klaus
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Jan 26, 2006, 12:22 PM
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Watch out! Here comes the age wave
By Klaus Rohrich
Most North American businesses want nothing to do with seniors
Sometime one wonders just how smart the people that run this country’s major businesses are. It’s a known fact that most companies who do not manufacture exclusively for the mature market want to sell their goods and services to that market segment aged 20-34 or in a pinch they’ll even look at the 35 to 49 demographic, but as a rule the 20 to 34 year-old market is king. While these two market segments combined currently account for about 45% of the population, their combined spending power falls far below that of the 50+ age group.
The 50+ age group currently accounts for close to 30% of the total population, comprises 42% of the adult population, accounts for approximately 50% of all discretionary spending and owns upward of 80% of all the personal wealth held in our financial institutions. Yet they are targeted in fewer than 5% of all advertising and they account for less than 5% of all market survey respondents.
What’s wrong with this picture? When one considers the purchasing behavior and brand loyalty inherent to the 50+ age group it would appear that not pursuing this market is folly. For instance, when purchasing food, 76% of mature purchasers show loyalty between one to four brands, 77% do so in their beverage purchases, while an unbelievable 90% switches between 2 and 4 brands of personal care products.
It’s not like there aren’t companies that produce foods, beverages or personal care products; it’s that they seem to take their older customers for granted by appealing to younger purchasers. How can this trend toward appealing to younger buyers affect the health and welfare of businesses? Very likely there will be little immediate impact on their market, as the number of 20 to 49 year olds will remain relatively static at approximately 40% over the next decade. What will change is the number of individuals described as “mature” (over the age of 50) will increase by one third over the same time period. By the year 2025, the 50+ demographic will eclipse the 20-49 by a substantial number ( 38% to 52%) and that’s when the problem of ignoring your base purchaser will make itself most evident as over half of the population will be “mature”.
It isn’t difficult to ascertain why a lot of businesses are ignoring the older buyer. First of all, there isn’t a great deal of sex appeal in mature people (Candice Bergen notwithstanding) and one of the driving motivations in most marketing efforts aimed at younger buyers is sexual. Older purchasers buy their products on very specific, well-reasoned motivators, whereas younger buyers just want what they want when they want it.
Secondly, most marketing executives in today’s corporations are in the same demographic as the people to whom they are appealing, i.e. 20 to 49. Thus there is a lack of objectivity among these executives that translates into a kind of Achilles’ heel. They aren’t really comfortable evaluating the effectiveness of a potential ad campaign, particularly if no focus groups are involved.
Finally, most advertising agencies employ the youngest of the young, looking for that edgy, creative 20-something that will bring an outside-the-box perspective to the agency’s creative team. Very few people inside the advertising business think that gearing marketing campaigns toward mature buyers is outside the box because their box has only four sides, while a real box has six.
Most ad people look upon aging as a form of poverty and therefore shrug off a market that could increase their clients’ business hugely.
There will come a time when advertisers discover older buyers and begin to seriously look at that market, particularly as the aging, self-indulgent “Baby Boomer” crosses that 50+ threshold. Until then they will continue to pursue that 20 to 34 year-old prospect whose discretionary spending power remains at just under $10,000 per year.
Klaus Rohrich is President and Creative Director of Taylor/Rohrich Associates Inc., a marketing and advertising firm that specializes in niche marketing retirement real estate developments http://www.maturitymarketing.com.
(This post was edited by klaus on Jun 29, 2006, 1:05 PM)
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