Reference no: EM133359565
Traditionally, values and beliefs affect the demand for types of products (e.g., more environmentally friendly products), but values and beliefs may also influence the amount of products and services customers demand. Younger generations often have different attitudes towards owning products, leading to more cautious and frugal consumer spending. Please read the following short article authored by Dess and Colleagues (2021) and respond to the questions that immediately follow the article.
"Consumers of the Generation Z (born in the mid-1990s and early-2000s) are about to become the most sought-after target market in countries around the world. However, these consumers may be more frugal than earlier generations because their early life experiences shaped their values and beliefs when it comes to consuming. Specifically, kids of the Gen Z experienced economic downturns or saw their parents struggle during recessions (such as the global financial crisis of 2008). These early life experiences have shaped the consumer attitudes of Gen Z consumers and imprinted a thrifty attitude.
For example, Japan had five recessions in the past 20 years, transforming Japanese consumers into one of the most frugal consumers in the world. These frugal attitudes learned at a young age also persist and hardly change when economic conditions brighten. In Japan, recent economic conditions are more positive and wages are growing. Fast Retailing Co. (the owner of the fashion company Uniqlo), for instance, is raising entry level pay by 20% to win the war for talent in the tight Japanese labor market. However, young Japanese are not increasing their spending, but stick to buying necessities.
Executives around the world adjust their strategies to effectively address frugal consumer attitudes and broader preferences for sustainable consumption. For instance, fashion company "Urban Outfitters" recently started a subscription clothing rental business called Nuuly. For a fee of $88 dollars per month, consumers get six clothing pieces, a reusable bag, and a prepaid return envelope to return the clothes (or pay full price in case you love and want to keep them). The hope is that young consumers will find this new clothing business model not only attractive for its reduced environmental impact but also for meeting the broader values of beliefs regarding product ownership of Gen Z consumers."
What must firms do to attract Younger generations? Why are such efforts becoming increasingly important? Can you think of an industry that may need to respond to the values and beliefs (such as environmental concerns and product ownership) of younger customers?