Why targeting Gen-Z is really lazy marketing
If you were to believe the description of Generation Z (or Millennials before them) depicted in the media you would assume they are some undiscovered new species, wildly different to the rest of society.
Headlines abound about their views on work, environmentalism, alcohol, politics and more. They are called Snowflakes and accused of being soft. They are portrayed as ‘Other’ compared to what is the historical norm.
This opinion is especially apparent within the Marketing discipline. Brands create new products and services specifically targeting these groups, marketers spend hours thinking about how to target them in pursuit of youth and “coolness”, and agencies actually employ Gen Z consultants to help get into young people’s minds.
But in reality, this is, to put it kindly, idiotic.
There are two reasons why.
1. They’ve got little disposable income
The first is that younger generations are less likely to have disposable income relative to older generations. Given the role of marketing is to generate incremental sales, that’s a pretty big miss and worthy of its own column.
But for expediency, I’ll quote something from a column by Alex Murrell:
The over 50s spending is so high, in fact, that they account for the majority of value in many categories. Campaign found they make up 60% of all car sales. Lonely Planet claim they account for 58% of spending in travel and tourism. Barclays believe they are responsible for 58% of hospitality and leisure sales. Kantar found they account for 50% of healthy and beauty value sales and Nielsen report that they make up 49% of all FMCG sales.
To put it bluntly, the over 50s are the most valuable generation in the history of marketing.
And yet they are ignored by almost all advertising.
2. Gen Z is not a real marketing segment
Secondly, and the focus of this article, using generations as segments presumes that everyone within a generation is the same as the others yet somehow wildly different from other generations. In essence, they treat a generation like a marketing segment — and they really, REALLY aren’t.
What is the value of segmentation?
The idea of chopping up your customer base or the market in which your brand operates into segments can be for a couple of reasons.
At a marketing strategy level, segmentation is part of developing a diagnosis of your market. To quote Professor Mark Ritson:
One of the great errors of market segmentation is thinking that this step is somehow about you or your company. The clue is in the name ‘market segmentation’. It has nothing to do with your organisation and everything to do with the market. That means, in theory at least, your competitors could build exactly the same segmentation as you. Segmentation is not strategy, it is a map of the market and therefore part of the diagnosis.
At a more tactical CRM level segmentation is about your own customers and their interaction with you. Whether you’re looking at their value, their habits and tastes, their product holdings or more, the idea is to build a map of your customer base.
In each case, though the point of segmentation remains the same — to target your efforts and your finite marketing budget towards those segments you deem most appropriate for your marketing strategy. And just as importantly those that you are choosing NOT to focus on.
What is a segment?
If we’re going to talk about treating a generation as a segment we need to explain what makes a segment. A real segment.
A simple definition is a group of people who all have at least one common trait. Against that definition, you could describe Gen Z or Millennials as a segment.
But it’s not that simple. In order for a segment to be useful it needs to satisfy a few criteria:
- It needs to be homogenous within itself i.e. the people within a segment need to have key similarities.
- It needs to be heterogeneous from other segments i.e. each segment must be different to the others.
- It needs to be big enough to be useful. There is limited use of a segment of 10 people — it becomes uneconomic to alter the marketing mix for a group that small.
- But it also needs small enough to be actionable so that it meets points 1 and 2 above. The bigger the segments the less homogenous they become.
- They need to be relevant to the brand or objective you are working on. Building a segment around a customer’s tastes in fashion is useless to a brand in the DIY sector.
Let me give you an example of this in practise.
Back in my distant past at GAME, the UK-based video game retailer, we built a segmentation based on the genre of games customers bought.
Lads League were into sports and driving games, Elite Gamers were into First-person shooters and action games, and it was fantasy and strategy role-playing games for our Fantasy Fanatics. There were seven segments in total.
Each group was distinct from the others, the behaviours tracked were clearly relevant to selling video games and each group was big enough to be valuable but small enough to retain their homogeneity and distinctive character.
We used them to target CRM comms for new product releases. They were invaluable in explaining the changing face of who is buying games to video game publishers. They allowed us to make choices on who we would and wouldn’t focus on throughout the year.
In short, they were proper segments.
Generational groups are not segments
Gen Z (or any other generation) are not homogenous in their attitudes and behaviours, and in lots of ways they aren’t really that different from everyone else.
To illustrate the point, please have a look at these date range definitions of the generational segments.
Taking Millennials as an example, are we truly to believe that a person born in 1980 (and at the time of writing is 43) is the same as someone born in 1995 (28 years old now)? Of course not.
Even the people within those generations don’t feel their generation is a huge part of their Identity. Again, according to IPSOS:
…what cannot be assumed is that consumers themselves will identify as a member of their cohort, or share the characteristics ascribed to each. Baby Boomers will have the greatest sense of being part of a wider cohort of people but are unlikely to see this as a key part of their identity. And among younger groups, an approach based on exciting generational identity will resonate with only a subsection of the overall target.
So the question is — why on earth do marketers use them as a segment to be targeted?
Well, I think you can put it down to two things: Marketer's penchant for focusing on youth (which we have already touched on) and flaws in research methodology.
Context and relativity matter in research
A lot of research considers generations in isolation and this leads to outlandish claims that lack context.
I really like the way IPSOS considers three lenses when looking at generational behavioural claims:
- Lifecycle effects: The idea that people’s attitudes change as they age, driven by life stages or events.
- Period effects: attitudes of all cohorts change in a similar way over the same period of time.
- Cohort effects: A cohort has different views and these stay different over time.
Lifecycle Effects — Younger people have always been vilified by older generations
It is a truth that through the ages, younger people have always been seen as different and looked at disparagingly. Indeed, Plato is quoted as saying:
“What is happening to our young people? They disrespect their elders, they disobey their parents.”.
In practice, this means where data allows we should be comparing Millennial and Gen Z attitudes and behaviours to previous generations when they were the same age.
That’s not always possible but it should always be considered when making conclusions. For example, Millennial turnout at General Elections in the UK is not really worse than Generation X when they were a similar age.*
Period Effects — Society is changing as a whole
There are changes in attitudes and behaviours that manifest across large swathes of society. For example, a much-touted theory about Gen Z is that they are more uniquely focused on Environmentalism. Not so according to IPSOS:
However, in one area where there is a lot of coverage — environmentalism — we find no evidence that Generation Z hold unique views, especially from Millennials. Society overall has become more likely to care about the environment, and few people of any age do not agree that it is a worry.
Any study or survey that looks at generations in isolation will attribute these changes just to that group specifically and is to be looked at with a sceptical eye.
Cohort effects are few and far between.
There are without doubt things that are impacting Gen Z disproportionately. Most of them relate to the worse financial context they find themselves in relative to Gen X and Boomers at the same age.
Research on the US and Southern Europe from the World Economic Forum’s Centre for the New Economy and Society* shows that younger generations are much less likely to own a home than previous generations were at the same age for example.
But these aren’t attitudinal changes. They’d like to own a house, according to researcher Gonzalo Paz-Pardo, senior economist at the European Central Bank — but they can’t afford to.
There’s also evidence that, in general, Gen Z are more liberal and less bound by traditions. They have significantly different views on crime and punishment (see below) for example.
But in general, there are few things that mark them out as truly unique that can’t be attributed to Period or Lifecycle effects. If they were truly unique then there would be a lot more attitudes and behaviours that could be attributed to Cohort effects but they just don’t show up.
If you want to segment, don’t rely only on age.
The brain is described by Nobel prize-winning Psychologist Daniel Kahnemann as “a machine for jumping to conclusions”. Our brains seek to avoid the cognitive strain that comes from rational thought. Essentially we prefer not to consciously think if we can avoid it and we like stories that make sense even if they aren’t true.
Creating a stereotype for Gen Z or Millennials gives us an easy answer to attitudes and events in our society and validation of ourselves.
It is true that Gen Z have some tendencies that make them different based on the environment in which they grew up but it is not true to say they are all the same and certainly not that they are completely different to the rest of society. There are way more commonalities than differences.
As Marketers, we need to look beyond something so overly simplistic like age as a targeting variable. Instead, you should consider the strategic objective that segmentation is supporting. What is the right targeting for that?
Not what is easy to write on a brief…
I am a Senior Marketing Consultant with over 20 years of experience across both client and agency-side specialising in CRM, CX and Loyalty. I have applied my knowledge across brands as diverse as Vodafone, McDonald’s, Volkswagen, Disney, Gumtree, Activision Blizzard and GAME.
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