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HOW (AND WHY) TO BUILD GEN Z LOYALTY

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This huge young generation of Gen Z already has significant buying power and it holds the key to the industry’s future. Here’s why they’re different, and how to market to them.

Now that Gen Z accounts for 20% of all U.S. consumers, marketers are courting the segment to build brand loyalty for both now and the future. After all, this group of 11- to 25-year-olds has an estimated direct buying power of $143 billion, according to Jennifer Pelino, exec vp of the IRI Media Center of Excellence.

ON THE RADAR

These facts have been on the radar of marketers for some time now. After all, building loyalty within this growing segment is key to the future. Details about Gen Z — and how to market to them — are outlined in Understand Me, Don’t Define Me, a white paper from IRI, the Chicago-based market research firm.

Pelino, an author of the white paper, says brands making the connection with Gen Z drive an average of 14 times greater dollar growth opportunity versus other generations. This is based on sales of New Product Pacesetter/Rising Stars products identified by IRI.

We’ll start here with three of IRI’s recommendations for moving forward, and then focus on insights about Gen Z within the report.

1. Understand their needs and motivations, notably that they are consumers who are multidimensional and ever-changing. Create a feedback loop that allows you to consistently connect with them — and make sure you are able to integrate those learnings into their actual behaviors to fully understand how their needs and motivations translate to their omnichannel retailer and brand choices. For Gen Z, shopping is an adventure and finding new products is fun. But they also have serious buying power and hot buttons that differ from previous generations.

2. Be transparent and authentic when messaging and connecting. Strive to stand for something good, whether it is a societal message or one of sustainability.

3. Meet them where they are, focusing on video, Advanced Television and gaming. Prioritize the platforms that influence them, including TikTok, Snap, Pinterest, Instagram and YouTube. Brands can use Deterministic Purchase-Based Audiences to help them find and create the right audiences that connect the right messaging in the platforms they view.

Pelino cites seven important factors to keep in mind when marketing to Gen Z:

—Have appealing packaging.

—Market in a gender-neutral way.

—Make sure your message feels authentic.

—Understand what Gen Z members want/need.

—Make them want to know more about.

—Show you genuinely care about the environment/sustainability.

—Support a cause(s) Gen Z members believe in.

With this as a backdrop, let’s drill down on Gen Z itself. Pelino says the group’s tech savvy has unprecedented power to influence not only its peers but prior generations. But she warns that it’s important not to label them. Gen Z’s racial and ethnic diversity gives them deep and genuine acceptance of what makes people unique. Rather than trying to conform to social, societal or political constructs, they embrace individualism.

To drive sales, marketers should be helping them explore and experience the fun of trying something new. Connections between what brands say and their packaging relay immediate cues to authenticity (or lack of it). If you tout a sustainability story but wrap your product in layers of plastic, your credibility is shot, she notes.

In order, here are the top 10 things Gen Z members say are most likely to get them to buy a new product: Recommendations from family/friends; seeing a friend/family member using a product; TikTok videos; seeing a store display; TV ads; Instagram ads; product feature in store circular/ad; Facebook ads; and digital ads on a website.

Pelino explains that Gen Z has vast numbers and more diversity than previous generations. “They are digital natives, and have different expectations in how they think about society and the political construct,” she says. “They think about rights, equality and sustainability. They think in a way that is more gender-neutral. Anything perceived as opportunistic marketing is flatly rejected by Gen Z.”

TASTE AND PRICE TOP THE LIST

After taste and price, the next most important factors in deciding which brand of food or non-alcoholic beverage to buy are:

—Cares about the environment/sustainability (38%).

—Understands what I want/need (34%).

—Feels authentic (24%).

As one Gen Z focus group member put it, “It’s all about efficacy and authenticity with brands. Efficacy lends authenticity, rather than brands standing for certain ideals because they sound good.”

IRI researched the success of eight brands that over-index on dollar growth with Gen Z: Pop Tart Bites; Bang Energy Drinks; L’Oreal Infallible; Bubly Sparkling Water; Planet Oat Oatmilk; Native Deodorant; Wonderful No Shells Flavored Pistachios; and My/Mochi Ice Cream.

“Leveraging social media, communicating authentically and delivering against their promises — both for the product experience and what the brand stands for — is how these brands have won with Gen Z,” according to the white paper. Here are some key points:

—All the brands had the psychographic traits of openness and agreeableness valued by Gen Z.

—Gen Z consumers displayed the highest engagement with content that featured influencers they like and follow.

—Short-form video, especially through TikTok, is working to fuel purchase intent for brands like Pop Tarts Bites and Bang Energy Drinks.

Bang, which had very little in the way of marketing spend, was singled out by the white paper for having a personalization mindset offering Gen Z members a sense of belonging. Notably, in households with 17- to 23-year-old Gen Z members present, the buyer index for Bang was 180. In households without this segment present, the buyer index was only 81.

HERE’S WHY GEN Z LOVES TRADER JOE’S

The retailer is consistently mentioned as a favorite CPG retailer by Gen Z. It’s worth understanding why.

— The experience matches the hype.

— Trader Joe’s is confident in who they are, which allows Gen Zs to relax because it doesn’t feel like the store is trying too hard.

— It feels safe.

— It feels approachable. Signage looks hand written, which conveys that it doesn’t take itself too seriously.

— It feels like a local store even though it is a chain.

— Carrying their private label brands almost exclusively simplifies the product decision process.

— Almost all of Trader Joe’s product packaging is neutral — the absence of a lot of gender specificity further simplifies the decision process.

— Trader Joe’s is increasingly neutralizing the importance of identity, rather than trying to carry every option for all identities.

Gen Zs are constantly balancing the quest for quality with the desire for value, and in Trader Joe’s, they get both. They are also disproportionately likely to shop in the dollar channel, where their dollars stretch a bit further.

Source: White Paper, Understand Me, Don’t Define Me, from IRI (iriworldwide.com), the Chicago-based market research firm.

PLANET OAT, MY/MOCHI

Planet Oat and My/Mochi were singled out in the white paper for their authenticity, a dominant purchase driver. Shopping for My/Mochi skews toward dinnertime and late evening — likely a quick stop for dessert on the way home.

“The marketers and retailers that can adeptly use a wide variety of data assets — both qualitative and quantitative — will be best able to connect the dots that lead to Gen Z loyalty,” says Pelino. ■

Warren Thayer

Warren Thayer

Warren is the Editorial Director & Managing Partner for Frozen & Refrigerated Buyer.

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