Showing off environmentally-friendly shopping bags during car-free day in Bekasi, West Java, in August. (Antara Photo/Suwandy)

How Gen Z's Consumption Habits Are Changing Companies' Marketing Strategies


SEPTEMBER 12, 2019

Jakarta. Generation Z, the demographic cohort after the Millennials, aka those who were born between 1995 and 2010, apparently displays unique, transformative consumption habits that have started to influence the marketing strategies of companies around the world.

A study by McKinsey & Company revealed that Gen Z, digital natives who were already exposed to the internet growing up, exhibit different spending patterns with personalization and self-identity playing a bigger role than in previous generations.

The study, conducted in three major Brazilian cities – Recife, Rio de Janeiro and Sao Paulo – claimed Gen Z constantly searches for the truth, and thus values individual expression and avoids labels.

Their way of looking at the world is apparently more realistic than Gen Y or Millennials (born 1980-1994) who are idealistic and self-oriented.

The following are three "roots" of Gen Z's consumer behavior that companies need to adjust themselves to.

Gen Z Define Themselves Individually

Gen Z tends to avoid labels and is very self-reflective when choosing stores and products to shop. Around 48 percent of Gen Z value brands that don't classify items as male or female, as opposed to 38 percent in other generations.

A 23 year-old female respondent from Goiania said she prefers unisex products and thinks that fabric is genderless. She considers it absurd that stores and brands split everything into male and female.

Consumption is a vehicle of self-expression for Gen Z. They don't mind paying a premium for personalized products that highlight their individuality. Companies need to be flexible to cater to the demand for customizable products and balance it with the existing scale-oriented mass production.

Gen Z Is Radically Inclusive and Tends to Mobilize Around Causes

According to an online survey conducted in Brazil in 2017, around 80 percent of Gen Z agree they will stop buying or spread words about brands that conduct macho marketing campaigns. Seventy-nine percent will stop buying brands that conduct racist campaigns and 76 percent will avoid brands that conduct homophobic campaigns.

Companies are recommended to take a closer look into more inclusive marketing and pander to causes that Gen Z consumers care for.

The first thing Gen Z consumers do is see if a company's actions match their ideals. They will quickly find all there is to know about a brand and develop a strong point of view about it.

Seventy percent of the respondents in the study said they would purchase products from companies they think as ethical, and 65 percent of them said they would try to learn the origins of everything they buy.

Gen Z Is Realistic and Pragmatic

Gen Z analyzes what they buy and define consumption as having access to products or services, not necessarily owning them. They seek unlimited access which they find readily in ride-hailing services, video streaming and subscriptions.

Thus, companies may need to rethink their value-creation models to make them more accessible and leverage a more direct relationship with their customers.