Is Gen Z willing to pay for sustainability? An advanced market segmentation analysis

Purpose The purpose of this study is to develop a segmentation model that uncovers distinct segments of Gen Z respondents based on their perceptions related to sustainability issues, with the United Nations Sustainable Development Goals (SDGs) as a framework, along with willingness to pay a premium for sustainable products. Design/methodology/approach Drawing from two national samples of Gen Z individuals and utilizing state-of-the-art econometrics techniques – Finite Mixture Modeling – the authors apply perceptions of the importance of SDGs and related societal issues, along with demographic and psychographic factors including willingness to pay a premium for a brand that makes the world a better place, across two longitudinal studies to determine differentiated segments of Gen Z individuals. Findings These findings explore Gen Z’s perspectives related to sustainability with implications for managers and policy makers. Results reveal segmentation models with two segments of Gen Z consumers with differing model characteristics across the two studies. Findings highlight how changes in public sentiment can substantially alter the characteristics of consumer segments over relatively short periods of time, posing challenges for traditional assumptions about segmentation model generalizability and stability. Originality/value As demand for sustainable goods and services grows, brands continue to incorporate sustainability and social responsibility within their marketing practices. Existing research supports the rationale (market-, policy- or ethics-based reasons) for firms to take a leadership role in addressing important environmental and societal issues. However, there remains a gap in research that explores perceptions related to sustainability and social justice initiatives from a segmentation perspective related to Gen Z consumers. This study reveals the impact of recent socio-political shifts in sentiment on the generalizability and stability of segmentation models. It contributes to existing research by advancing the understanding of when and why segmentation models may need to be reassessed or adapted in dynamic cultural, social and political environments.