More than 15.5 million people in the UK are over 55 years old, and the latest Experian projections are for that figure to reach 21.6 million by 2022. The group also accounts for the majority of the nation’s wealth. According to a new study by the research company, seen exclusively by Marketing Week, they divide broadly into two groups, one of which is an easy target for brands, while the other is a tougher nut to crack.
Drawing on its Mosaic consumer classification system, Experian’s research divides the demographic based on variables including age, income, house type, car, holiday, affluence and number of children. From that come two distinct groups – the ‘active retirement’ (AR) and the ‘elderly needs’ (EN). According to Experian marketing services consultant Richard Jenkings, the former represents a “big opportunity” and the latter a “difficult bunch to sell to”.
Jenkings says that those in the AR group in particular have often paid off their mortgages and downsized to cottages in the countryside to live near people in similar circumstances. There is also a “surprisingly marked” divide between ENs living in the North and ARs in the South.
However, both segments could represent a relatively untapped opportunity for brands. He says: “Underneath the two groups you can dig deeper into mortgages, debts and so on. The over-60s have around £1bn in housing assets to their name, so even if a tiny fraction of that is released, if they trade down to smaller properties outside the cities, then that is a big [potential spend] being pumped into the economy.”
Those in the active retirement group have seen their outgoings cut and they are looking to establish new friendships, engage in new leisure activities and explore new places. Many brands have failed to realise that the group has “a lot of spending power” and will consume goods that they feel are of value or quality, says Jenkings.
“These people [ARs] may still be at work, but without the costs of a mortgage and children at home, and yet how many people in their 50s, 60s or 70s have you seen in a car ad? This group is not necessarily actively marketed to.”
Experian’s study delves deeper into the over-55s demographic, investigating who they are, how they interact, their feelings towards the internet and social media, and the goods and services they want to buy. Its key discovery, Jenkings argues, is that the interests of this group are far from homogenous.
“The idea that everyone over 55 is the same is wildly wrong,” he says. “You always think of the over-55s pigeon-holed into this pot of bus holidays and cruises, but [late Apple chief executive] Steve Jobs would have been 57 this year – the over-55s are not all the same.”
Although people in the AR group will freely spend their money on a variety of products and services, Jenkings warns that engaging with those in the EN group will require a more strenuous marketing effort.
“Most people in EN can’t be bothered at their stage of life to switch from brands that they have been familiar with over the years,” he explains. “Few have the need or the motivation to purchase from new product categories. Still, who you target depends on what you’re trying to sell.”
This is where marketing plans can often come unstuck, with companies blindly categorising all over-55s as ‘old’. Marketers might be surprised by research in the US that shows spend on iPhones is greater among the over-60s than in the 16- to 24-year-old age group.
The question of whether people aged over 55 are technology active often creates heated debate among marketers. Experian’s research found that EN is the group least likely to use the internet, though the more technologically advanced consumers in this segment may buy occasional goods and services online, including their weekly grocery shop.
Those in AR are “not particularly active” online either, says Jenkings, but there is a rise in the number of “silver surfers”. Interestingly, they tend to engage more online with the brands they recognise from the high street or TV and more are starting to manage their finances online.
Some brands say it is a common misconception that the over-55s are not active online, with Marks & Spencer for one suggesting that there are big changes taking place in this demographic and that brands need to change their marketing to meet their needs (see The Frontline, below). But what about social media?
“The supposed fact that those in AR don’t have a presence in social media is becoming an untruth,” says Jenkings. “One of the biggest growth areas in social media is the over-55s.”
And yet there should be a hint of caution about overcommitting resources to social media at present. One business that has tried social media as a means of engagement with its core customer group is Retirement Villages. But the initiative did not gain the traction that was expected.
“Until recently we had a Facebook page,” explains sales and marketing director Sarah Burgess. “However, as this new Experian research found, while it may be a big growth area the number of over-55s who engage with it on any meaningful level is very small. As such, with little uptake, we cancelled the page and chose to concentrate resources elsewhere.” Burgess is currently marketing a new village using more “traditional marketing tools”, such as poster sites, newspapers and mail drops.
However, Burgess says the Experian research shows there is a shift underway: “Marketing to this age group will change in the coming years. The computer-literate 40-somethings who access the internet wirelessly on phones and tablets will be the over-55s of the 2020s. They will be sharing details on Twitter and Facebook. They are more savvy about marketing, and will rely less on printed newspapers and television ads. We will have to start shifting our marketing focus and reinstate the Facebook page.”
As people live longer and the size of this demographic rises, so the opportunities for brands will grow bigger. With age comes wisdom and it is a wise brand that sees diversity and dynamism among the over-55s.
We ask marketers on the frontline whether our trends research matches their experience on the ground
Chief marketing officer
As someone who markets almost exclusively to older generations, there is something ironic about one of the wealthiest demographics also being one of the hardest to target. This is our experience with mobile phones for older people.
It may not be a surprise that the research shows older people live in rural areas, they like to socialise with people like them and they spend a lot of money on overseas holidays.
It sounds like the ideal retirement we might all look forward to. It is interesting that digital television indexes so highly among the older population and this is something we will consider in future marketing initiatives.
For us the over-55s have two important attributes. First, there’s a huge diversity across this group. A 75-year-old could be a more active user of technology than a 50-year-old. Social group and job experience also come in to play, so don’t assume all older people are the same.
Second, the over-55s have specific requirements that need to be built into mainstream products so they can enjoy the same product experiences as the rest of us. ‘Special products for older people’ is stigmatising. Great product experiences should be for everyone.
Head of online and digital marketing
Marks & Spencer
The research highlights the misconception that this group is not active online. The over-55s demographic is the fastest growing group when it comes to online usage: within our core customer group around 80 per cent have a laptop, over half own a smart phone and one in three uses some kind of tablet device.
Quite simply our customer is changing and we have to change our marketing mix with them. More specifically, our campaigns have to connect with the customer who is at home watching the TV, with a smartphone in their hand – giving them a reason to interact with the brand through both devices.
Take our autumn/winter campaign – the night the TV ad first aired we offered free delivery to viewers who ordered before midnight – giving a compelling reason to shop the very latest M&S trends there and then. These customers are embracing online channels as a fun, inspiring and informative experience – and our campaigns have to offer them exactly that.
Dr Christine Broughan
Co-director, Age Research Centre
There is growing awareness of the importance of older people generally to our society – not as any kind of burden but as a real asset in terms of their contribution at work, as consumers and in communities. Eighty per cent of the wealth of this country is in the hands of the over-45s – a critical shift away from the traditional picture of a consumer society dominated by aspirational youth.
This new research clearly shows the potential for marketers and some of the characteristics of what may well become the most influential target grouping. But it also highlights the challenge. Marketers need to quickly gain a genuine understanding of the particular needs of this group, in order not to be patronising and to appreciate the nuanced differences between younger and older target audiences.
For example, there is a huge opportunity in the motor industry. Research in the US shows that the number of drivers over 70 will triple during the next 20 years, meaning a huge new market to sell to.
This will mean a balance of the traditional messages around quality and desire, but also engaging with older people over the idea of new types of vehicle with better access, visibility, and more active and visual dashboard information.
Sales and marketing director
The over-55s are our target market and the results confirm what we’ve discovered over three decades of marketing to the age group.
We have also earmarked the two tiers of older people [identified by Experian as ‘active retirement’ and ‘elderly needs’]. A number of our villages cater for both and our challenge is marketing directly to each without putting the other off.
Active retirees may not want to think about ‘what’s to come’ and so may prefer not to live in a property that shares grounds with a care home, for instance. Conversely, others think in broader terms and embrace the opportunity to ‘future-proof’. That’s one of our key marketing messages – the reassurance and peace of mind that if you do need help in the future it’ll be there.
The testimonial comments touch a chord with us. As it says on our website ‘our residents are our best ambassadors’. We incorporate their testimonials and case studies on various platforms.
We also invite them to sales and marketing events at our villages. Again, as the research reveals, this age group likes to be presented with straightforward information in a simple way – a chat over a coffee works wonders sometimes.
- Mostly over 65 with grown-up children
- Have often moved to rural and coastal areas
- Have downsized, so have no or small mortgage with cash to spend
- Not all are affluent and some may struggle with bills
- Looking to form new friendships and try new things
- They do want smart and formal clothes, but don’t want DIY products
- Not particularly active online but growing number of “silver surfers”
- Prefer marketing information by landline and post, as well as digital TV
- Majority are people who had lower incomes and rely on state pension
- Many tend to live in nursing homes and sheltered accommodation
- Large numbers of pensioners who struggle to look after houses
- Large numbers found in the North
- Particularly unfamiliar with IT and unlikely to use internet
- Do not switch from the brands they have used for long time
- Confused by vast array of product and service options available
- They will purchase more via TV and landline compared to the general population