The following is a guest post by Jennifer Mandeville, director of media strategy at Merkle. Opinions are the authors' own.
Generation Alpha is the next generation of consumers who are or will be born between 2010 and 2025, ranging from 0 to 12 years old. By 2025, Gen Alpha will be 2.5 billion members strong across the globe, with a new member of Gen Alpha born in the U.S. every nine seconds. They are the first generation to be born entirely in the 21st century and come from diverse families in terms of race, ethnicity, structure and finances. Each member of Gen Alpha will have his or her own unique interests, but as a group, they'll share several characteristics shaped by macro-level influences.
- Activism matters. Transparent, authentic corporate social responsibility will be important. This group will likely prioritize buying from sustainable companies.
- Digital first. They're in front of screens more, and earlier, than any other generation. Sixty-five percent of children ages 8 to 11 either own or have access to a mobile phone at home.
- The post-pandemic normal. Social distancing measures pushed Gen Alpha to rely on digital forums to interact with people; they'll lean on digital games and the metaverse as meeting places.
Although this generation is currently small, its influence is and will continue to be big. Marketers should start paying attention to Gen Alpha now, as they will have high expectations of the products and brands they choose.
How will Gen Alpha influence consumerism?
Gen Alpha is poised to have the greatest spending power in history, even more so than millennials and baby boomers. While Gen Alpha is sometimes referred to as "mini-millennials," they will have a very different upbringing from their millennial parents. But they will still be influenced by their millennial parents' tastes. Their digital-first, tech-savvy and highly social upbringing will fiercely impact their shopping behaviors.
On the flip side, the youngsters of Gen Alpha are already influencing the purchase decisions of their parents, as children can begin recognizing brands as early as age three. Eighty-seven percent of parents say their children influence their purchase decisions, especially within toys and games, apparel, and food and drink categories. Kids in general are also more influenced by others, with friends having the greatest impact on purchase decisions (28%), followed by influencers/bloggers (25%) and family members (21%). With the high level of influence kids have in their household, brands and marketers should continue to design content with both parents and children in mind across multiple media platforms and categories. Influencers and bloggers will become key drivers of awareness and consideration and should be explored in marketing strategies.
The complex dual-consumer journey
Gen Alpha's current shopping habits are unique, with the parent often making the final decision and completing transactions. In 2020, there was an average of two children under age 18 per household in the U.S. Reaching both Gen Alpha kids and their parents might be challenging, but it will be a major key to brand success and longevity. Marketers and brands must pay close attention to generational gaps, differences in shopping habits and how each group views the overall shopping experience. Gen Alpha will also likely need to be micro-segmented, given the wide age span and different attributes during their formative stages. Ultimately, there will be a dual-consumer journey happening within each household that looks something like the following:
How will brands reach Gen Alpha?
Gen Alpha is digital-first and tech-driven, so it's no surprise that social media will be a major gateway in reaching them. Currently, online videos (24%) and social media (19%) have the greatest influence on Gen Alpha's purchasing decisions, followed by photos on websites or apps. Gen Alpha tends to be visual and engages best with these types of media. When surveyed about how they would like to make purchases in 10 to 20 years, Gen Alpha respondents said they plan to make purchases using a mobile device (21%), a physical shop (19%), with their minds (11%) and through a voice assistant (9%). If we know where kids are inspired to purchase now and potentially in the future, brands and marketers can build a strong, optimized presence in those channels to shorten the customer journey. Life stages and shifts in shopping preferences will also need to be considered to anticipate the short-term versus long-term points of conversion.
Technology will reign supreme in the early engagement with Gen Alpha across industries. With the cohort growing up using advanced tech on every modern device they touch (artificial intelligence, machine learning, robotics and biometrics, for example), this generation will not know how to function without it. Three industries that Gen Alpha will vastly shape include:
- Retail. In addition to leveraging Gen Alpha's favorite influencers on YouTube, brands are getting creative to engage this generation. Voice assistant-enabled toys are gaining momentum, as brands such as KidKraft incorporate Amazon's Alexa into interactive toy functionality. Despite Mattel's privacy backlash for Hello Barbie, they continue to lean in to Gen Alpha with sustainable packaging aimed at this environmentally conscious group.
- Financial services. Adults are now embracing digital wallets, but Gen Alpha will soon come to expect them for all transactions. Some companies are educating kids as young as five through online financial literacy programs and even starter bank accounts and credit cards.
- Entertainment. The virtual entertainment space is driving experiences and purchases for Gen Alpha, from Ariana Grande's Fortnite concert to social gaming and social commerce. Brands are also making plays for Gen Alpha's attention and dollars within the metaverse of virtual playgrounds. Gucci sold a virtual bag for $1,000 more than the real version in Roblox, while Nike launched virtual Jordan sneakers in Fortnite.
Brands must stay in step with Gen Alpha’s unique needs and characteristics, appealing to their connected world with personalized, authentic experiences that integrate seamlessly into daily life. Investing early in understanding and building loyalty with Gen Alpha will pay off for brands as this predicted "wealthiest generation" grows up.