By Alpa Patel
As a new generation of consumers emerges—Generation Alpha—investors are beginning to make ... [+]
There is a generational cohort quietly, steadily encroaching upon teenhood, and by 2025 this group will be the largest generation ever at over 2 billion in size. Few of us have taken heed of their stealthy march or even known that this group had a name, but the first true generation of the 21st century, Generation Alpha, is maturing.
Members of this generation are passionate and compassionate, and growing up with smartphones and tablets has made them more digitally empowered than any group before them. The sheer size of this cohort will make them formidable when they enter college and the workforce. However, they are still young and there is a slight uneasiness in directly targeting them without involving their parents; consequently, their most significant contribution to date is creating a new consumer segment by bringing Millennials into parenthood. This move to parenting, as it should, has shifted the priorities of Millennials and opened new opportunities for brands to court this coveted ‘Millennial Parent’ demographic while putting their ‘Gen Alpha Kids’ on the radar.
As the oldest members of Gen Alpha turn 13 this year and move from starring in their parents’ social media accounts to creating their own, the time is now to gain a better understanding of the characteristics of this blossoming generation, the powerful influence of their parents, and the impending impact of this generational shift.
This move to parenting, as it should, has shifted the priorities of Millennials and opened new opportunities for brands to court this coveted ‘Millennial Parent’ demographic while putting their ‘Gen Alpha Kids’ on the radar.
Get to Know Gen Alpha
Born circa 2010, just as Steve Jobs and the iPad were changing the world, these tweens are ahead of the curve when it comes to technology, education, and cultural trends. The term Gen Alpha was first coined by social researcher Mark McCrindle of McCrindle Research. According to his studies, this cohort group will encompass the years 2010-2024 and will eventually constitute the largest generation ever as a new member is born every 9 seconds and 2.8 million are born globally every week. At this rate, Gen Alpha will surpass Millennials and become the largest generational segment currently.
This is a generation that cares deeply about the global outlook, education, and equity. Climate change, poverty, refugee crises, digital disinformation, and mental health are some of the issues that Gen Alpha is observing with keen interest. This social awareness is important to appreciate in order to get to the heart of who Gen Alpha is. They are going to benefit from the technology advancements that are changing education such as the controversial AI platform ChatGPT that is transforming the availability of information. Schools must adopt a new approach to match their way of digital learning. While older folks are still debating race, gender, and reproductive justice, the youngsters have no tolerance for inequality - 96% believe that all people should be treated fairly no matter what they look like (compared to 79% of Millenials and 58% of Boomers).
Gen Alpha is the most racially diverse generation ever thanks to their Millennial parents. Their early lives have been informed by a global pandemic, which has led to a changing labor force and evolving workplace. In addition to caring about the world, they also care about their future. What does this future in terms of career outlook resemble? 65% of Gen Alphas will work in jobs that don’t exist today according to McCrindle.
This is a generation that cares deeply about the global outlook, education, and equity. Climate change, poverty, refugee crises, digital disinformation, and mental health are some of the issues that Gen Alpha is observing with keen interest.
Technology access is transforming thinking. As Artificial Intelligence continues to grow smarter and dominate the tech landscape and the jobs market in 2023, the code on Gen Alpha has not yet been written. Apple released Siri in 2011 and Amazon launched Alexa in 2014. As such, Gen Alpha is adept with virtual assistants, as well as smartphones and tablets; in fact, they do not know a world without touch technology or voice command. They are technologically enabled in a greater way than Gen Z. ‘Kidfluencers’ such as Ryan’s World and Nastya are exemplifying this trait all over YouTube, Instagram and TikTok.
Gen Alpha certainly sounds like an impressive generation: Worldly, impassioned, and connected. But they are still young children to tweens who are known as mini-Millennials because of their propensity to copy their parents’ social media habits and lean toward their parents’ brand preferences. Thus, it is important to evaluate the characteristics of the Millennial Parent to get a full picture of this cohort.
Prior generations tend to inform the behaviors of generations after them. This is especially true ... [+]
Millennials Look Different Than Previous Generations
Gen Alpha will become the generation with the greatest spending power in history, but for now, spending power lies with the Millennials, estimated at $2.5 trillion annually by YPulse. Millennials, born 1981-1996, are a diverse demographic and are the largest generational group with an estimated population of 72.2 million in the U.S. in 2021. More than 90% are employed, they like to spend but also prioritize saving, and they care about many of the same issues as Gen Alpha such as the environment and mental health.
Gen Alpha certainly sounds like an impressive generation: Worldly, educated, and connected. But they are still young children to tweens who are known as mini-Millennials because of their propensity to copy their parents’ social media habits and lean toward their parents’ brand preferences.
Markedly different from previous generations, Millennials have delayed marriage (age 30 for men and 28 for women), more often lived with romantic partners (12%), married partners of different racial or ethnic backgrounds (13%), attained higher education levels and married partners with equal education levels, and given birth at older ages (with many first-time mothers in their 40s) according to Pew Research Center. Interestingly, while Millennial women are giving birth later, they aren’t necessarily having fewer children, averaging similar rates to the Gen X and Boomers before them. This has implications for how Gen Alpha experiences the traditional nuclear family relative to the older Gen Z.
Millennial Parents Are Building Generational Wealth
As they start their families later, Millennial parents are hands-on, child focused, and extremely attuned to their Gen Alpha kids’ needs. They rely on YouTube and parenting blogs for advice, engage with kids’ brands online, value lifestyle, and want only the very best for their children.
Millennials as parents differ from other parents both in their demographics and their shopping habits. An in-depth National Retail Foundation survey found that Millennial parents research extensively online and enjoy quick turnaround service. They prefer brands that reflect their social or political values and they are more brand loyal than other parents even ahead of convenience or selection. These are the values and brand preferences they are passing on to their impressionable children.
Millennials care deeply about generational wealth—a trait that will greatly benefit their Gen Alpha ... [+]
Millennials are set to inherit trillions from their own parents and are on a path to have 5x the wealth they have today by 2030. This amassed wealth will be passed on to Gen Alpha along with a healthy dose of financial literacy. GoHenry found that U.S. children collectively earned $25.5 billion from allowances in 2020. A Capital group study found that 39% of millennial parents said they would start telling their children at age 12 or younger to start saving. The many benefits of talking about money early include developing budgeting skills, encouraging saving and investing, and creating wealth.
Millennials also know money.39% of the generation research investing at least weekly and 67% cite YouTube and Facebook as their preferred resources for finance advice. Millennials feel that schools and their parents failed to teach them about money and so they are passionate teachers to their own children about saving for education, learning entrepreneurship, giving charitably, and being smart with money. They understand the importance of utilizing cash and investment gifting at an early age.
Gen Alpha Kids + Millennial Parents Are a Powerful Combination
Understandably, many businesses and venture capitalists are laser focused on the of the moment Gen Z cohort that is wielding its spending power. However, their Boomer parents have retired and their forgotten Gen X parents have aged out of relevance if you look at today’s influencers. There is plenty of money being left on the table. The Millennial + Gen Alpha combined cohort is by far the largest and subsequently most attractive parent-child cohort to woo for VCs and nascent businesses and in the marketing materials of established brands. Let’s summarize the salient points to understanding this marketing demographic before formulating strategies to capture them.
Consider the characteristics and evolving needs of Gen Alpha when determining a value proposition. Gen Alpha may not have acquired the financial knowledge yet but they know who they are and what they care about.
What we know about Gen Alpha:
- Tech-native: Life is immediate and accessible
- Inclusivity, social issues, and education matter
- They largely behave as mini-Millennials
- Their parents take their preferences into account when making household decisions.
What we know about Millennial Parents:
- They’re tech savvy: Millennials rely on the Internet and social media for research
- Their kids are an extension of their lives
- They want to pass on financial knowledge and wealth to their kids
- They are instilling their brand and value preferences into their children at an early age thereby insuring that 'Mini Millennials' will become the 'New Millennials.'
What we know about Millennial Parents + Gen Alpha Kids:
- Quick to adopt tech advancements
- Brands that reflect their values earn their loyalty
- Parental predilections are influencing the kids’ preferences and vice versa
The Millennial + Gen Alpha combined cohort is by far the largest and subsequently most attractive parent-child cohort to woo for VCs and nascent businesses and in the marketing materials of established brands.
Generation Alpha will grow up never having experienced a world without technology like smartphones.
The Road Ahead
Leverage existing relationships to capture new users. Longer-standing brands have the advantage of the hold they already have on Millennials. Millennials love Amazon and Amazon inserted itself early with Gen Alpha - 46% have access to an Amazon Prime account via their parents.
Meet them in their space with parent approved (and nostalgic) brands. About 25% of kids have purchased via a voice assistant obviously with parental controls. Lego and Barbie are example brands that promote on Amazon’s Alexa virtual assistant and metaverse technologies. Fortnite, Roblox, and Minecraft have brought in-game collaborations to the metaverse with brands such as Puma, Lacoste, Ralph Lauren, Wendy’s and UberEats. Gen Alpha feels connected with technology and this type of personalized experience in their platforms speaks to them. Meanwhile, Millennial Parents have introduced brands from their 90s youth to their kids and created opportunity for this sentimental resurgence.
Invest in strategies that find solutions for world problems that intersect with values. Gen Alpha wants the newest technology but won’t compromise their principles - 66% like to buy from companies trying to do good in the world and 51% want a job where technology makes a difference. This is what they’ve learned from their parents in wanting their values represented in their lives. Think innovation in rapidly emerging sectors: AI, cybersecurity, digital transparency, disinformation, sustainability, diversity/equity, SaaS, and the creator economy.
Help parents set their kids on the right path to a strong financial footing. Traditional financial advisors aren’t available to everyone, so fintechs are enticing Millennial Parents and Gen Alpha kids with savings, investments, Crypto, debit cards, and neobanks. Debit cards with parental controls and made specifically for this consumer segment are favored by Millennial Parents. Kids financial gifting apps encourage parents to reach out to their social communities to celebrate their children and set them up for future success. Fun and youth oriented online only banking experiences are challenging traditional in person banks.
Longer-standing brands have the advantage of the hold they already have on Millennials. Millennials love Amazon and Amazon inserted itself early with Gen Alpha - 46% have access to an Amazon Prime account via their parents.
Gen Alpha is set to overtake their parents in becoming the generation with the greatest spending power in history. The key to future success for brands and businesses, then, lies in reaching them at an early and impressionable age. And the only road to connecting with Gen Alpha early travels through their Millennial Parents.
Alpa Patel ‘03 has 20 years of extensive marketing and analytics experience, across the Technology, Research, and Media & Entertainment industries in Silicon Valley and NYC. Currently, she leads marketing efforts to launch and scale Ballooning Nest Eggs, a Fintech gifting app designed to transform the process of growing wealth for Generation Alpha. Prior, she helped create the Digital Research & Analytics team at ESPN and helped launch a breakthrough SaaS platform in the kids’ recreation space. Follow Alpa on Twitter or LinkedIn.
