Behind every thriving business is a great product – but excellent products are not ultimately the secret to a company’s success. Rather, due to our ever-changing world, businesses will flourish to the extent that they recognize who their customers are and discern what they most value – and, accordingly, understanding who controls the market.
While Millennials (Gen Y) have taken center stage in recent years, driving marketing campaigns and brand identities, this group will soon be eclipsed by Gen Z. By 2026, this group – born 1997 to 2012 – will dominate the U.S. population at a whopping 82 million.
Already, Gen Z-ers make up 40 percent of global consumers and command nearly $140 billion of spending power in the U.S. Plus, 24 million Gen Z-ers have already celebrated their 18th birthday – which means that many of them have begun taking their seats in higher education and in the workforce.
Understanding the values and spending habits of this generation, then, is more important than ever for the success and longevity of businesses. But gleaning valuable insight into this group of consumers requires more than a glimpse into their preferences. Rather, it requires an analysis of their defining characteristics – and their defining moments, too.
Dr. Heather Dretsch, assistant professor of marketing at Poole College of Management, recently conducted a survey of Gen Z-ers aged 18 to 23 to determine what this up-and-coming generation values most. And, for Dretsch, this included understanding how COVID-19 is shaping their mindsets.
“One defining characteristic of Gen Z is that they grew up with technology, the internet and social media, so they may be more insulated to the sudden shift toward virtual learning, e-commerce and physical distancing – and certainly more agile,” Dretsch says. “But what we don’t know is how the emergence of COVID-19 might affect their relationship with brands.”
To begin her study, Dretsch took a cue from a Boston Consulting Group (BCG) study of Millennials and asked Gen Z survey participants to select a quote they most identified with. “Asking a consumer group to describe themselves with a quote is one of the best ways to get inside their heads,” Dretsch explains.
While BCG found that a majority of millennials identified most with “I can make the world a better place,” only 23 percent of Gen Z-ers in Dretsch’s study selected this same statement. Their preferred response? “I take care of myself and the world around me” won out with 40 percent of survey participants. Another 13 percent chose “It’s a great day to be me.”
“Gen Z and Millennials share an inherent optimism and confidence,” Dretsch says. “But I’ve found that Millennials are more of a me+ generation. Gen Z-ers, on the other hand, think more about tying their own personal success to empathy and care for others.”
For this reason, Dretsch has found the brands that Gen Z-ers most resonate with right now are ones that provide them with the greatest functional benefits and help them satisfy basic needs. Brands like Apple, Microsoft, Lenovo and Samsung stand out because they help them stay connected to the world around them, while others like Crest, Colgate, Dove and Old Spice stand out for personal health and grooming.
“We can relate this back to their values,” Dretsch says, “They want to personally succeed, even in the midst of the COVID-19 global pandemic.”
Similarly, Gen Z-ers are attracted to brands that offer a source of comfort due to their quality, consistent performance and dependability. Big brands like Lululemon, Toyota and Aerie stand out to Gen Z-ers for offering the combination of comfort and reliability they are looking for.
“Comfort is a source of confidence for Gen Z-ers,” Dretsch says. “Enabling them to feel more comfortable as they try to achieve their goals is key.”
From her data, Dretsch also identified the three most defining characteristics of Gen Z-ers: independent, family-oriented and driven. These traits lead Gen Z-ers to connect deeply with brands like Nike that they believe embody their worldview. They find that Nike’s “Just Do It” slogan matches their determination to challenge themselves, make themselves better and take care of the people around them.
Thus, as coronavirus wreaks havoc and produces widespread uncertainty, Dretsch observes that Gen Z-ers are concerned with remaining positive and seeking to be part of the solution. She has also found that the pandemic has led Gen Z-ers to place more value on kindness, respect, integrity and loyalty.
“Compared to six months ago, they speak with more frequency about how they treat people and how they want to be treated,” Dretsch says. “Brands that offer a touch of friendliness and a do-good message, along with their reliability and comfort, will resonate most with them during this time of uncertainty.”
This post was originally published in Poole College of Management News.