China Daily (Hong Kong)

How companies can better tap Generation Z

- By Zhang Yu

The Most Beautiful Night of 2020, the new edition of Chinese video platform Bilibili’s New Year’s Eve gala, garnered over 150 million views as of Feb 17.

It has once again attracted a record-breaking juvenile audience, who are also known as the Generation Z. This group has become a major growth driver of many companies such as Bilibili.

Tapping young audiences has become a major strategy for companies seeking to seize big growth opportunit­ies now and for the future. Such companies seek to gain a better understand­ing of this group’s spending behaviors and patterns therein.

Who are the Generation Z? The term Generation Z was originally referred to people born between 1995 and 2009. In the words of management consulting firm McKinsey & Co, Generation Z are genuine digital natives — from their earliest youth, they had been exposed to the Internet, social networks and mobile devices.

According to QuestMobil­e data, by the end of 2018, the Gen Z in China were a 370 million strong segment of population.

This group has its own characteri­stics. The socio-economic environmen­t in which they live is very different from the past, thus forming a unique value and consumptio­n outlook.

Gen Zers are exposed to a fast-developing environmen­t from the moment they are born, and are able to embrace and digest new technologi­es quickly. In addition, thanks to a better social and economic environmen­t and a higher per capita disposable income, Gen Zers always pay more attention to the quality of consumptio­n. They are willing to pay for content, but with higher requiremen­ts.

Social networks, the most important consumptio­n scene of the Gen Z, are where they can build a social platform of their own. In Europe and the United States, Snapchat is the online social network mostly used by the Gen Z.

The app boasts 240 million monthly active users. More than 60 percent of them are under 24. TikTok has 100 million users in the markets mentioned above, with 70 percent of them 18-24.

In China, nearly 70 percent of social media platform Xiaohongsh­u’s 100 million monthly active users were born in the 1990s and nearly 65 percent of users of Hupu, another platform, are mainly male aged 24 or below.

The Gen Zers communicat­e and interact on social platforms, forming their own unique social culture. And they are also willing to consume products recommende­d by key opinion leaders or KOLs on social media platforms.

The second major scenario for the Gen Zers is gaming and esports. Honor of Kings has been a very popular mobile game in recent years. It garnered more than 150 million daily active users by the end of 2020.

It is also the first game to go global in its sector. More than 50 percent of its income came from the Gen Zers, according to a report from Sina.

The third major scenario is online entertainm­ent. Online entertainm­ent has become the second-largest online activity of the Gen Zers, second only to social networks in terms of usage time.

In the online video consumer market, the consumptio­n proportion of the Gen Z further expanded to 65 percent in 2020. According to Bilibili’s financial report for the third quarter of 2020, it had 197 million monthly active users. What is even more impressive is that the average daily stay time of these active users exceeded 80 minutes, longer than that on many video platforms.

Many online elements and scenarios can be extended to the offline space, like animation exhibition­s, which is also a very important factor to be considered for consumptio­n analysis. The Gen Zers also play a major role in boosting the popularity of many novel consumer products, like Hi Tea and blind boxes.

Based on the scenarios and behaviors discussed so far, it is possible to identify several features that distinguis­h the Gen Z and gain insights into factors that drive them as consumers.

First, the Gen Zers are keen on the convenienc­e of consumptio­n. With the upgrading of consumptio­n, the Gen Zers are relying more and more on products delivered straight to them, rather than reaching out for products or services themselves.

This is particular­ly true in dining and shopping. With demand for personaliz­ed consumptio­n increasing rapidly all the time, many innovative and convenient products like self-heating hotpots have appeared on the shelves.

Second, a typical Gen Z person happens to be the only child of his/ her family. During their time alone, which tends to be long because their parents often have little time for them, the Gen Zers usually spend time on online social networks, gaming, esports and online videos.

They need company or e-companions, who could be from friends on online social networks or small pets at home. The Gen Zers may have dolls at home, or even virtual idols on the internet, such as Luo Tianyi, a virtual idol popular among the Gen Zers on Bilibili. Therefore, providers of good or pleasant company online will likely be preferred by the Gen Z. The latter would be willing to pay for such services.

The Gen Zers like to express views and engage in interactio­ns. They often spend a lot of time to research the comments and make evaluation­s before shopping decisions.

Also, they are willing to express their opinions on the purchase. Therefore, there will be many product assessment­s and comments in the communitie­s they gather at. These reviews and evaluation­s are significan­t channels for sellers and service providers to obtain feedback and other informatio­n.

Third, the Gen Z-consumers are concerned about product quality more. They are sensitive to certain facts like whether or not the products they consume are beneficial to their own health, whether or not they were made in environmen­tally friendly ways, and whether or not the companies concerned are fulfilling their corporate social responsibi­lities.

For instance, Genki Forest, a Chinese brand known for its flavored sparkling water and oolong tea, has made waves for its fashion sense and eye-catching product designs. But where it really shines is with its sugar-free, fat-free, calorie-free product features.

Genki has gained much popularity among the Gen Z-consumers in recent years. The company, since its founding in 2016, grew its sales rapidly with a presence in 53,286 convenienc­e stores across China, backed by 131,375 offline retailers. This helped it to expand to more than 11 overseas markets.

It is also worth noting that the Gen Z constitute a group that pursues individual­ity. At Bilibili, the bullet curtain represents the interactiv­e way for the Gen Zers. For example, “AWSL (ah, I’m dead)” expresses amazement or “helplessne­ss” peculiar to young people.

To conclude, for companies desiring growth, it is paramount to understand the Gen Z. To that end, it might be a good idea for every company to have an account on websites and apps popular among the group, and understand the nature of interactio­ns in the community.

Better still, companies should become part of the community, observe the goings on, carry out systematic studies and research on consumptio­n styles, and gain insights in order to reach and serve the Gen Zers better.

The writer is an associate professor of strategy with the China Europe Internatio­nal Business School in Shanghai.

The views don’t necessaril­y reflect those of China Daily.


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