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How Generation Z will shape the future of business
Generation gaps are defined by moral, social, political and even technological differences between the day's youth and their elders. But as Generation Z, or those born beginning in 1994-95, reaches the college age, businesses are finding that a whole new model will be necessary to keep up with the first real tech savvy generation. The new model highlights a trend as previous generations have willingly embraced technology and already begun to change the landscape of how people do business.
Dan Keldsen, who co-authored "The Gen Z effect: The Six Forces Shaping the Future of Business," told the American Express Open Forum that Generation Z is likely to be a defining one. That's because the technologies that have already changed the world so much in the last few decades have been present in their lives from the beginning. The Internet, smartphones and social media were all readily available to generation Z as they grew up, and that will shape the way businesses must approach them to create a successful market. Here are some of the ways generation Z will effect businesses.
"Generation Z has an estimated monthly purchasing power of $44 billion."
Generation Z has an estimated average allowance of $70 a month, which collectively totals about $44 billion, according to Entrepreneur. That's an enormous purchasing power that will increase exponentially as they finish college and begin making real money of their own. The next decade will see businesses undergo radical transformations just to stay in the game, or find themselves picked apart by the vultures of app-driven task companies. Here are some of the ways businesses will be effected by the coming generation:
The fact that high-tech is really the new standard actually means cheaper options for businesses to make sales. Keldsen used the example of a recent trip to a small business in the Midwest. The clerk swiped his credit card through a device attached to a smartphone, and emailed the receipt to him.
"The cost for a similar solution just five years ago would've been tens of thousands of dollars," Keldsen told American Express.
Whereas now, there's little added cost in using a device that's already paid for and is capable of performing plenty of tasks with the simple download of a new app or the relatively cheap purchase of an accessory.
Entrepreneur magazine reported that restaurants are at the forefront of the battle to create a market that appeals to Generation Z. Not only have they been raised in a more health conscious culture that sees McDonald's losing out to healthier options like Chipotle, but Generation Z also expects a different atmosphere and a tech savvy approach in the restaurants they frequent. Restaurants are developing new products that are interesting enough to find their way to Instagram and Twitter, as a means of indirect advertising, Entrepreneur reported. It also means creating an atmosphere that is riddled with colorful visuals and technological service, whether it's interactive menus on iPads or automated machines to take the order.
As Keldsen pointed out, one of the most important changes that comes with Generation Z is lifehacking. It's easier than ever for people to find better, cheaper and faster ways to do things. Lifehacking has given rise to companies like Uber and Airbnb which took traditional services and found a more convenient way to bring them to consumers.
Keldsen said that 3D printing, crowd funding and the redefinition of intellectual property are the three greatest hacks that will transform the future of business, thanks to Generation Z. Online shopping will be more prevalent than ever, fundraising will be as simple as setting up a legitimate social media page, and As Uber, Foodler and other app-driven businesses have done, Generation Z can use social media and resources readily available in the tech cloud to conduct business.
Generation Z actually provides a considerable advantage to small and recently founded businesses because they are relying on social media and the opinions of others to research and purchase products. Existing corporations that use traditional methods to market their brand will have to step up efforts in making the switch, while small businesses can start and grow with social marketing and online and mobile business practices.
International Business Times reported that while targeting Millenials had already caused marketing to head in the direction of social media, Generation Z is receiving and spreading information through even more channels than the previous generation. That's not just Facebook and Twitter, it's also Reddit, Vine, YouTube, Instagram, Pinterest - the list goes on. Marketers will have to develop a significant social media presence to keep their brand alive. But social media also presents trouble for businesses.
"Business practices are more transparent than ever with social media."
Generation Z will hold businesses to higher standards than the previous Millennial generation. Homegrown businesses with quality and integrity in their products will appeal to Gen Z because clever branding will no longer be enough to create consumer loyalty, according to Entrepreneur Magazine. Thanks to social media and peer reviewing, practices in companies will be more transparent than ever before, and it will take honesty to win loyalty from Generation Z. Not only that, but businesses will have to do some serious damage control when their errors or misgivings have been revealed on social media, which can be ruthless when it comes to moral judgment. To bounce back from a tarnished reputation on social media requires a serious campaign that will need the same kind of attention the controversy had in the first place.
Change from within
The good news is that the future of business doesn't rest solely on the shoulders of business leaders of today. The great recession of the late 2000s effected the way Generation Z thinks about buying, as many watched their parents struggle with unemployment and tight budgets, according to IBT. But that also had an effect on the way they perceive income - IBT reported that a recent Sparks & Honey survey indicated that 75 percent of high school students want to open their own business someday. Over the next few years, Generation Z will be done with college and headed to the professional world, where they are likely to help mold the future as they see it.
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