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In the next few decades, the "baby boomers",
the large generation born in the
1950s and 1960s, will grow old. As they do, their sheer numbers
and their different attitude to age will create new markets in
the world's rich countries. Yet business remains largely obsessed
with youth. Many companies seem blind to the fact that their customers
are greying. Some have started, with uneven success, to market
and advertise to an older population and to design products and
services that meet its special needs. Few, though, see the elderly
as an exciting group to sell to.
In industrialised countries, the over-60s already
account for 20% of the population--compared with less than 12%
in 1950. By 2050 that proportion is expected to rise, on average,
to a third, reaching over two-fifths in Japan. However, companies
still spend 95% of their marketing and advertising budgets on
the under-50s. Many businesses have not yet shed the outdated
view that the mature market is made up of stingy old-timers set
in their ways. Unless you are in the business of prescription
drugs or retirement homes, the argument goes, why bother?
One good reason is that the old are wealthier and
healthier than ever, and the self-indulgent baby-boomer generation
in particular is determined to enjoy itself to the end (see chart
2). According to the United States Census Bureau, the poverty
rate among Americans over 65 has dropped from 35% in 1960 to 10.2%
today, compared with a fall from 22% to 11.3% for the population
as a whole.
Senioragency International, a consultancy specialising
in marketing to the elderly, says that the over-50s own three-quarters
of all financial assets and account for half of all discretionary
spending power in developed countries. Over two-thirds of them
own their own homes, three-quarters of which are unencumbered
by a mortgage. In America, they control four-fifths of the money
invested in savings-and-loan associations and own two-thirds of
all the shares on the stockmarket. Not only are the elderly wealthier,
they are also healthier and have more time to spend their money.
A few decades ago, most people had only a few years to live by
the time they retired. Most workers retiring today can look forward
to 15-20 years of free time and, thanks to medical advances and
healthier living, remain active for most of it.
Free time and health, combined with relative financial
comfort and a greater readiness for self-indulgence, are creating
a mature market eager to consume and explore. Over the past two
decades, consumption by the over-50s in Europe has increased three
times as fast as that by the rest of the population. In industrialised
countries, people over 50 buy about half of all new cars and have
a weakness for the top end of the range. Even Harley Davidson,
the maker of the legendary motorbike, cannot escape the age wave.
Long gone are the days of young easy riders: the average age of
its customers today is 52.
Getting to know long-ignored older customers, however, is hard
work for marketing youngsters who are used to lumping all people
over the age of 60 into a grey basket of frailty, tweed and stinginess.
Advertising's creative types, the people who dream up commercials,
are considered ancient by the time they are 35. Finding the right
way to communicate with an older audience is a challenge for them.
Many advertisements still caricature older people
in order to make younger audiences laugh--as in the soft-drinks
advertisement that portrays an adolescent using his grandfather's
trembling hand to shake his can. Yet the over-50s make up the
largest share of TV audiences, spending 30-40% more time in front
of their boxes than the rest of the population.
Jean-Paul Tréguer, the French founder of Senioragency International
and author of "50+ Marketing" (Palgrave, 2002), says
that not so long ago European company executives would laugh when
he tried to convince them that they should pay more attention
to older consumers. Now, he says, everybody is talking about them,
but no one knows what to do.
America is a few years ahead and has developed
a better understanding of the nuances of marketing to the old.
The Centre for Mature Consumer Studies at Georgia State University,
for example, segments the elderly into four groups--"healthy
hermits", "ailing outgoers", "healthy indulgers"
and "frail reclusives". Ken Dychtwald, author of "Age
Power: How the 21st Century will be Ruled by the New Old"
(Putnam, 1999), prefers to segment them according to stages in
their life--tracking people as they become, for example, empty-nesters
and grandparents, or (sometimes) single again. Travel companies
such as Grandtravel and FamilyHostel have followed that road with
packages for older travellers and their grandchildren.
Better segmentation, however, does not mean that
marketing departments always get it right. When Gerber, a maker
of baby food, realised that many older consumers with dental and
stomach problems were buying its products for their own use, it
decided to launch a line of similar food called Senior Citizen.
Ageing shoppers, however, had no appetite for showing
up at the cash register with purees designed for the elderly,
and the product was withdrawn.
The most successful advertising campaigns targeted at mature consumers
focus instead on active and healthy lifestyles and introduce positive
role models. Rejuvenated patients cycling with their grandchildren
or practising TAI CHI are far more effective than the stereotype
of a frail arthritis sufferer.
Even the youth-obsessed cosmetics industry--Lancome
once ditched Isabella Rossellini as its model because she was
considered too old at 42--is getting better at portraying women
over 50. Since such women make up more than half the market for
face cream in developed countries, that is a wise move. Last year
L'Oreal recruited the then 57-year-old French actress Catherine
Deneuve to promote its hair-care products, while Estée
Lauder asked Karen Graham, its star model in the 1970s, to be
the face for a new cream for the mature market.
It is not all about image and communication, however.
Products and services also need to suit older consumers. Some
companies are catching up with the need to adapt to older users--the
food industry in particular. Unilever's margarine products were
in decline until it launched its Proactiv spread, which reduces
cholesterol. The advertising campaign focused on happy consumers--mostly
over 50--attesting to their lower cholesterol levels. According
to Jean Marc Liduena of Unilever Bestfoods Europe, the success
of Proactiv was responsible for turning round Unilever's margarine
division.
Packaging and design are also slowly adapting to
the mature market. When Danone, a food and beverage giant, decided
to target older consumers with its new calcium-rich Talians mineral
water, it made sure that customers would have no problems with
the bottle. The label was designed to be clear and readable, while
its larger and easy-grip cap is simpler for arthritic hands to
open.
A similar approach has been adopted by other industries as well.
Once it had identified the older population as a promising growth
market, NTT DoCoMo, a Japanese telecoms company, launched a new
mobile phone. Called Raku-Raku, or "easy-easy", it has
a panel with larger buttons and easier-to-read figures. After
its launch last September, over 200,000 units were sold in less
than two months.
Products and services adapted to older customers
often benefit everybody. Three years ago RATP, the Paris public-transport
network, asked its older passengers what they disliked most. The
metro map layout came high up their list. So the RATP introduced
150,000 copies of a simplified and more readable map, originally
supposed to co-exist with the old one. But its instant success
with all passengers--old and young alike--led to the old map being
replaced by the revised one.
Mr Tréguer argues that designing for the
young excludes the old, while designing for the old includes everybody.
With its population of over-60s reaching almost 25%, Japan has
been at the forefront of a trend to create so-called "universal-design
products"--products that can be used by anyone, regardless
of age and ability. In 1999, members from 17 industrial associations
created the Kyoyo-Hin foundation--the foundation for universal
products--and in 1998 the Japanese government proposed to the
International Organisation for Standardisation a new global standard
for products and services accessible to people of all ages. New
guidelines were published last November.
The approach has worked for Fiskars, an American
company: its "soft touch" scissors, which operate like
secateurs and are therefore easier to use, but are also modern-looking,
have been a hit with people of all ages in America. The same goes
for Oxo's arthritis-friendly, contemporary-looking range of cooking
utensils.
To help young designers to understand older users'
limitations, Age Concern, a British non-profit organisation, has
developed a "through other eyes" training programme
for retailers. It tries to simulate the physical limitations that
older customers experience when shopping. Ford, a car maker, has
come up with something called "the third-age suit" to
help its design engineers--most of whom are under 40--grasp the
needs of ageing drivers. The outfit adds about 30 years to the
wearer's age by stiffening the knees, elbows, ankles and wrists.
It also adds material at the waist--a rotund stomach affects people's
ability to sit easily--and it has gloves that reduce the sense
of touch. Ford's lucky designers also have to wear yellow scratched
goggles to find out what it is like to have cataracts. The exercise
has been fruitful.
Thanks to the third-age suit, the company's cars
are now easier for everyone to get into and out of; their seat
belts are more comfortable to wear; glare has been reduced; and
the controls are more readable and reachable. Such initiatives,
however, remain the exception rather than the rule. Despite the
prevalence of grey hair in boardrooms, companies are only just
waking up to the impact that shifting demographics will have on
consumption. The vast majority of them are ill prepared for a
transformation that, as Mr Dychtwald puts it, will turn a world
focused on the young into a gerontocracy. See related content
at http://www.economist.com/business/displaystory.cfm?story_id=1270771
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©2002 TABIC. All rights reserved.
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