Generation Z consumer behavior: What brands need to know
Gen Z consumers are beginning to flex their economic muscles, bringing different perspectives and expectations than previous generations. Brands need to adapt.
B2C marketers have long known the “4Cs” of branding guidance as “company, category, consumer, and competition,” or as “consumer, cost, convenience, and communication.” Now, as the oldest Gen Z members move into adulthood and bring their values and habits to their purchasing decisions, it’s time to think about the new 5Cs of marketing:
- Company
- Community
- Culture
- Circularity (aka sustainability)
- Customer
Gen Z had $360 billion in disposable income in 2021, a figure that’s sure to rise as the cohort ages and advances in their education and careers. They also have a unique set of values and a worldview unlike past generations, informed by their status as the first digital natives.
Building relationships with these consumers requires understanding the 5Cs and understanding how today’s consumers interact, think about identity, plan for the future, and see their own role in a digital-first world.
5cs of marketing: Company DNA is the core of brand identity
The most effective brand-building strategy draws on the company’s “DNA”– the heritage, assets, and history that shape the brand’s identity and help illuminate the path forward.
That DNA, deployed in the service of the company’s goals and mission, is the way to truly connect with younger customers who expect authenticity.
Identifying the company’s DNA and mission goals requires understanding its unique history and purpose, along with its goals. Beyond those core elements, it’s also important to characterize the company’s workforce and structure, so the brand can talk about them in a way that aligns with the DNA and mission.
When all these elements are defined and understood, it’s easier to see which company assets are the best to leverage in brand building.
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Community spans digital and physical experiences
Finding community is important to most of us, and for younger consumers, community can spring from nontraditional sources, making it a focus for the new 5Cs of marketing. Sixty-two percent of Gen Z and millennials think brands can create communities centered on specific interests.
These interest-based communities not only build brand loyalty and create connections among brand fans, but can also drive collaboration that translate into new products, brand experiences, and value.
For example, one global toy brand has fostered the development of a brand-centered community on its creator website. The site is a collaborative platform where users share the results of building “missions” at different skill levels, participate in design challenges, and even shepherd their ideas from initial submission to production by earning enough support from within the community. Visitors can buy building sets based on user-generated ideas, reflecting a range of creativity that spans fine art, engineering, children’s literature, history, and other domains.
This community is large and enthusiastic enough that it’s extended to other platforms. A subreddit dedicated to the brand has more than 8,000 members who share their builds and campaign for support. Some of these builders also post videos on YouTube, extending the community’s reach even further.
This kind of organic community activity strengthens brand loyalty and provides data brands can use for segmentation and product development. That data can also allow businesses to connect with various segments and subsets within micro-communities for more niched and direct engagement.
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5Cs: Global culture & self-expression
Culture is always evolving, and for younger consumers who’ve always had access to the whole world online, culture is increasingly global rather than siloed by geography.
Consider the rise of K-pop groups that have fans worldwide. Over the past decade, the K-pop phenomenon has spurred global enthusiasm for music, films, and television shows from South Korea, while streaming services make it easier for fans to access content from anywhere.
By Q3 2020, shows from outside the U.S. made up almost 30% of shows streamed by U.S. viewers.
At the same time, younger generations have adopted their own ideas about gender in general, and 59% of Gen Zers say online profiles and forms should include additional options for gender. Masculinity, in particular, is a more malleable concept among young consumers who are less invested in traditional gender roles.
As attitudes shift, so do buying habits. By the end of 2022, the global men’s beauty and personal care market will be worth approximately $166 billion.
The takeaway is that brands who support and reflect an inclusive culture are more likely to resonate with younger consumers and build lasting relationships with them.
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Circularity as a business model, not just marketing
Today’s consumers are wise to greenwashing tactics in marketing. They’re also deeply concerned about the future of the planet, and their shopping choices reflect that concern.
For example, 90% of the active users on one global clothing resale platform are younger than 26. The platform allows young consumers to update their wardrobes frequently without buying new, unsustainable fast fashion. They can also resell their clothes when they’re ready to pass them on.
Major brands are also becoming more sustainable by reclaiming and repurposing their used products to make new items without tapping new resources.
One athletic shoe brand has a program which turns the rubber, leather, textiles and other materials from worn-out shoes, unused material, and scraps from manufacturing into new products. The initiative also provides recycled materials for other companies to use in a range of products from flooring products to playground equipment and laptop sleeves.
By demonstrating a commitment to circularity, whether that’s through recycling, reselling, or another sustainable practice, brands can connect with customers who want to see evidence, not just messaging, about eco-friendly initiatives and business models.
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Customers’ starring role in the 5Cs of marketing
Younger customers expect to gain real value from brands’ stories. That’s true whether the brand centers customers in its story or offers an aspirational vision of how customers would like to see themselves.
Gen Z is the most racially diverse U.S. generation so far, and as digital natives they grew up using filters, so Photoshopped models that represent outdated beauty standards are unlikely to generate much interest.
Instead, 82% of Gen Z consumers find brands more trustworthy when they include real customers in their ads. Celebrity endorsements don’t hold a lot of sway over this group, either – just 26% say paid spokespeople increase their trust.
When younger consumers like and trust a brand, they’re more likely to create their own content about it. This ties back into the idea of community, where self-appointed brand evangelists post product ideas, tutorials, product reviews, and other content.
Ninety-one percent of Gen Z shoppers look for user-generated content from other customers before they make a purchase, and one-third won’t buy if there’s no UCG from people who own the product.
Brands that create authentic marketing messaging, including real customer images and user-generated content, can establish credibility with younger consumers and earn their loyalty. These brands can also build the resources to connect with micro-communities of customers with refined messaging, rather than speaking to all customers in the same way.
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Adapting for the future
Adapting the new 5Cs of marketing requires a mindset shift and ongoing insight into the attitudes of today’s consumers. It also requires new strategies.
Putting the customer at the center of the brand story, cultivating an enthusiastic community, practicing circularity, and embracing a more inclusive culture are the keys to branding for the newest generation of customers.
