Sunday, October 08, 2006

Senior Marketing: An untapped opportunity

Currently most western countries are undergoing a profound shift in their population distribution. The world’s population is forecasted to age faster over the next half century than ever before and this will affect mostly the high-income countries. According to a United Nations Population Division’s study published last year, in 2000 the median age in the west was 37.3; by 2050 this is expected to increase to 45.2 and in some countries with lower fertility like Japan, Italy and Spain will be over 50.

The effects of aging will be less severe in the United Kingdom, partly because its birthrate is higher in comparison to most other European countries. However, the share of over-65 households will also increase slowly, from 26 percent in 2003 to 29 percent by 2025.

Alongside their relative growth in numbers, the senior consumers wield considerable economic power in the UK. According to published data over 45’s have nearly 80% of all financial wealth, and are responsible for about 30% of consumer spending. There is little doubt, if any at all, that as years go by the western societies will age and amongst these senior consumers will possess the largest disposable income.

Almost everybody in the marketing profession seem to appreciate that seniors represent an excellent marketing opportunity which no company can afford to ignore or worse alienate this group. However, this is not the case when it comes to marketing campaigns by most companies. One of the easiest examples we can refer to is the Television advertising. In the TV advertising, there is a domination of young people and a much rare appearances of seniors. Furthermore, their appearance often is shown in a negative demeaning way. While marketers increasingly acknowledge the importance of the “senior” market and more companies are being founded to serve this segment, especially in the medical and tourism industry, advertising in most industries still remains youth orientated and age-biased.

In comparison to the available products and services for the senior market the advertising business seem to be less open-minded and not willing to associate with the so-called “silver market” in fear of risking its youth image. It seems contradictory that although companies increasingly recognize the importance of the older consumer; advertising, which is one of the major vehicles that carry their communications strategy does not seem to adjust itself into the new reality. A research conducted in Netherlands analyzing more than 1000 commercials showed that in only 3% of these advertisements older consumers were shown.

People tend to collectively call the elders as the third age. However, it is evident from the current research that the senior market is not homogeneous and it must not be treated as one. Many marketers have found themselves trapped by treating them as one. According to the center of mature consumer studies at Georgia State University, the senior market should be segmented into four different groups and the main criterion is that of health. The four groups are “healthy indulgers”, “ailing outgoers”, “the healthy hermits” and “frail recluses”.

Several researchers have attempted to segment this senior market according to stages in their lives considering for example the time when they become empty-nesters or grandparents. The senior market has been segmented by these researchers on two decisive factors: children and work. Some research have adopted a conservative approach of defining them through their age as a segmentation criteria such the “young old” (55-64), the “mature old” (65-74) and the “old old” (75+). Different names also have been coined for this age related segmentation such as the “prime lifers” (50-65), the “recently retireds” (65-75) and the 75+ or “the masters” (50-59), “the liberated” (60-74), “the peaceful” (75-84) and “the elderly” (85+).

Segmenting this market purely on the basis of age may be an over simplified approach and other factors, like income level and state of health, should be also taken into account. Even so, the 50-65 segment seems to be the more “privileged” one. Research has shown that they (the 50-65’s) spend the most money, approximately 5 per cent more than the national average. A study by the Henley Center revealed that the 55-64 age group is responsible for about 30% of consumer spending thanks to their higher levels of home ownership and possession of private or occupational pensions. It has also been seen that on average the mortgage and other loans are paid by the age of 49 and the children leave home when the father is 54 and the mother is 52, leaving their parents with the biggest disposable income they have ever had in their lives.

Having all of the above in mind I firmly believe that marketers in UK seriously need to look at the relationship between their present marketing campaign and the senior market. There exists a huge opportunity for the small and medium scale companies to understand, identify and act on this untapped opportunity soon before multinational companies take control of it and it vanishes before their eyes.

esbn ESBN 81595-060305-733086-52