Net Generation: the Growing Dominant Consumer Group in Network Society

Citation:

Seong-Yeon Park and Eun Mi Lee (2005) ,"Net Generation: the Growing Dominant Consumer Group in Network Society", in AP - Asia Pacific Advances in Consumer Research Volume 6, eds. Yong-Uon Ha and Youjae Yi, Duluth, MN : Association for Consumer Research, Pages: 239-243.

Asia Pacific Advances in Consumer Research Volume 6, 2005      Pages 239-243

NET GENERATION: THE GROWING DOMINANT CONSUMER GROUP IN NETWORK SOCIETY

Seong-Yeon Park, Ewha Womans University, Korea

Eun Mi Lee, Ewha Womans University, Korea

I. INTRODUCTION

The Internet, a network of networks connecting the computers of the world and users everywhere, has grown very rapidly. In Korea more than sixty-five% of the population aged six and older use the Internet at least once a month (KRNIC 2003). Men are more frequent users than women (71.7% to 59.2%), and youths aged 6-19 represent the highest user group (94.8%). Although Internet usage rates decrease with age, 94.5% for 20-29, 80.7% for 30-39, and 51.6% for 40-49 age groups, the fastest growing segments are the older age groups with the 40-49 and 30-39 age groups experiencing a gain of 12.3% and 11.3% respectively. These figures clearly show that the Internet is not the exclusive property of teenagers and twenty-somethings any more (KRNIC 2003).

Other data show that Korea is one of the most advanced nations in IT usage. Korea has the second highest rate of Internet usage in the world, a very high rate of high-speed access and nearly universal use of advanced mobile communications equipment such as text messaging and email capable cell phones (International Telecommunications Union 2003). Korean companies like LG and Samsung are leading the way in developing protocols for advanced mobile access capabilities.

Thus, the use of computers and the Internet has become an integral part of consumers’ daily lives in Korea, and studying resultant changes in consumers’ buying behavior may provide a window on future changes in other industrialized countries that are just behind the curve in terms of Internet and IT use. The current article is an empirical study of the Net Generation (originally the Network Generation)Ba consumer group that appeared with the widespread use of the computer and the Internet.

The term Net Generation was first used in Tapscott ’s "Growing Up Digital: The Rise of the Net Generation" (1997). Since then, the Net Generation has become an ever-growing consumer group, and thus has been drawing a lot of attention from both practitioners and scholars. Industries such as mobile and digital products, games, beauty and fashion are aggressively using marketing strategies targeting the Net Generation.

Tapscott (1997) defines the Net Generation as those born after 1977, the first generation to grow-up surrounded by digital media. Computers and other digital technologies, such as digital cameras and cell phones, are commonplace to the Net Generation. Nevertheless, there is some doubt as to whether the Net Generation in Korea is the same as the Net Generation in America because values, consumer behavior patterns, and social and cultural backgrounds differ from country to country even though they both grew-up surrounded by digital technology (Gim and Yu 2000).

The Net Generation was born in an affluent time and is making use of the digital revolution and is inter-networking. Even those people in their thirties and forties can also be part of the Net Generation if they use and are skilled at inter-networking. In addition, Net Generation consumers are highly involved with their computers and the Internet and skillful in their use. They are also skilled at using mobile and digital products, and they have ever-increasing purchasing power.

Despite the attractiveness of this group to marketers and their importance as a harbinger of future consumer behavior, there has been little academic research and attempts to understand them. Moreover, as Net Generation was defined for America without considering various characteristics, there has been no clear and consistent definition or criteria in defining the Net Generation.

Korea, however, differs in many ways from America in terms of diffusion rate, advancement of technology, values, consumer behavior patterns, and social and cultural differences. Also, over the last seven years Internet has rapidly spread beyond the age groups who represented the overwhelming percentage of users in 1997. Today, there are many people outside the narrowly defined age category who exhibit attitudinal and behavioral characteristics once reserved for a narrowly defined age group. For this reason, it is reasonable to use a richer, more behavior based method to classify the Net Generation by such diverse characteristics as their Internet usage and buying behavior, mobile Internet experience, commitment to the Internet, lifestyles, and demographic characteristics.

Therefore, this paper classifies consumers according to Internet usage behavior, then, identifies the definite and meaningful Net Generation through synthetic investigation of behavioral, psychological, demographic characteristics, and lifestyles of the classified clusters.

II. THEORETICAL BACKGROUND

2.1 Definition of the Net Generation

Classification of generations is different in each country. America divides generations into before baby boom generation (born 1946 before), baby boom generation (born between 1946 and 1964), X generation (born between 1965 and 1976) and Net Generation. Therefore, Tapscott (1997) considered the Net Generation as children who started to learn about the computer, who are now in their twenties, and who are accustomed to using the Internet.

In Korea, the Net Generation is also generally defined as those born after 1977. Gim and Yu (2000), however, argued that an age-based definition is less accurate and useful than a behavioral conceptualization. They suggested that the Net Generation in Korea is the group who are skilled in inter-networking (using such digital technologies as computer games and online chatting) regardless of age.

2.2 Previous Studies of the Net Generation

Tapscott (1997) wrote about how the Net Generation is learning to communicate, work, shop, and play in profoundly new ways. Walsh, et al. (1999) defined the Net-Powered Generation as those 16 to 22 and suggested that successfully marketing to them requires strategies emphasizing utility, speed, a balance between cutting-edge technology and ease-of-use, and the basics before the extras.

Other researchers focused on psychological and consumption characteristics (Kang 1998; Gim and Yu 2000, Sung, Jang, and Kang 2000; Yu and Gim 2001; Lee 2001). Kang (1998) suggested that the Net Generation is accustomed to communication via emotions instead of cognitions and affect takes precedence over logic. Sung, Jang, and Kang (2000) proposed that the formation of the Net Generations’ social identity could be observed in the use of digital media. They discovered that adopting digital media drove them into deeper involvement in social relationships.

Lee (2001) analyzed the inclination of networking, individualism, materialism and attitude toward advertisement using ethnographic methods to draw the attributes of the Net Generation. According to the research, members of the Net Generation spend a comparatively large amount of time using the Internet, at least 2 to 4 hours a day, and they have a negative attitude toward Internet advertising, and they do not trust Internet shopping malls. In addition, the Net Generation of Korea differs from its counterparts in America in that Koreans have more of a group tendency than individualism. Yu and Gim (2001) argued that the Net Generation tends toward impulsive and innovative consumer behavior. Woo (2000) conducted cluster analysis on middle and high school students Internet usage, lifestyles, buying patterns, and attitudes about advertising. Results indicate three clusters, an Immersion group, an Entry group and an Unconcerned group. Cheil Communication’s (1999) survey found that members of the Net Generation are fashion oriented, curious about new things, and satisfied with their present lives. They are also sensitive to advertising and consider their personal computers as necessities of their lives so they can interchange information with each other. Korea Research Center (2000) investigated fashion lifestyles with 745 subjects in the study. Net Generation members exhibited cognitive-dominant buying behavior, low advertising response rates and high fashion awareness and involvement.

TABLE 1

BIC, AIC, CAIC STATISTICS

Nevertheless most of the extant research accepted Tapscott’s simplistic, age-based definition without filtering, and no clear and consistent behavioral definition or criteria has emerged to define the Net Generation. Also, much of the existing work has been descriptive research conducted by practitioners with narrowly focused agendas. There has been a particular dearth of empirical academic research in this area. Thus, the purpose of the current research is to help close the gap in the literature by conducting an empirical analysis to identify key behavioral, psychological, and demographic characteristics of Net Generation and alternative archetypes.

III. METHODOLOGY

This study had a convenience sample of 660 people ranging in age from teenagers to fifty-somethings in Seoul, Korea. A total of 628 usable responses were obtained: 32 questionnaires were discarded because more than half of the questions were left blank or we felt the respondents did not answer the questionnaire sincerely.

The questionnaire employed 7-point Likert scales (I =strongly disagree, 7=strongly agree) and nominal scales. The questionnaire consisted of the Internet usage behavior, Internet shopping behavior, mobile Internet usage behavior, and lifestyles of consumers.

For data analysis, Latent Class (LC) cluster analysis was used to classify consumers according to the most frequently visited sites. The data were analyzed with the Latent Gold package and SPSS v.10.

IV. RESEARCH RESULTS

4.1 Respondents' Demographic Profiles

The demographic profiles of the respondents are as follows: The sample consists of 48.3% female and 51.3% mate. In age distribution, I Os (25.2 %), 20s (32.5 %), 30s (30.4 %), and over the 40s (16.6 %) represent the whole sample. The respondents tended to be well educated: 5.1 % were undergraduate students and 56.2% had earned undergraduate degrees. Student (45. 1 %), office worker (16.9%), professional (9.7%), and housewife (7.2%) represent the majority of the sample.

4.2 Cluster Analysis

Table I shows BIC, AIC, CAIC values according to the number of clusters. AIC statistics show the smallest value in the 5 clusters, and BIC & CAIC statistics show the smallest value in the 4 clusters. Overall results of 5 clusters are similar to 4 clusters. But a reduction error that reveals the estimation rate of class membership shows the highest accurate prediction of over 80% in the 5 clusters. Therefore, 5 clusters were selected as the most representative number of clusters.

Table 2 shows the result of cluster analysis according to Internet usage behavior. The "cluster size" category represents the size of each cluster. The activity categories reveal the relationship of Internet usage behavior with each cluster as a conditional probability. For example, the probability of visiting e-mail related -sites is 27% among the respondents belonging to the first cluster.

LC cluster analysis takes consumer choice probability into account (which is difficult to do in simple cluster analysis and factor analysis), thus providing objective statistical data for determining size and the number of clusters (Kim and Lee 2001). Cluster I is composed of 26% of respondents who visit the sites of news (53%), finance and stocks (68%), business (53%). They are predominantly business users. Cluster 2 (26%) is composed of users who frequently visit sites of e-mail, community, shopping, information search, employment, beauty and fashion. Cluster 3 (24%) is composed of hedonistic users who frequently visit sites where they play game, chat, listen to music, watch movies, and use adult sites. Cluster 4 (15 %) consists of generally passive users who rarely visit any sites except those categorized as "others." Finally, cluster 5 (10%) comprises the most active users who visit almost all of the Internet sites categorized.

TABLE 2

CLUSTER ANALYSIS (THE MOST FREQUENTLY VISITING SITES)

4.3 Characteristics of the five clusters

Cross tab analyses were conducted with demographic characteristics, Internet usage behavior, Internet buying behavior, mobile Internet usage behavior, and lifestyles across 5 clusters to illustrate the specific characteristics of each of the 5 clusters. The lifestyle measures consist of eight factors: fashion life, food life, shelter life, leisure life, buying/consumption life, one's values, Internet usage, and advertising/entertainment/media behavior (Park 1996, 2000). The results show that all clusters have significant differences across the variables.

In the Internet usage behavior category, cluster 5 (41.7%) uses the Internet for the longest hours among the 5 clusters (over three hours per day) and cluster 4 (32.4%) is the group who uses the Internet for the least hours (less than 30 minutes). In e-mail related behavior, cluster I mostly uses the company's domain (28.4%), and cluster 4 has a much higher ratio of non e-mail users (10.5%) than the other groups.

In community activity, clusters 2, 3 and 5 use the Internet community almost everyday, while clusters I and 4 hardly use the community (only one or two times a month). All clusters utilize the bulletin board for community information.

There were differences in the usage frequency of chatting and messenger services across the clusters. In general, clusters 2, 3 and 5 have a high frequency and time of chatting and messenger services, while clusters I and 4 have a low frequency of those.

In mobile Internet usage, clusters I and 4 have low usage/ experience rates of 32% and 19% respectively, while clusters 2, 3 mid 5 have high usage/experience rates of over 50%. All of the clusters use bell sound and e-mail services most frequently. Cluster 1, 4 and 5 use high degree of news service and stocks and finance services, and cluster 2 uses background image service highly.

In Internet buying behavior, clusters 1, 2 and 5 have higher average buying experience, frequency, and amount of purchasing than clusters 3 and 4. Though cluster I has high buying experience through the Internet, they use the Internet shopping mainly for business instead of their personal needs or wants. On the other hand, despite cluster 3 having high mean scores in most Internet activities, they have low purchasing experience. The reason of low Internet purchasing experience is due to their demographic characteristics. That is, cluster 3 is the youngest cluster, more than half are teenagers and over 30% are in their twenties and they are primarily composed of students. Therefore, cluster 3 represents a latent purchasing power group whose members will likely convert to heavy buyer status when they gain economic power.

The reasons given for Internet shopping are fairly consistent across groups. Most of the clusters select low prices and saving time as the most important reasons for Internet shopping. On the other hand, most of the clusters choose invisibility of the products, the insufficiency of product information, and the reliability of the sites as the reasons of not buying from Internet. Cluster I and 2 are concerned about the possibility of personal information release. Cluster 4 responded that the insufficiency of enjoyment kept them from making purchases.

In terms of lifestyles clusters 2, 3 and 5 are fashion oriented, Western and convenience food seekers, impulsive shoppers, celebrity worshippers, and they enjoy sociable leisure activities. Clusters I and 4 do not exhibit the previously described characteristics and enjoy self-fulfilling leisure activities rather than sociable leisure activities. In addition clusters 2, 3 and 5 have a higher degree of involvement with the Internet than clusters I and 4.

4.4 Identifying the Net-Generation

Cluster 1, which was named the Business Purpose group, is a married male dominant cluster mainly in their thirties and forties, mainly composed of office workers and professionals and the group has a high number of university graduates (53.3%). They have relatively low Internet usage and frequently use their company's domain (28.4%) in using e-mail. They passively participate in Internet community, chatting and messenger services, and mobile Internet usage and are dissatisfied with bad connections, slow speeds, and communication expense in using the Internet.

In terms of Internet buying behavior, they have relatively high Internet buying experience, buying frequency, and amount of purchasing and do Internet shopping to buy products and services. In addition, even though it is not a significant effect, they have a lot of experience buying office and stationary products. They do Internet shopping frequently, but their purpose is mainly for business. They are not aesthetically oriented, do not like Western and convenience food styles and are planned shoppers. Also, they enjoy self-fulfilling rather than sociable leisure activities and have the lowest degree of involvement and fun seeking behavior with the Internet.

Cluster 2 was named the Regular User group. It is a young (teenagers-20s), female dominant cluster mainly composed of students. They use the Internet at a mid-level and have a relatively high usage in community, chatting and messenger, and mobile Internet. In Internet buying behavior, they have relatively high Internet buying experience, buying frequency, and amount of purchasing. They do Internet shopping for convenience of delivery and don't buy because of insufficiency of product information. They are concerned about the safety of using the Internet to make purchases. In lifestyles, they have Western and convenience oriented eating habits. In addition, they are heavily involved in equal opportunity issues and opposed to traditional family values and have a low degree of fun seeking behavior with the Internet.

Cluster 3 was named the Hedonic Involvement group. It is the youngest cluster. More than half are teenagers and over 30% are in their twenties. This group is primarily composed of students. Cluster 3 has high Internet usage in general (community, chatting and messenger, and mobile Internet and so on). In Internet buying behavior, they have lower than average purchasing experience, purchasing frequency, and amount of purchasing. They frequently visit Internet shopping sites for events and free gifts. In lifestyles, they like Western and instant foods most and have the worst eating habits among the 5 clusters. They usually enjoy leisure activities with friends and they are heavily impulsive shoppers. In addition, they are active celebrity followers and TV watchers, hedonic and fun seekers, and they have the highest degree of involvement with the Internet.

Cluster 4 was named the Passive User group. It is a cluster primarily consisting of females in their thirties and females and males in their forties. They are primarily composed of married people and have a high number of housewives, sales persons, and small business owners. They are the most passive group among the five clusters in Internet related activities. They have the highest ratio of people who do not have e-mail addresses, they do not participate in Internet community activities or use mobile Internet, chatting and messenger services. Cluster 4 has relatively low Internet purchasing experience, purchasing frequency, and amount of purchasing. In lifestyles, they are health-conscious and are opposed to convenience products (Western and instant foods), societal change (the sexual revolution, equal opportunity issues and the increasing divorce rate) and hedonistic values (impulse buying and celebrity worship). They are the only cluster that has aesthetic senses and orientation regarding shelter life. Also, they enjoy selffulfilling leisure activities rather than sociable leisure activities, and have the lowest degree of involvement with the Internet.

Cluster 5 was named the Active Involvement group. It is a group comprised of more than half males in their twenties or thirties. This male dominated group has the highest mean score in most Internet activities, such as e-mail, community, chatting and messenger, and mobile Internet. In addition, this group has the highest rate of Internet purchasing experiences, frequency, and amount of purchasing, and they do Internet shopping because of the variety of products. They frequently eat convenience and Western food, engage in social activities, exhibit high advertising elasticities and report a high degree of involvement with the Internet.

According to the integrated results, clusters 2, 3 and 5 can be identified as the Net Generation.

V. CONCLUSIONS

Due to it's preeminent ranking in terms of high speed Internet access (International Telecommunication Union 2003), Korea has drawn a lot of interest from Internet marketing and e-commerce researchers from all over the world. This study analyzes the important Internet user group, Net Generation, using a large sample of Korean Internet users.

Despite the attractiveness of this group to marketers and its importance as a harbinger of future consumer behavior, there has been little academic research and no clear and consistent definition or criteria for defining the Net Generation or describing its key behavioral characteristics. Therefore, this paper uses Latent Class cluster analysis to classify consumers according to Internet usage behavior, then, identifies the definite and meaningful Net Generation through synthetic investigation of Korean consumers' lifestyles, Internet usage and buying behavior, the use of mobile Internet usage, and demographic characteristics.

The results show five clusters of Internet users: Hedonic Involvement group, Active Involvement group, Regular User group, Business Purpose group, and Passive Usage group. Three similar clusters of strong Internet characteristics, Hedonic Involvement, Active Involvement, and Regular Internet User group, comprise the Net Generation.

The Net Generation has strong Internet involvement and commitment, contains a youth dominated demographic profile, mostly teenagers to early thirties, intensive use of Internet, e-mail, chatting and messenger services, and engages in a full range of activities in Internet community. More than half of them have used mobile Internet services. In terms of Internet buying behavior they are not only very experienced in making actual purchases, but also visit Internet shopping sites. In lifestyles, they are fashion oriented, Western and convenience food seekers, heavily impulsive shoppers, and celebrity worshippers.

In contrast to the three clusters of the Net Generation, the other two clusters, the Business Purpose group and the Passive User group, show very different characteristics. They passively participate in Internet related activities. In lifestyles, they enjoy self-fulfilling leisure activities and have a low degree of involvement with the Internet.

According to the results, the Net Generation is an important and growing consumer group. Although simplistic definitions confine it to people born after 1977, the current study found that people into their thirties exhibited Net Generation characteristics. The results thus suggest broadening the definition or using cognitive age or behavioral characteristics rather than birth-year-based definitions. And the results show the possibility of segmentation within the Net Generation. Even though the Net Generation in general shows similar characteristics in terms of Internet behavior and demographics, their motivation, behavior and lifestyles; are diverse. That is, the Net Generation is heterogeneous, and segmentation based on the current study's cluster analysis can be a useful marketing strategy.

In addition, it is very important to manage the Net Generation well because they are skilled at using Internet, mobile and digital products, and have purchasing power. This study attempts to provide a foundation for future Net Generation research and improve the efficiency of companies using e-commerce by providing a framework for more effective advertising and marketing strategies that target the Net Generation.

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