We've all heard about Millennials and how different they are in terms of spending pattern and consumption behaviour. Well, they are in no way special. There has always been a shift in behavioural pattern every 20 years or so. Since Millennials have now achieved purchasing power, and they are the first ones to reach that point after the onset of the information age, the change is being watched and analysed by the whole world, possibly in awe.
From a marketer's perspective, this change that happens mostly in a 20 year interval seems frustrating, because after trying on so many levels only the industry may 'hack' the marketing 'tactic' that may produce certain results, but that statistics or data may become invalid or vain due to the shift to the next generation and with that, the behaviour too.
For those who are new to this whole 'Generational Segmentation', I would like to explain in very brief about the different segments of generations we have witnessed the past century [Source: Wikipedia]:
1) Baby Boomers - defined as those individuals born between 1946 and 1964.
2) Generation X - Demographers and researchers typically use birth years ranging from the early-to-mid 1960s to the early 1980s.
3) Millennials - Researchers and popular media use the early 1980s as starting birth years and the mid-1990s to early 2000s as ending birth years.
4) Generation Z - Demographers and researchers typically use the mid-1990s to early-2000s as starting birth years.
Currently, the thick meat for marketers lies in the Gen X and Millennial segments. For the sake of the length of the post and the context, I'd like to skip talking about Gen X and take Millennials only as the subject of analysis. I am noting below, only, the two main purchasing behaviours of those who belong to this category. [Source: Forbes]
1) Millennials want their purchases to make them feel good ie, they spend for experiences.
Research has shown that more than half of Millennials purchase from a brand which relates to them as a person, which helps them portray themselves more explicitly.
2) Millennials trust peer-generated endorsements.
Interestingly, it has been found that they avoid paying attention to direct advertisements from the brands and place more belief on word of mouth and product reviews.
All these are good data for marketers and they have been riding on it. But, as I've mentioned above, what next?
As millennials are getting older, it has started to create a new space, the 20 years old window is slowly coming to an end and is opening gates for the new segment, the Gen Z.
The new segment is only barely learning to walk, and for the same reason itself, they haven't exhibited sufficient patterns or traces for researchers to observe and to make sense out of it. But like always, looking backwards can help in predicting the future.
No, Gen Z isn't going to study from Millennials, rather from Gen X - says a study done by Bloomberg. “Gen X is raising Gen Z to look like them: autonomous, cynical, with looser reins,” said Corey Seemiller, professor at Ohio’s Wright State University who has conducted research and written several books on Generation Z. [Source: Bloomberg]
The above graph is one among the strong data clusters that clarifies the predicted similarity in behaviour between Gen X and Gen Z.
It's all good to know that Gen Z is learning form Gen X, but what's in it for marketers? The behavioural changes can be concluded as follows [Source: LinkedIn]
1) Gen Z is tougher and more resilient than the millennial generation.
2) Sees more value in education.
3) Seeks financial security after witnessing those born in the 80s and 90s incur massive debt.
Alright now we do have a clarity about their behaviour, what are they going to spend on? (The million dollar question)
And the answer is... they are going to buy.. nothing!?
I may sound hideous, but that's what their behaviour predicts. Instead of buying pricey items, they are going to save money by renting.
It's assumed that Gen Z is going to literally rent out everything - from real estate to clothes to furniture. Hence a new window could possibly open up for marketers, that is to build products or services with such caution that, the particular should preferably be in a subscription model and may be put up in a manner that can withstand changes in user patterns.
As a marketer myself, I hope that the trend predicted withstands time so that we could help Gen Z choose better, worthwhile products to rent. Thanks for reading :)