As Gen Z’s Spending Power Rises, Companies Need to Adapt Their Marketing

Companies constantly want to know what is the best way to market to the widest audiences. While millennials represent the largest consumer group and baby boomers have the greatest spending power, Gen Z’s spending power is on the rise.

According to a Bloomberg report as of last year, young students and professionals have a disposable income of $360 billion. As that number grows, companies are scrambling to figure out how to market to this generation, and many are struggling to figure out how to get them to buy, especially since their spending habits differ dramatically from those of previous generations.

If a Gen Z member disagrees with a company’s morals, many of them will boycott the products altogether and urge their friends to do the same. What advertisers and brand managers learned years ago in their marketing courses is outdated. The best way to find out what Gen Z expects from companies is to ask them.

I asked Madeline Skrovan, a marketing student at Arizona State University, what she thinks about advertising to Gen Z consumers and what brands need to do differently.

Jeff Fromm: How can brands best reach Gen Z?

Madeline Skrovan: Not only is there hard data, but I can personally attest that social media is the best way to reach my generation right now. With the simplicity of ordering products online and the fact that most of us Gen Z have our mobile devices at all times, reaching this generation online is the best thing a brand can do.

I get ads on my Instagram feed every time I go to the app, and I’m guilty of clicking on them even though I know it will have at least two consequences: I’ll spend money on something I don’t don’t need and since I signed up I will be getting more ads. If brands could capitalize on advertising to Gen Z via social media, they would be very successful.

There are also many ways to do this. There are genuine paid advertisements embedded in users’ Instagram feeds, but there is also the use of influencers or brand ambassadors. Gen Zers like to stick together and are heavily influenced by the people they look up to. They like to follow trends. Having people they seek out to showcase their favorite products makes Gen Z consumers want those items as well.

It is also important to look at what Gen Z is passionate about. It has been found that my generation strives to be socially and environmentally responsible and is self-aware and passionate about mental health. We are more demanding, determined to succeed and ambitious. We value diversity and equality, family and success, and we worry about terrorism, gun violence and the economy. We’re a generation for people, and we tend to lean towards brands that align with beliefs similar to ours. If a brand can show that they support things similar to ours, then they are in an ideal position to reach members of Gen Z and earn our loyalty as consumers.

Fromm: Which brands best engage Gen Z?

Skrovan: Brands can do at least two things to better engage Gen Z: reach them via social media and align with their progressive way of thinking. Brands that are doing a great job of engaging Gen Z online are Nike and Duolingo. Nike is arguably one of the most popular brands in the world. They obviously have no trouble reaching consumers, but they continue to engage with my generation online.

I get served a Nike ad on Instagram every day, like clockwork. As a young person pursuing a career in marketing, I should know not to fall into the traps of click-bait and online advertisements. I’ve studied cost per click, reach, and frequency, and I know I’m about to make a decision that will result in more ads flooding my page. Yet I do it anyway because brands like Nike make it harder for us not engage. They have mastered catering to their audience and strategically run multiple ads across different platforms consistently.

Nike also engages with Generation Z from a moral standpoint. On their social media platforms, they feature top athletes and even “normal people” wearing their products. They show that Nike is for everyone, while simultaneously making us want to wear the same as world-class athletes like Lebron James and Alex Morgan. That’s why Nike is great with its advertising. They run engaging and motivational ads that cater to the ambitious and driven side of Gen Z. They also emphasize that anyone can wear Nike, people of all ages, sexualities and demographics.

Another brand that is doing a unique genius job of reaching Gen Z is Duolingo, an easy-to-use language learning app. Duolingo is leading the charge for TikTok advertising. They don’t even necessarily promote their brand in these videos. Instead, their giant, green bird mascot Duolingo participates in TikTok trends that Gen Z can relate to. They now have a massive following of 4.4 million people because they engage with Gen Z through humorous 15-second videos, forcing us to connect with their content and remember their name.

Gen Zers are more aware of their shopping habits than previous generations. We tend to pay more attention to what we buy and the effect our actions have on the environment. So, Gen Zers like to offer their support to brands that also think sustainably. The brands to highlight are Starbucks, Patagonia and Hydro Flask. Many Gen Zers have a reusable water bottle, carry tote bags, and appreciate companies that voice their efforts to eliminate plastic. Tote bags and reusable water bottles are current trends that many Gen Zers want to partake in, whether they do so for sustainable reasons or just to fit in with the rest of their generation.

Of : How do Gen Zers spend their time?

Skrovan: Generation Z is very social. This may be because a majority of the generation is in a very social period of our lives, especially the high school to college age bracket. Young adults depend on human connection at this stage of their lives. Gen Z have also grown up in a digital world and have a unique opportunity to connect with their peers both digitally and in person. Previous generations did not have this same luxury.

A big part of a Gen Zer’s life is social media, especially with the rise of TikTok over the past three years. More than 60% of TikTok users belong to Generation Z. This generation also represents around 40% of the current global population. In fact, next year, 74 million people in the United States will be Gen Z, making them the biggest generation of all, so reaching them would be hugely beneficial for businesses.

It’s safe to say that Gen Zers also spend a lot of their time educating themselves. These young people are ambitious and eager to learn new ways to improve the world around them. They educate themselves on social issues and take a stand in political conversations, social justice movements, and even organize rallies for various movements they believe in.

Partly out of social responsibility, thrift has also become popular among Gen Z, as they can battle fast fashion while finding trendy pieces. Gen Z are nostalgic for the clothing trends of past generations and frequently incorporate past trends into their own modern styles.

For example, fashion trends from the 70s to the early 2000s seem to have made a comeback in Gen Z wardrobes. Showcasing second-hand and unique clothing has become popular with Gen Z because it connects to their values ​​and highlights their personalities.

Fromm: What are some of the effects of COVID on Gen Z behavior and spending?

Skrovan: Living in a pandemic has forced us to do everything differently. We behave, think and consume differently. As a member of Gen Z, speaking on behalf of my generation, I feel like we’ve lost the human connection. I have now spent many of my young adult years living in a pandemic. I was graduating from high school when COVID happened, and I lost all of my “last moments” of high school like my prom and the proper graduation ceremony.

My university years have also been affected by COVID. I hadn’t walked into a proper college lecture hall until my sophomore year. Just when I had a sense of freedom as an adult, it was taken away by a pandemic. Gen Z in particular was forced to adapt to a socially distanced lifestyle as we were meant to live through the vital transition years from adolescence to adulthood.

After conducting a small survey of students at Arizona State University, I found that more than half of my peers agreed that COVID had a significant influence on how they spend money. ‘silver. It’s no secret that pandemic life has hurt the economy. Many members of my generation lost their jobs, so they had less or no income and therefore spent less. We spent most of our days at home, spending less money. Living a socially distant lifestyle for more than a year has led to more online shopping. Thanks to the same small survey of Gen Zers at my university, 78% say they buy most of their products online.

Contactless payment has also grown in popularity due to COVID. Online banking and payment services like Venmo, Paypal, and Apple Pay are very important, especially in the hands of young adults. Payments like these make it too easy to spend money.

Discovering how to seduce Generation Z will open new perspectives. The way the marketing world has been targeting consumers for two generations won’t work with this one. Their beliefs and values ​​differ significantly and they are willing to stop buying to force change. If companies want to sell to Gen Z, they have to change first. It involves meeting them where they are – online – and being authentic and socially responsible.