Characteristics of brand loyalty of Generation Z and the millennials

Brand loyalty leads to the repeated purchase of products or services and holds an appropriate and positive attitude towards business. The success of e-commerce relies heavily on brand loyalty and it has been theorized as a “vital driver of post-purchase spectacles” (Ghane, Fatian and Gholamian, 2011). A loyal customer helps a brand by making repeated purchases, recommends the brand to their peers and spreads positive reviews through word of mouth. In order to improve brand loyalty among the millennials and Generation, it is important to understand customer requirements long-term commitment (Isa et al., 2015). However, brand loyalty differs among different age groups.

For instance, Generation Z consumers are more price-conscious than Millennials, and therefore exhibit brand loyalty differently (Crowd Twist, 2018). This is a result of differences in certain characteristics of the consumers such as lifestyle, values and goals.

Price promotion is a prime characteristic of brand loyalty among the Millennials

Previous studies have shown that the spending power of Millennials is high but they are relatively less loyal towards a brand as compared to their previous generations (Weyland, 2011). The main reason behind this low brand loyalty can be attributed to the greater availability of price promotions. Price promotions refer to the short-term reduction of prices of products in order to attract more consumers and increase sales (Smith, 2010). However, on the other hand, Smith, also explained that providing e-coupons or promotions in exchange for any interaction is enough for the Millennials to shift their loyalty to another brand.

Although, there are contradictory findings indicating the role of price promotions, one thing is certain that there is a correlation between the two factors.

Individuality and distinctiveness of brands help the Millennials to self-promote

Millennials tend to look for those brands which match their lifestyle, nature and give importance to social and community values. Therefore, according to Ayaydin and Baltaci (2013), it can be said that millennials use brands for the purpose of self-promotion, to symbolize their individuality and commune their principles. This finding has been supported by other researchers too. Millennials have an increasing purchasing power which they tend to spend fast on those products which help them in defining their distinctiveness.

For instance, in an ICSC (2017) report it was found that Millennials are more loyal towards smaller brands because of their distinctiveness.

Millennial’s love for Tech-savvy brands

Moore (2012), opinionated that millennials are more interested in integrating technologies in their everyday lives. This is because they have grown up in the age of the internet and are quite adept at using it for researching at making purchases. The primary source of information for Millennials is the internet and they trust it. Therefore, they are more loyal towards brands with an impressive online presence (Nowak, Thach and Olsen, 2006).

Millennial’s brand loyalty is based on trust

It was also found that Millennials are attracted towards those online sites that had strong values and ethics, while at the same time, were distinctive (Nowak, Thach and Olsen, 2006). They make use of their knowledge regarding the current trends and reputation of e-vendors and their products in order to be considered as peer leaders in their field.

Ordun (2015), discovered that millennials were loyal to a brand they trust and for a short period of time. Their loyalty is fickle as their preference keeps changing due to change in fashion, trends, as well as the reputation of the brand. The brand loyalty of millennials cannot be trusted as they focus more on fashion and class instead of the only price (Lissitsa and Kol, 2016).

Customer service is the prime factor that attracts Generation Z

Generation Z plays an active role in the expenditure decision of their family (Manala-O, 2018). According to a survey conducted by EY (2015), Generation Z is not motivated by loyalty programs while making a purchase decision. Moreover, they also find special events and shopper cards disengaging. Instead, Generation Z is strongly driven by customer service such as:

  • speedy and seamless online transactions,
  • same-day delivery,
  • mobile checkouts, etc.

Generation Z looks for an enjoyable shopping experience

Businesses today realise the impact of the shopping experience on brand loyalty. They, therefore, are coming up with smart technologies to entice them, such as:

  • chatbots for personal interaction,
  • drones,
  • augmented virtual reality,
  • checkout-free stores,
  • face-based buying,
  • smart mirrors and,
  • voice-based search (Priporas, Stylos and Fotiadis, 2017).

Impact of price promotion and trust on the Generation Z

Generation Z shoppers value sales and discount offerings from top brands. They compare prices and make an informed purchase decision based on discounts and coupons offered by online retailers (IBM Institute, 2018).  Businesses are using a variety of channels to provide discounts to Generation Z shoppers, such as influencer marketing, referrals, etc.

Generation Z is expected to constitute a major proportion of online sales traffic as well as the fastest-growing generation in the workplace. It is important for the e-vendors to provide quality products and services to their customers along with having a cleat positioning for themselves in the market (Rashid et al., 2016). In order to create and retain the trust of Generation Z, it is important to position as being trustworthy and pertinent. The people of this generation take time to be loyal towards a brand but stick to them once they have gained their trust (Goutam and Gopalakrishna, 2018).

A challenge to win customer loyalty

Earlier it was seen that customer loyalty towards a brand was measured by using metrics like purchase frequency and increase in sales. However, nowadays, it is based on the multi-dimensional relationship of a brand with its customers. Therefore, it is important to understand the motivating factors that lure the Millennials and Generation Z. Recent studies have found that younger customers are largely influenced by social media engagements. Millennials are not as loyal to brands as compared to shoppers of the previous generations. Furthermore, brand loyalty of Generation Z is difficult to earn.

References

  • Ayaydin, H. and Baltaci, N. (2013) ‘European Journal of Research on Education’, European journal of research on education human resource management, (c), pp. 94–99.
  • Crowd Twist (2018) GEN Z VS MILLENNIALS: THE CHANGING LANDSCAPE OF LOYALTY. New York.
  • EY (2015) What if the next big disruptor isn’t a what but a who? USA.
  • Ghane, S., Fatian, M. and Gholamian, M. R. (2011) ‘“Full relationship among e-satisfaction, e-trust, e-service quality and e-loyalty: the case of Iran e-banking’, Journal of theoretical and applied information technolgoy, 33(1).
  • Goutam, D. and Gopalakrishna, B. V (2018) ‘Customer loyalty development in online shopping: An integration of e-service quality model and commitment-trust theory’, Management science letters, 8, pp. 1149–1158.
  • IBM Institute (2018) What do Gen Z shoppers really want? New York.
  • ICSC (2017) Consumers Confirm Loyalty to Retailers, Product-Brands.
  • Isa, N. et al. (2015) ‘Impact of Trust on Online Shopping: A Systematic Review of Literature’, Journal of Advanced Review on Scientific Research, 8(1), pp. 1–8.
  • Lissitsa, S. and Kol, O. (2016) ‘Generation X vs. Generation Y. A decade of online shopping’, Journal of retailing and consumer services, 31, pp. 304–312.
  • Manala-O, S. (2018) ‘Factors Affecting Customer Loyalty of Generation Z in Fastfood Industry’, Journal of global business, 7.
  • Moore, M. (2012) ‘Interactive media usage among millennial consumers.’, Journal of consumer marketing, 29(6), pp. 436–444.
  • Nowak, L., Thach, L. and Olsen, J. E. (2006) ‘Wowing the millennials: creating brand equity in the wine industry’, Journal of Product & Brand Management, 15(5), pp. 316–323.
  • Ordun, G. (2015) ‘Millennial (Gen Y) Consumer Behavior Their Shopping Preferences and Perceptual Maps Associated With Brand Loyalty’, Canadian Social science, 11(4), pp. 1–16.
  • Priporas, C.-V., Stylos, N. and Fotiadis, A. K. (2017) ‘Generation Z consumers’ expectations of interactions in smart retailing: A future agenda’, Computers in Human Behavior, pp. 1–8.
  • Rashid, A. et al. (2016) ‘Impact of Service and Food Quality on Customer Satisfaction Among Generation Y for the Fast Food’, Journal of social sciences research, 8(1), pp. 51–67.
  • Smith, K. T. (2011) ‘Digital Marketing Strategies that Millennials Find Appealing, Motivating, or Just Annoying’, Journal of Strategic Marketing, 18(6).
  • Smith, T. (2010) Pricing Strategy: Setting Price Levels, Managing Price Discounts and establishing price structures. New Jersey: Cengage Learning.
  • Weyland, A. (2011). ‘Engagement and talent management of Gen Y’, Industrial and Commercial Training, 43(7), pp. 439–445.

Priya Chetty

Partner at Project Guru
Priya is a master in business administration with majors in marketing and finance. She is fluent with data modelling, time series analysis, various regression models, forecasting and interpretation of the data. She has assisted data scientists, corporates, scholars in the field of finance, banking, economics and marketing.

Related articles

Discuss

We are looking for candidates who have completed their master's degree or Ph.D. Click here to know more about our vacancies.