, soon Apple TV — is already leaving the technology adverse retailers and brands in the dust.
When will marketing learn that it isn’t about marketing any more? It is about serving the customer. You can’t sell them anything … including your brand story, per se.
Know your customer and give them what they want, and I don’t mean products. Figure out the ways that you can serve and delight them.
‘Nuff said … and that’s my 2 cents.
While Gen Z and those that come after them — Gen AA? Gen Alpha? — will no doubt be digitally influenced, what’s to say that will be the only or even primary influence? Our parent’s (and in some cases our grandparent’s) generation(s) were inalterably shaped by the twin traumas of the Depression and WWII, so what’s to say Z and “AA” won’t be shaped by the Great Recession and the coming financial apoc…er “adjustments” that come from the mass retirement of the Baby Boomers? I think the main marketing message of the next few decades will be financial security (or the lack of it)…and there’s no app for that.
Retailers have to constantly adjust their tactics and strategy as demographics and geographic income level change over time. Adjusting to Millennials and Gen Z is no different, except the technology-driven mobility is throwing store strategies in a loop. Omnichannel and mobile are givens, the challenge is how to deploy technology cost-effectively in the store to help with the shopping experience and create online options for those who buy online only.