Tales of collapsed pension schemes, court battles and pensioners losing their pension funds are never far from the headlines. Yet consumer industries are gearing up to profit from the huge rise in the number of over-65s who represent a future goldmine according to the report The Swing Generation: Marketing to the Over 65s, from Euromonitor International.
The swing generation, so called for the popularity of swing music at the time of their birth and childhood, includes people aged 65 and above. From 2000 to 2005 the percentage of the total world population over the age of 65 grew from 7.1% to 7.5%, according to Euromonitor International. Consumers of this generation, described as the “yuppie elderly”, tend to be in good health with high disposable incomes; as a result they should be a target market for all consumer goods players. In Japan, for instance, pensioners are said to possess almost half of the country’s ¥11.3 trillion (£5bn) in savings, and have an income only 10% less than the country average.
Many consumers over 65 are determined to enjoy retirement, doing and buying all the things they feel were denied to them earlier in their lives. In particular, elderly people in developed markets are increasingly taking out loans or equity on their homes in order to finance primarily holidays and expensive cars. This presents significant opportunities, particularly for marketers of luxury goods and services.
The rising numbers among the generation of over-65s is already leading to strong growth for a number of consumer markets across the globe, particularly those with a focus on improving health. Functional food products, for instance, are very popular, due to their fortification with ingredients that may prevent many of the ailments associated with old age. The market for these products grew by an impressive 96% between 2001 and 2006, according to Euromonitor’s research. Health foods companies can undoubtedly benefit from an ageing population and their interest in their health.
Marketers in these industries are only just coming to terms with the fact that the over-65s represent a large and growing consumer market, and need to be approached in a different way to younger consumers, even baby boomers. Traditionally anyone over 50 has been classified in the band of senior citizens. However, there are major differences in the outlook of today’s over-50s and those over 65. As new methods of segmentation have been sought, narrower age groups have emerged as a successful method of achieving this. The US so far seems to be the most developed in terms of segmentation: for instance, the Centre for Mature Consumer Studies at Georgia State University segments the elderly into four groups: “healthy hermits”, “ailing outgoers”, “healthy indulgers” and “frail reclusives”.
Companies are beginning to appreciate the growing opportunity that the over-65s represent and are altering their marketing strategies accordingly. Kellogg’s, for example, is targeting older consumer through the relaunch of its Smart Start cereal, now in three varieties, each with specific health claims, “antioxidant”, “soy protein” and “healthy heart”.
The cosmetics industry is also introducing a flurry of products aimed at older women. According to Euromonitor International’s latest research, nourishers/anti-agers was one of the fastest-growing sub-sectors within the cosmetics market between 2001 and 2006, growing by 99% to reach sales of $12.7bn (£6.5bn). L’Oréal, for instance, launched its Pro-Calcium Age Re-Perfect line in 2006, advertised by 68-year-old actress Jane Fonda. More skin care companies are set to follow-suit and develop calcium-based skincare products for older skin. L’Oréal itself is also expected to extend its range of products for the over-60s into colour cosmetics and haircare products.
Companies will need to adapt for the boom in over-65s spending. The ageing population is set to increase, particularly when baby boomers start to reach 65. All consumer industries will have to adapt in order to profit from this growing consumer segment, who will be living more independently and have higher levels of discretionary income to spend. Adaptations, such as simple packaging, larger keypads and stronger flavours to suit older palates, will improve business’ performance over the coming years
Gina Westbrook, research director for Euromonitor International, contributed to this week’s Trends Insight
David Fletcher, managing director, MEC Media Lab
Here’s the biggest paradox of modern times: as society gets ever older so we are less likely to live according to age-defined rules. Want a baby at 55? Go ahead. Digitally connected? Natch.
The current 65 to 74s will be the last generation to benefit from the glorious interaction of final pension salary schemes, property based equity, good post-retirement life expectancy and even higher aspirations for the quality of that life.
And as well as financial resource they have time to invest in thinking about their consumption – an active selection based on merit more than habit. So get your proposition right and there’s an audience willing to hear your case, adapt repertoires of brands in lifelong categories and adopt new categories that deliver their promise.
The corollary of all the resources of time, energy and aspiration however is that “grumpy old…” is a real dynamic. Under-deliver to these people and you’ll know about it both in your inbox and your repeat sales figures.
So go for it. Just don’t call them “over” anything.