Young people who refuse to apply for credit cards have begun to "rectify" the consumer market

The consumption concept of millennials is changing towards practical rationalism, and the marketing strategy of winning by volume will no longer be suitable for young consumer groups. This article starts with the consumption behavior of young people refusing to apply for credit cards, objectively analyzes the reasons behind this consumption behavior, and puts forward suggestions for the marketing strategy of new consumer enterprise brands. I hope it will be helpful to those who want to understand the psychology of young consumers.

I don't know when it started, but "getting a membership card" seems to have become a standard feature in the consumer market. From gyms, barber shops, fruit shops to video websites...in order to attract consumers to spend more, businesses always try their best to promote membership cards with different discounts. But as the younger generation of consumers gradually form their own unique consumption habits, "getting a membership card" has gradually lost its appeal.

The 2022 China Fitness Industry Report released by GymSquare shows that "one-time payment" has become the second largest payment form in the fitness industry with a share of 36%, second only to the long-term payment model of more than one year. In the video website membership and other daily consumption areas, young people are gradually resisting the "card application" consumption form and instead solving their daily needs in a more rational way, thus bringing new changes to the entire consumer market.

1. Young people encounter "card application" routines

From an operational perspective, membership cards are essentially a form of pre-paid consumption. Merchants offer discounts to attract consumers to "deposit" their spending in advance with the merchants, which in turn allows them to recover funds faster and reduce operational cash flow pressure. However, although consumers receive greater discounts, they also face the risks of pre-paid deposits.

In recent years, cases where consumers' interests have been damaged due to poor business operations and businesses running away have become a major problem in the traditional consumer sector. In February this year, the "Analysis of Complaints Received by National Consumer Associations in 2022" released by the China Consumers Association showed that "shutdown" disputes caused great damage to consumers. Among them, some chain supermarkets suffered serious losses and weak supply, and arbitrarily restricted or modified the scope of use of issued prepaid cards, which has become a common phenomenon. There are also offline stores such as gyms, cinemas, and educational institutions that have closed down due to poor management or deliberately raised money and ran away, causing strong dissatisfaction among consumers.

College student Lili was one of the victims of the stored-value membership card trap. In April 2022, Lili, who wanted to learn dance, signed up for a training class at a dance institution on the recommendation of a friend. Although she had heard about the incident of the institution running away with money before, the enthusiastic attitude of the person in charge of the training institution and the first-class environment of the store dispelled her concerns. "I learned about the courses and payment issues in detail, and I got satisfactory answers. And I feel that the institution is very formal, the space is large, the decoration is also very high-end, and it looks very reliable." Lili said that in the end she paid 4,000 yuan and bought 25 street dance courses.

However, less than two months later, Lili received a notice from the head of the institution. The other party said that the class had to be suspended for a period of time due to renovation of the venue, and she has not been contacted since then. Lili felt something was wrong and went to the store to check and found that the door of the institution was closed, the front desk was empty, and there was no sign of renovation. After contacting the person in charge many times without success, Lili called the consumer complaint hotline. After verification by the relevant departments, she received a reply that "the dance institution has closed down." To date, Lili's remaining 21 classes of more than 3,000 yuan in tuition fees have not been refunded.

Xiao Ma was also fooled by the "card application" scam. During the Chinese New Year this year, Xiao Ma was preparing to buy New Year's goods when he saw the supermarket launched a "charge 500 and get 200 free" promotion. Considering that he shopped frequently, Xiao Ma immediately applied for a membership card and recharged 500 yuan. "The supermarket shopping guide said that this membership card can be used to buy almost all the goods in the supermarket. I felt that I had made a profit at that time." After applying for the supermarket's stored-value membership card, Xiao Ma excitedly recommended this activity to his friends.

Later, when Xiao Ma was buying toiletries, he discovered that the prices of some supermarket products were divided into original prices and ordinary member prices. Xiao Ma, who had applied for a stored-value membership card, could only purchase products at the original price, while ordinary members only needed to register their mobile phone number to enjoy the ordinary member price at a price ranging from 3 to 20 yuan lower than the original price. After realizing that there was a price inequality problem for stored-value members, Xiao Ma asked the supermarket to return the card, but was told that "the usage rules have detailed the scope of use, and refunds are not supported after recharging."
Xiao Ma said that when he applied for the card, the shopping guide did not mention the specific rules of use. "As a consumer who has a membership card, I can't enjoy the price of 'ordinary members'. It's outrageous." The supermarket's "underhanded" operation made Xiao Ma buy a bicycle in anger. After spending the money on the membership card, he never set foot in that supermarket again.

2. The Awakening of Practical Consumerism

Although there are still consumers who cannot resist the temptation of discounts and fall into the "card application" trap, young people who have suffered losses have become more cautious about "card application" consumption, and practical consumerism has begun to awaken.

After the dance organization ran away with the money, Lili said that her awareness of prevention has been greatly improved. "Now when I hear words like 'prepay' and 'recharge', I will be alert immediately. For large expenses, I will confirm the specific after-sales scope again and again, record and keep the receipts." She also said, "Don't put all your eggs in one basket." Even in the new consumption scenario, she will no longer easily choose long-term, large-amount pre-paid consumption.

Xiao Ma, who always likes to "take advantage of others", realized the truth that "there is no free lunch" after being tricked by merchants. In his opinion, "If the discount period for card application is relatively long, it means that you are tied to the merchant. You will have to consume because of the card application, and you will not be able to try other better options."

However, although young consumers are wary of "applying for a card", it does not mean that they have given up on discounts. On the contrary, more and more young people with active minds, with limited disposable income, are beginning to prefer short-term and high-quality consumption plans to maintain a certain quality of life.

Yanyan, who has just worked for two years, revealed to the Jingzhe Research Institute that she is facing the pressure of renting a house and buying a car after work, which makes her consumption habits become conservative. Yanyan now needs to carefully calculate every expense, focusing on just needs and practicality. In order not to affect the quality of life, she has set an upper limit on how much money she spends on each aspect every month, and maintains a balance between quality of life and budget through the consumption method of "small amounts and multiple times".

In recent years, the growth trend of the consumer market has gradually slowed down. After experiencing consumption upgrades, young consumers have entered a new cycle of consumption stratification, and short-term consumption experiences with small amounts have become more popular. Taking course training institutions as an example, the Jingzhe Research Institute has observed that most institutions have launched short-term experience courses, with the number of courses generally within 5, and the unit price is 20% to 50% higher than the formal courses. According to the person in charge of the Guangzhou DT Dance Training Institution, even though the unit price is higher, many students still choose short-term courses as their first choice. The person in charge revealed: "Among the students who registered for the first time, more than 50% will first purchase a short-term experience course, and only after the experience will they repurchase a long-term course." It is worth noting that the number of students who purchased more than 20 classes (with a total cost of 1,800 yuan) is less than 10%.

The practical consumerism of young people is also fully reflected in the matter of "chasing TV series". Yanyan told Jingzhe Research Institute that she used to recharge her video membership on average once every two months for the "freedom to chase TV series". "But many times I just watch one of the TV series, and then it's 'idle' after watching it, and now the monthly membership is around 25 yuan, which is very expensive." In order to reduce unnecessary waste, Yanyan replaced the monthly membership with a weekly membership, and watched all the series within a week after stockpiling a certain amount.

Searching for the keyword "money-saving tips" on Xiaohongshu will bring up more than 100,000 notes. Related content such as which software is cheaper for similar products, how to get coupons, and recommendations for cost-effective products have all received a large number of collections and likes. Obviously, driven by practical consumerism, young consumers who have given up the "card application" discount have found more ways to save money without affecting their quality of life.

3. “Rational consumption” is popular among young people

The other side of practical consumerism is that young people's consumption concepts are becoming more and more rational. The "2022 China Millennial Youth Consumption Behavior Research and Analysis Report" released by iMedia Research shows that 72.5% of young people hold rational consumption concepts and have the habit of comparing prices when shopping. This data shows that young people are not really stingy, but they no longer waste money on impractical things.

In this regard, the "substitute" consumption popular among young groups is particularly obvious. On major social platforms, you can often see various affordable substitutes for big-name products shared: from common beauty substitutes to snack substitutes, and even travel destinations such as "Sanya" have begun to have affordable substitutes.

In terms of food consumption, the trend among young people to buy "leftover" food is a true reflection of the substitution consumption. Compared with the bread and cakes in cake shops that cost tens or hundreds of yuan, "leftovers" not only look not so good, but taste the same, and more importantly, are much more affordable. On Pinduoduo, Taoli bread leftovers have been purchased for 47,000 pieces, and there are countless leftovers of snacks such as meat jerky and biscuits that have been purchased for more than 100,000 pieces.

In addition, in the beauty market, the rise of domestic beauty brands is also due to the reason of substitute consumption. In the early years, the domestic low-end beauty market was basically occupied by Japanese and Korean brands, while high-end beauty was almost the main battlefield of European and American brands. However, as domestic beauty products have become increasingly prominent in terms of cost performance, more young people have begun to choose domestic beauty products as "substitutes for big brands." In December 2022, a group of beauty survey reports released by the discount e-commerce Vipshop showed that "substitute" and "cost performance" have become hot search terms for consumers, and more and more young consumers are willing to pay for cost-effective domestic beauty products.

The practical consumerism trend and rational consumption habits shown by the current young groups are not only affected by the consumer market environment, but also to a certain extent related to the environment in which young consumers grew up. The Jingzhe Research Institute mentioned in "40 Years of Changes in New Year Goods, a History of Consumption Upgrade" that the per capita disposable income of residents nationwide reached 2,400 yuan in 1995, an increase of 167% compared to 900 yuan in 1990. It was also from this period that China's consumer market began to show great development potential.

The post-95 generation, who grew up with the consumer market, has now become the main force in the consumer market. They have consumption power and demand for consumption quality, so under limited budgets, they will choose short-term, high-quality consumption models to satisfy their pursuit of exquisite life. Therefore, the past marketing strategy of winning by quantity is no longer applicable. For more new consumer brands and companies, young consumers who do not apply for credit cards are reshaping the entire consumer industry, and returning to high-quality consumer experience is the key to regaining recognition from young people.

Author: Mu Yu, Editor: Bai Lu

Source: WeChat public account "Jingzhe Research Institute (ID: jingzheyanjiusuo)"