David sinclair ilc

The International Longevity Centre-UK is an independent, non-partisan think-tank

dedicated to addressing issues of longevity, ageing and population change.

The Golden Economy: Older People and the Consumer Markets

David Sinclair Head of Policy and Research – ILC-UK



Summary

  About ILC-UK

  The size of the market (and it’s growing)

  What is an older consumer?

  Is the consumer changing? Why does participation decline with age?

  Given all this, are older consumers ignored?

  The issues.



We influence Government policy and debate

The ILC-UK was established in 2000 to explore and address the new longevity revolution and its impact on the life-course and society.

  Think Tank   Global (12 ILCs)   Evidence Based   High visibility around Westminster (e.g. 17events/1000 people in 2010)   Engage at highest levels of Government   Focussed on life-course



Some of our publications



It’s a big market

  Older people’s spending reached an estimated £97bn in 2008 (over 65)

  The over 50s spent £276bn in 2008. This represents 44% of the total family spending in the UK



An ageing society means more older consumers

  The 65+ age group now accounts for 20% of the UK consumer population (16+), and is expected to rise so that in 2030 over 65s account for 25% of the consumer market. PRFC for ILC-UK

  The older market will grow by 81% from 2005 to 2030 while the 18-59 year old market will only increase by 7%. EU figures quoted by Stewart

  In the UK, the number of consumers over 60 years old could increase by 40% over the next 30 years. Meneely, Burns and Strugnell (2008)



Distribution of net household financial wealth1: by age of household head (2006/08)

0

20,000

40,000

60,000

16-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

Mean Median



And we might buy different things

  Older people currently spend more than other ages on: drugs and healthcare; personal care; and coffee

  They represent a significant market for new cars and travel.

  Clothing spend declines with age   But less on eating out, movies, theatres,

petrol and champagne   Certain industries will need to adapt to an

ageing society



The beer industry is worried!

“German beer consumption fell 2.1% in 2009 based on an ageing population” Bloomberg.com



But we know that ageing represents growth potential (BIS)



What makes a consumer an older consumer? Impact of biological and social ageing on consumption   Loss in physical strength may make opening jars/

bottles more difficult

  Older people losing mental capacity/dementia may find difficulties with problem solving or processing information. They may also find it difficult to shop around or exercise choice

  Those housebound can be excluded from the physical marketplace

  Ageing can make it more difficult to carry heavy weights and can also result in reduced appetite (Twofers!)



Difficulty with shopping, communicating and handling money



There are some very wealthy people not spending



Yet people would like to participate more



Are older consumers ignored?

“Just because I’m over 60 nobody wants to sell me anything anymore” Germaine Greer

“Advertisers and marketers are astonishingly neglectful of older audiences even for products primarily sold to older people” Mike Waterson, Chair World Advertising Research Centre



Why don’t companies target older people?

  Perception of a lack of buying power

  Stereotyping of older people as “powerless, ugly, dowdy or uninspiring” (alongside an obsession with youth)

  Lack of information about older people’s sensitivity to marketing Tynan and Drayton (2008)



But some companies are getting more interested

“Coca Cola moved into the wine, coffee, tea and orange juice markets during the 1980s to capture older consumer markets who were less interested in their coke brands” Simcock and Sudbury 2006

“Anheuser Busch, the largest US beer maker, attempted to reach the 50 plus age group and wound up creating one of it’s top selling brands” Green 2004



6 Issues to consider

Older consumers as giver and recipient

Better representation of older people in advertising

Older people as users of technology (the role of Inclusive design)

Engaging the active consumer (Shopping around)

A continuing need to tackle Age Discrimination



The older consumer is a giver and recipient

  Marketers note that older consumers buy a relatively high proportion of toys (25%?) and confectionary

  Grandparents spend £50,000 on their first grandchild (Oct 2010)

  Younger children/grandchildren often buy for the older person

  In other words, people aren’t always buying for themselves.



Representation of older people in advertising

  Older people, particularly women, are under-represented in advertising (NB Cognitive age effect) IPC/Simcock and Sudbury (2001)

  Where older people are represented, evidence that it is for products such as “pain relievers, digestive aids, lacistives and denture forumlas” Freimuth and Jamison (1979)

  There is limited evidence that older people are badly represented in advertising Simcock and Sudbury

  We’ve started to see more examples of companies using older models (e.g. Dove)

  Scant evidence and no consensus that using older models puts younger people off the product/service Simcock and Sudbury (2001)



Technology – an opportunity (and a challenge)

Around 820,000 older consumers (65+) in the UK made an internet purchase PRFC Analysis for ILC-UK (EFS 2007)



Inclusive design



Can you read the menu? In many European cities one of the

main groups eating in restaurants are those over 50, yet very few 50 year olds are able to read a menu by candlelight with out their reading glasses. That is because the menus are usually designed by younger people in print shops, not for senior citizens. What a crazy situation: the people who the restaurants want to market to cannot read any of their sales literature. Patrick Dixon (2008)



Shopping Around Mixed evidence but in terms of insurance; utilities; communications technologies, there is evidence that as we get older we are less likely to shop around. WHY?

  Older people are happy with the product?

  Difficult to calculate the benefit of switching (telecoms/utilities)

  There are few alternatives (e.g. upper age limits)

  Switching is a hassle

  Reduced information processing abilities (but does experience compensate for age?)

  But if marketers assume people don’t shop around they won’t target them.



Direct and indirect age discrimination

“Interflora, Britain’s biggest flower delivery business, has been accused of ageism as their new ‘happy birthday’ balloon range only goes up to 60 years old.”

Telegraph, September 2010



Are older consumers changing?

“It is blindingly obvious that there is enormous difference between the seniors of yesteryear and people of the same age today.” Saga 2008

We have a wealthy cohort (on average) (and there are more of them)

Recent retirees “are more strongly defined by the impact of consumer society on their lives and expectations of post work life than previous generations”



But is this a new phenomenon?

“They have fewer ties to family responsibilities... With their homes paid for their major housing concern is for property taxes and repairs... Being essentially free from obligation, they may spend their income and assets as they wish. Here is a potential market, therefore for those marketers who wish to appeal to it. It is a new market, almost unrecognised which must be developed with care as it depends upon the changing role of older persons in our society and the realisation that they are more free than their predecessors in the past century.”

Dodge, 1962



Let’s not assume older people are all the same



The new image of the older consumer “ageless”. Let’s take age out of the equation?

Age Neutral approach argues that:

  An Age Neutral approach should be taken to marketing

  Needs of older people are not that different from other adults

  The principals of marketing to all ages are the same

  Lifestyle or interest is going to be more important than age

Dick Stroud



Summary

  The older consumer has money

  They value good service

  Lots of companies get it wrong

  Age not best predictor of behaviour

  There is money to be made by those who get it right.

  But. Is there such a thing as “the older consumer”?



Many thanks

David Sinclair - Head of Policy & Research,

International Longevity Centre (ILC-UK)

[email protected]

Twitter:

@sinclairda @ILCUK

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David sinclair ilc