Harnessing the potential of older generations

The Five Es of Marketing to the Aging Consumer : Title

The aging baby boomer generation is spending, tweeting, and staying active—and in the process obliterating past assumptions about older consumers and how to meet their needs. For marketers, future growth may rely on attracting aging consumers, who are wealthier, healthier, and more "youthful" today than ever before. But how to harness the enormous potential of this segment? By taking care of the five "Es."

Projections about the graying of the U.S. population are staggering. Between 2000 and 2030, the number of people age 65 or older in the United States will double from 35 million to 72 million, or 20 percent of the total population, according to the U.S. Census Bureau. And for the rest of the century, this age group will represent the world's fastest-growing consumer group (see sidebar: What About China's Aging Consumer?). The implications of this "agequake" are extensive. From falling birthrates and longer life spans to greater wealth and the need for healthcare, a profound shift is taking place in the needs, expectations, shopping behaviors, and preferences of maturing consumers. And in the time it takes to address these changes, waves of new entrants will join the ranks of aging consumers.

What are the secrets to attracting customers in this demographic? We have identified five "Es"—elasticity, electronics, experience, endurance, and empathy—that together create a foundation from which to attract maturing consumers.

The Five Es: Rethink Your Marketing Strategies

Spending by U.S. consumers 55 and older surpassed $2 trillion in 2009—a 110 percent increase in nominal terms over 1999, according to the U.S. Bureau of Labor Statistics. The fact is, a combination of working longer, larger inheritances, and more savings means that aging consumers today are less like the stereotypical frugal senior citizens, and more like younger consumers (see sidebar: Aging Consumer Myths. Busted!).

Aging consumers are wealthier, healthier, and more "youthful" today than ever before. How can marketers harness their potential?

With so many assumptions being proven false, it's time to rethink how to market to aging consumers. That's where the five Es come in.

Elasticity. Just because the "early-bird special" pricing strategy worked in the past to capture older customers doesn't mean it will work going forward. And assuming people will demand lower prices just because of their age could mean you are leaving profits on the table.

Premium-priced products or services targeted at this demographic are a gold mine waiting to be discovered—if done correctly (and in line with the other Es). A.T. Kearney's recent Global Maturing Consumer study finds that healthcare, food, and beverages are areas where aging consumers are willing to spend more money.1 Products and services within these categories in particular may be ripe for pricing review. Still, the strategy must be more than merely raising prices. Considering the complication of the global financial crisis and the consumer demands that come with premium pricing, a tactical evaluation of the pricing strategy is necessary.

Electronics. Today's aging consumer is online and proud of it. They may not be texting 24-7, but these silver surfers spend time in cyberspace (more than eight hours per week), aren't afraid to shop online (half say they do), and maintain profiles on social networking sites (one-third say they update and maintain at least one social site).2 Some marketers are already tapping into this new online boom. Seniormatch.com is one of the fastest growing dating sites around. We fully expect this trend to continue to grow. The youngster on a smartphone today will be an aging consumer tomorrow— and even more electronically minded than preceding generations.

What this means: Communicating with older people has become a lot more complicated. The TV ad on the nightly news may still draw eyeballs, but not enough to fully engage this group. And influencing purchasing decisions is also a tougher task, as many mature shoppers are loyal to their trusted brands. Indeed, more than two-thirds stick with brands they have previously used, compared to about half of younger consumers.3 Convincing these folks to buy your products requires a well-planned multi-channel approach with all the right messages.

Experience. Just what is the right "experiential" message for aging consumers? For the most part, it's youth. The products and services that attract these people offer the experience of youth with the comfort of meeting their physical needs. These buyers do not see themselves as senior citizens; they are active and want to feel and look youthful. The truth of aging, however, is that it comes with diminished physical capabilities—you run a little slower, see a little blurrier, and ache a little more. This reality requires products and services that accommodate an aging body. It's little surprise that sales of Botox and hair dyes are at all-time highs.

Successful companies will integrate the mature consumer's total experience into its marketing—developing products and services that address physical aging while striking a balance to ensure that buyers still feel young. Take Toyota's ad campaign for the Venza. An energetic gray-haired couple drives up in an SUV to go mountain biking while their daughter sits at home fully engrossed in the online world. This campaign is central to Toyota's attempt to capture the aging consumer market.

Experience also applies to packaging and store formats. More than half of aging consumers in our Maturing Consumer study report difficulty reading labels, and more than two-thirds would appreciate seating in stores.

Endurance. People are not just living longer, they're staying healthy longer. On average, a 60-year-old American has at least 19 more years of healthy life expectancy, a number that has grown by one year in four of the past five years. As life cycles stretch, and ailing years diminish, marketers must reevaluate how to attract and retain older customers. From pricing to promotions to maintaining customer loyalty, longevity will pose a challenge at every step. Products and services must accommodate uncertainty about life expectancy while holding up to the test of time. Critical categories such as housing, financial services, and durable goods must help aging consumers who, in the wake of the global economic crisis, are preparing for a retirement that could last as long as their working years. Indeed, financial institutions are promoting reverse mortgages as a way for homeowners to release the equity in their homes.

Empathy. Despite the importance of feeling young, today's elders still like to think that they are important to their families and especially to their grandchildren. Advertisements that show elders as wise and experienced, or as custodians of family traditions, do well in focus groups. Advertisers, retailers, and manufacturers will want to empathize with the social concerns and self-images of their mature consumers. This may mean hiring older retail staff and marketers who can understand their older customers.

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