Business can be unpredictable, but one thing we know for certain is that the dramatic and unprecedented ageing of populations demands a business response.
In recent years, the body of knowledge about elderly people has improved, as has our portfolio of useful marketing techniques to appeal to them, there is still much we have to learn.
While it’s difficult and dangerous to generalise, here’s my pick of the five most important universal truths that we can use when considering a business response to the ageing consumer.
We know that in nearly all regions the median age is increasing. The only differences are the starting point and the rate of change. Allied to this is our understanding of the declining birth rate in most countries. The relationship between these two factors results in one of the most significant social and economic upheavals affecting the planet.
In the USA and most of Europe (and many countries of the Asia-Pacific) older people own the largest percentage of wealth. This is not surprising because the components of wealth are residential property and pension investments. Both of these are financial instruments that increase in value with age. There are many marketing opportunities resulting from the conversion of this wealth into income to support elderly people in their retirement.
3. Lack of uniformity
Whichever prism you use to view older consumers (for example, economic, social, educational, technological literacy) there is little consistency in their behaviours and personal circumstances. The wealthy, healthy and well-educated 65-year-old professional lady has very little in common with the poor and unemployed manual worker with failing health. At Silver Group we say: Age is a poor proxy for predicting behaviour.
4. Unreadiness for retirement
Very few governments are adequately prepared to manage the fiscal and social changes resulting from the ageing of their populations. Like their governments, most citizens, approaching retirement, are financially unprepared to maintain their quality of life once they leave employment. This situation has been made worse, in Europe and the USA, by the financial effects of the recession.
In those countries that are still experiencing a recession, we can be confident in predicting that older consumers are going to fragment into the ‘haves’ and the ‘have-nothings’. The split between these two will result in the majority of elderly people having to reappraise how they live the last quarter of their lives.
5. Changes in lifecycle spending patterns
While ageing populations are predictable in number, their individual behaviour is not. Traditional views of lifecycle spending will be challenged as the baby-boomer generation puts its unique stamp on the way people age.
Our traditional assumptions of lifecycle expenditure have been crude and inaccurate. Spending on non-essential items actually increases beyond 60. A recent, large-scale study of spending on non-durable items including food, clothing and drink showed that spending on food, transportation and “personal care” (which includes clothing) do decline beyond the age of 60. However, this may be explained by lifestyle changes rather than tightening of the purse strings. For example, when people are more likely to be retired, expenditure on transport to work declines. Non-work travel time actually increases over the second half of the life cycle; people have more time to go to museums and see friends. Similarly, people out of work need fewer—or less expensive—clothes, so expenditures on clothing decrease.
What all this means to marketers
We are entering a new era in which companies can no longer be complacent about population ageing because the ageing of customers is a dramatic and immediate phenomenon.
The relentless physiological changes that ageing bodies and minds undergo will demand a response from almost every company—even those that are not overtly attempting to appeal to older people.
Our innovation workshops reveal that these changes can be a major source of new product requirements and opportunities for organisations to compete on the excellence of their age-friendliness.