What makes these two priced digital consumer groups tick and what are they after?
Businesses have spent so many resources on studying Generation Y (a.k.a. Millennials, those born in the early ‘80s to 2000) due to their retail and economic impact. But just as they’re gaining ground in understanding this $600 billion demographic, they now must also keep their eyes peeled for its younger siblings, Generation Z (post-millennials, born 1996 and 2010), for their projected additional spending power presently at $44 billion annually.
While it’s tempting to lump Generations Y and Z together, as there’s not much generation gap between them, various researches reveal that their tendencies and motivations are actually quite different.
Where Gen Y and Z Part Ways
How these two generations turned out to be can be traced back to two major factors: the environment and the generations that nurtured them.
Generation Y were raised by baby boomer parents, while Generation Z are being raised by Generation X parents. Baby boomers are a hard-working and goal-oriented group, which placed so much value on their career that they’ve inadvertently raised optimistic-minded children in Generation Y.
Having achievers as predecessors (Boomers and Generation X) and growing up in a fast digitizing world, Generation Y is the most educated group in American history and so tend to want and demand more. Not only that, they also have a bargaining chip in their projected spending power possibly reaching $1.4 trillion by 2020.
Generation Z, on the other hand, were born in a world experiencing political (post 9/11) and economic (recession) turmoil. They were raised by Generation X parents, which according to Inc. make up the bulk of startup founders. For these reasons, Generation Z is more practical and pragmatic to the point of foregoing college in favor of entrepreneurship.
Presently, their spending money mostly still comes from their parents, but a study revealed that it doesn’t matter because they influence 93% of all household purchases. Not only that, come 2020, they will comprise 40% of American consumers, the biggest to date, hence, the need to get to know them up close and personal.
In terms of habits, as the true digital and mobile-native generation, Geny Y are far more attached to screens and have an even shorter attention span than millennials. They’re also aware of their older siblings’ “entitled” reputation and wants nothing to do with it.
In the workplace, Generation Y prefer a team and collaborative atmosphere, but Generation Z lean towards competition and individuality. Moreover, Generation Z prefer face-to-face contact rather than digital, unlike Generation Y.
Quick Insights into Gen Y and Z shopping habits:
Where They Come Together
These young demographics make up majority of the connected and “always on” generation, and so gravitate towards online entertainment.
Quick Insights into Gen Y and Z entertainment habits:
They’re both well-informed and they love interacting and sharing experiences through various social platforms. They also champion social activism, uniqueness and authenticity and so tend to rally around real people “influencers” more than celebrity endorsers. In terms of shopping, both surprisingly prefer to shop offline or in-store and are price-conscious.
How to Effectively Market to Gen Y and Z
With a combined spending power of $350 billion presently to 2020, it’s imperative for businesses to meet these groups where they live, work and play. And since they’re glued to their mobile devices wherever they may be physically, the marketers’ focus should be on the creation of engaging, worthwhile and platform-specific mobile experiences. Luckily, they don’t have to dig far and deep, because, according to a recent research, they basically lay themselves open, so businesses can create and build the experiences they want.
Gen Y and Z want a mobile experience that:
Surprises and challenges
Is consensual and contextual
Reflects and aligns with their taste, activities and/or location
Gives them a sense of self-determination
Has content they can act on now and save for later
How to lure them in-store?
Retailers must shift from a product to an experience-centric approach. They must recognize that the future of shopping lies in the individual and collective experiences of these consumers throughout their journey. To lure Gens Y and Z into the store and engage them, businesses can leverage video technology trends such as AR/VR and 360-degree — which are great vehicles for gamification. They can also employ value-adding strategies such as diversified payment methods, engaging rewards programs, convenient delivery and/or pick-up options and painless return policy, to build a relationship with these demographics.