Gen Z and brand loyalty—how limiting your scope can create a competitive edge
Today, we’re seeing brands span more demographics, geographies and product ranges than ever. The typical thinking is that a strong brand should stretch and diversify, that success relies on saying “yes” to as many opportunities as possible.
But increasingly, we’re seeing the importance of knowing which doors to close. In other words, deciding what you aren’t going to do is one of the most strategically important and often neglected decisions. Done in the right way, a narrower focus ensures that money, time and energy are being used with maximum impact.
Some of the world’s most successful brands are a testament to this. EasyJet is proudly non-premium. Fiat doesn’t make grey cars. Louis Vuitton never discounts.
Why are brands tempted to diversify?
Getting bigger has always been the name of the game. In theory, there are two ways to do this: grow your customer base or sell more to existing customers.
Growing your base is now easier than ever in a global market. International partnerships, online shopping and sophisticated supply chains have enabled Swedish milk alternative Oatly to become a success story in China, and Chinese auto brand BYD to be one of the fastest-growing car companies in Sweden.
Selling more to existing customers has become attractive in an era where people build communities around brands they trust—a phenomenon particularly strong among Gen Zers. This has enabled a new generation of influencers to create revenue streams from their personal brands. London-based entrepreneur Grace Beverly, for example, started out as an Instagram influencer and has since created million-dollar brands Tala (activewear) and Shreddy (a fitness app).
Simplifying to win your target customer
There’s lots to be said for signaling which customers you’re catering to.
In a world where more brands are going for mass appeal, with different products and services targeting different segments of the population, choosing a lane and sticking to it can give brands a competitive edge.
EasyJet’s purpose is to “make low-cost travel easy,” and it unashamedly delivers on this. When the airline was founded 25 years ago, it launched with the slogan “Flights for less than a pair of jeans.”
Such a laser focus on affordability has worked extremely well for EasyJet, which has won a large portion of the market that is simply looking for the cheapest flights. It reported revenues of £2.69 billion ($3.42 billion) in the six months ending to March 31, 2023—a 79% increase from the year before.
Narrowing the focus to differentiate your brand
Many categories have become a sea of sameness, making it harder for customers to distinguish among an increasing number of players. With options feeling interchangeable, this has contributed to a decline in brand loyalty. Research published in Forbes shows that only 37% of Gen Z are loyal to brands—that is, consumers who bought a product from the same brand they were considering at the start of the shopping journey. This is quite different from the 56% of boomers in the same category.
In this context, it pays to stand out, and standing out sometimes requires closing a door that all other brands have opened. Fiat recently made the bold decision to stop selling gray cars. CEO Olivier Francois said this was “… reinforcing Fiat's leadership as the brand of joy, colors and optimism.” The strategy doesn’t come without its risks, with gray being the most popular color for new cars in many of Fiat’s most important markets, including the U.K. But a strengthened commitment to the brand’s vibrant Italian roots will help it to resonate with customers looking for a more exciting choice of car.
Retaining value in the long run
In order to scale, it can sometimes be tempting to offer discounts, set up shop in new markets or sell through different, more mainstream channels. But while this might be a lucrative short-term strategy, opening up your brand in this way can erode value in the long run.
Louis Vuitton is one of few brands that never discounts products. “Items advertised as discounted on the Web are invariably fake,” the brand states on its website. This is a smart decision for the luxury brand, which realizes that doing so retains the value of the products while sending the confident message that the original price is exactly as it should be.
In the corporate world, leading U.K. law firm Slaughter & May has made the strategic decision not to open international offices. Its thinking is that best-in-class is a local affair, one best-provided through partnerships with leading local firms in each geography. By saying no to expanding into markets where the firm lacks expertise or experience, Slaughter & May has retained its premium international reputation.
This isn’t a call to always take a reductive approach—fewer demographics, fewer geographies, fewer product ranges. But rather, the strongest way forward might be to figure out which doors to keep firmly shut. No matter how tempting they might be, the longevity of your business could—somewhat counterintuitively—depend on it.