Redefining Marketing Strategies: How Brands Can Attract Younger Consumers (Gen Z & Gen Alpha)
Over the past decade, Asian consumer behavior has undergone a significant transformation. Gen Z and Gen Alpha, highly educated and culturally diverse, are reshaping brand engagement norms by prioritising authenticity and purpose-driven interactions. Marketing to these cohorts is a dynamic challenge as they redefine consumer engagement rules in a digitally saturated landscape. Gen Z, as digital natives, excels in filtering out advertising noise across various platforms.
Looking ahead, Generation Alpha, born after 2010, is set to be the largest generation ever, exceeding 2 billion by 2025. These young digital trailblazers will wield unprecedented spending power, reshaping the consumer landscape with an expected economic footprint surpassing $5.46 trillion.
This blog delves into the strategies that resonate with these young consumers, decode their digital behavior, and uncover the keys to successful brand engagement. Additionally, it explores how this demographic shapes talent and retention strategies.
Gen Z & Gen Alpha Are Rising With Their Distinct Marketing Needs
Every generation carves out its unique identity, distinct from its predecessors. But what sets Gen Z & Gen Alpha apart?
Photo by Christina Victoria Craft on Unsplash
Gen Z's Connection With Digital World
Gen Z, heightened advertising awareness reflects an understanding of the connection between free content and marketing efforts. Traditional tactics like lifestyle ads and celebrity endorsements fall short, with celebrity-endorsed content seeing a 25% drop in engagement rates on Instagram since 2020.
Brands need to prioritise authenticity and innovation, quickly capturing the audiences' attention in a digitally crowded landscape, while prioritising mobile optimisation and innovative engagement.
Take KFC Philippines for example, with their TikTok challenges and AI-generated films. By blending technology and creativity, it captivates and deeply connects with the digitally native audience. KFC's campaign reached an impressive 14.9 million impressions and engaged over 7.9 million users, showcasing the power of utilising popular platforms and interactive storytelling.
The Metaverse Evolution for Gen Alpha
While Gen Z favored fast trends and efficiency in retail, Gen Alpha's preference for immersive, IRL experiences is prompting brands to innovate, merging digital and physical assets. By viewing gaming not merely as entertainment but as a vital channel for creativity and skill enhancement, brands are seeing the need to delve into gaming platforms and the burgeoning metaverse to cater to Gen Alpha's unique gaming perspective.
Gucci's partnership with the NFT project 10KTF redefines luxury for Gen ZAlpha, blending exclusive digital accessories with immersive storytelling in the "New Tokyo" virtual world. This partnership, highlighted by the exclusive "Gucci Grail" NFTs, pioneers a digital-first approach in luxury fashion, appealing directly to younger consumers' evolving digital preferences.
Similarly, Alibaba's "Taobao Life" enriches online shopping with sensory engagement, allowing users to interactively design virtual spaces. This strategic move taps into the growing demand for online shopping in China, as evidenced by a live streaming session with top influencer Li Jiaqi, attracting 110 million viewers in two hours, highlighting the massive potential for engaging digital shopping solutions.
“Phygital” Transformation in Luxury Retail
The luxury retail industry has undergone a remarkable transformation, seamlessly merging brick-and-mortar resurgence with advanced omnichannel strategies. This smooth transition from Online to Offline (O2O) experiences has become highly efficient.
In Asia, particularly China, Gen Alpha significantly influences marketing strategies within its advanced digital ecosystem. Luxury brands on platforms like WeChat, Tmall, and JD.com engage this demographic, exemplified by Burberry's gamified shopping experience with Tencent in 2020 at their Shenzhen store.
Photo by Dezeen
Amorepacific, a South Korean beauty brand, embraced immersive retail by launching a VR shopping experience in the form of “New Beauty Land” in 2023, setting a trend in innovative consumer engagement.
These collaborations highlight the shift towards immersive retail tailored to Gen Alpha's digital fluency, signaling a broader trend where interactive engagements drive future marketing innovations.
Purpose-Driven Approach
Gen Alpha's dedication to purpose surpasses Gen Z, aiming to eliminate stigma and promote empathy. Brands must adjust their messaging to resonate with this compassionate perspective, especially mirroring Asia's rising mental health awareness initiatives.
South Korea's Kakao Friends, and innovative virtual reality mental health service, a collaboration between Kakao Healthcare and Korea University Medical Center, aims to revolutionise psychiatric care by offering virtual consultations with doctor avatars, enhancing accessibility and privacy for patients.
This upcoming virtual reality mental health service embodies a leap in accessible care, catering to Gen Alpha's digital familiarity, societal innovation trends and privacy concerns.
Digital Shopping Behaviours
It’s imperative for brands to reduce transactional friction with the implementation of digital wallets and mobile payments for the mobile-centric shopping generation.
In 2023, amidst economic challenges, digital innovations like AI catalysed a shift in commerce and payments, enhancing operational efficiency and security. Embedded payments are projected to hit $138 billion by 2026, with Paytm in India gamifying transactions for increased engagement.
Contactless payments are expected to reach $10 trillion by 2027, supported by 7-Eleven Taiwan's AI-powered autonomous stores, demonstrating a move towards seamless, secure shopping experiences that resonate with Gen Alpha's digital-first preferences and the global trend towards interactive, fraud-protected commerce using AI tools.
Customisation and Tech Integration
To increase customer retention, brands are putting a heavy focus on their efforts to personalising their customer journey. By creating a bond between consumers and brands, 84% of consumers are more likely to remain loyal.
This initiative led to a 45% increase in engagement among Gen Z consumers on the Chinese Shopping site Tmall, showcasing the effective integration of customisation and technology to meet the demands of younger audiences.
In Singapore, banks like UOB and OCBC are at the forefront of adopting AI to engage Gen ZAlpha, with UOB leveraging Microsoft 365 Copilot and OCBC enhancing task efficiency by 50% with its AI chatbot. With a focus on customer service and operational efficiency, AI has the potential to contribute up to $1 trillion annually to global banking, demonstrating the sector's strategic shift towards technology to meet the expectations of digitally native consumers.
Sustainability Is Ingrained In Gen ZAlpha DNA
Greta Thunberg, the big shift that led to an increase in Gen Z’s advocacy towards sustainable brands. Even with a generational division, Gen Zs wield the power to influence others, with Gen X showing the greatest change. In 2021, 67% of Gen X consumers will choose to support sustainable brands, a 24% increase from 54% in 2019.
Sustainability deeply resonates with Gen ZAlpha, where 95% of Chinese consumers preferred eco-friendly brands, a trend mirrored by Patagonia. Its commitment to sustainability through recycling and eco-conscious practices has not only bolstered brand loyalty but also led to a 69% surge in sales over recent quarters.
Photo by Toa Heftiba on Unsplash
Moreover, MUJI's rise in Asia, favored by Gen Alpha for its minimalist design and sustainability, showcases its success, achieving a remarkable growth rate that has propelled the company to a $2.7 billion valuation, demonstrating the brand's strong appeal among eco-conscious youth
DEI Matters For Gen ZAlpha: Shaping Consumer Decisions
There’s a high importance for DEI, with 41% of Gen Zalpha redirecting their spending from brands that overlook its significance. There’s a demand for all-inclusive products as seen from Fenty Beauty’s exceptional $100 million sales within their first few weeks of expansion in Asia.
Similarly, Shopee's promotion of gender equality and diversity has not only enriched the shopping experience but also catapulted the platform to the top, enhancing its market position in Southeast Asia with 375 million users in 2022.
Major brands like Sephora's commitment to doubling Black-owned brand offerings, Target's $2 billion pledge to Black-owned businesses, Walmart's $100 million investment to address systemic racism, and Nike's "Until We All Win" and “How We Do” campaigns all illustrate a strategic pivot towards inclusivity.
These efforts showcase how integrating DEI into business strategies sets a new standard for success in the e-retail sector, highlighting a direct link between a brand's DEI efforts and its appeal to the next generation of consumers.
Zara's Phenomenal Success Through Customer Co-creation Culture
To effectively engage Gen Z and Gen Alpha consumers, brands need to demonstrate a commitment to customer-centricity and innovation, as well as skillfully leverage influencer partnerships—a strategy in which Zara particularly excels. By engaging in strategic collaborations with local influencers, Zara has not only enhanced its social media engagement but also showcased its ability to blend global trends with local customs seamlessly.
Brands Are Building Localised Communities and Collaborations
Creator commerce thrives on authenticity and localised engagement – and the most successful creators are those who promote products and services within a carefully curated and localised community. Brands recognise the importance of this and are increasingly turning to creators who have a strong presence in specific regions or countries.
