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Presentation by David Sinclair for the engage Business Network run by Age UK. David summarises the findings of his research "The Golden Economy" which considers how the private sector is adapting to ...

Presentation by David Sinclair for the engage Business Network run by Age UK. David summarises the findings of his research "The Golden Economy" which considers how the private sector is adapting to an ageing society.

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Older consumers Older consumers Presentation Transcript

  • The Golden Economy: the consumer marketplace in an ageing society David Sinclair Head of Policy and Research – ILC-UK
  • Methodology
    • Literature review
    • Previously unpublished primary research (Investigate! – Mystery Shopping commissioned by Help the Aged in 2006/07)
    • Previously unpublished quantitative evidence from Age Concern Research Services
    • New quantitative analysis by Bristol University (ELSA; WAS etc)
    • Sense checking with experts (Age UK and Consumer experts) and older people (2 sessions)
  • It’s already 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
    Age Concern and Help the Aged analysis of ONS Family Spending 2010
  • 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)
  • Government and the older consumer
    • “ Businesses need to ditch outdated stereotypes... And focus on the grey pound” Foresight Ageing Population Panel (2000)
    • “ Generalised failure by industry and commerce to take advantage of the lucrative market represented by the ever growing group of older people” House of Lords Select Committee on Econ. Affairs (2005)
    • Ageing Strategies (2005 and 2009)
    • “ Establish an Innovation and Growth Team to draw up an action plan for business and Government on the economic opportunities presented by an ageing society”. BIS New Industry, New Jobs (2009)
  • Infrequent participation and respondent would like to participate more often ELSA (English Longitudinal Study of Ageing) Wave 3 Core respondents
  • There are some very wealthy people not spending
  • But what makes a consumer an older consumer? Impact of biological ageing in the consumer marketplace
    • 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
    • Older people losing sight/hearing are likely to find that the design of products and services may become increasingly problematic
    • 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 ELSA Wave 3 Core respondents. Weighted percentages.
  • Impact of social ageing in the consumer marketplace
    • Older people could assume that certain products and services aren't for them and therefore don't consider purchase
    • Older people may assume that certain technologies are for younger people and don't consider their use as a means of engaging with the consumer market
    • The media and corporate sector may strengthen the negative impact of social ageing through ageism
  • And who are the older consumers?
    • Companies use different ways to segment the market including:
      • chronological age;
      • generational segmentation;
      • income;
      • life stage;
      • cognitive ages and values
    • There is no such thing as a single “older consumer”
    • Chronological age is widely used a poor tool for segmenting the population
    • Some research finds that age has little impact on consumer demand (if income is taken into account)
  • Average gross weekly income
    • The gross household weekly average income peaks for households headed by someone aged 30 to 49 (£44,000 a year), and falls gradually among older cohorts
    • The average weekly income of the oldest households in 2007 (75 or older) was around £300, or just under £16,000 a year.
    • Taking household size into account, on average, income is actually greatest on a per person basis for those in households headed by someone aged between 50 and 64 (£321). PFRC analysis of Expenditure and Food Survey
  • Distribution of net household financial wealth 1 : by age of household head (2006/08)
    • 1 Results exclude households with zero net financial wealth. Wealth and Assets Survey, ONS© Crown copyright 2009
  • 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
    • Advertising/marketing agencies rarely asked to pitch for the older consumer
  • 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
  • How might an ageing society change the consumer marketplace?
    • 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.Travel has long been a key part of retirement
    • 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
  • Even beer …
    • “ German beer consumption fell 2.1% in 2009 based on an ageing population” Bloomberg.com
  • Categories of household expenditure by age of household reference person (2007) Expenditure and Food Survey (2007) Office for National Statistics (created from data in click-use data table).
  • Growth in expenditure (BIS) BIS (2009) Is Business Ready for an Ageing Population? Economic Opportunities and Challenges of Ageing: an Analytical Paper. Growth in expenditure 2008-2033 (%) 0% 10% 20% 30% 40% 50% 60% 70% 80% Food/drink Alcoholic drinks Clothing Fuel/power Household goods Health Transport Communication Recreation Education Restaurants/hotels Miscellaneous Demography Expenditure growth
  • The older consumer as 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.
  • Older consumers in a digital world
    • Just 3% of 75+ and 7% of 65+ use social networking on internet at home
    • Around 820,000 older consumers (65+) in the UK made an internet purchase PRFC Analysis for ILC-UK (EFS 2007)
  • Digital exclusion in the consumer market
    • Can make products more expensive
    • Can make shopping around more difficult
    • Can restrict access to information in the consumer marketplace
    • Online grocery shopping could benefit older people (but very few seem to use at the moment)
    • Media literacy, accessibility and usability of technology creates a barrier to digital inclusion
    • Stroud argues that income/class is as big a factor as age in internet use.
  • Lots of examples of products failing in terms of inclusive design
    • “ The instructions with the hand-held tape recorder are – as with all electrical items in very small print.” Molly, Investigate! 2007
    • “ Mobile phones have so far been deigned for those with 20/20 vision, petite and nimble fingers, who relish the challenge of mastering fiendishly complex menu systems.” Stroud (2008)
  • Inclusive design of mainstream
  • Shopping around
    • There could be a number of reasons for this:
    • 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?)
    Mixed evidence about shopping around but in terms of insurance; utilities; communications technologies, there is evidence that as we get older we are less likely to shop around. But if marketers assume people don’t shop around they won’t target them.
  • Other findings
    • Limited evidence about older people and ethical consumption
    • Mixed views on brand loyalty
    • Mixed evidence on the best way to reach the older consumer
    • Incomprehensible jargon and modern phraseology a barrier to the market (esp. financial services)
  • 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
  • Other findings
    • “ Ghost Town Britain ”, poor transport and access to toilets are barriers to the market
    • The end of the cheque could have a negative impact on the older consumer
    • Older consumers are often the main target for fraud, scams and mis-selling
    • Need for an age friendly retail environment : In 2009 Tesco announced it was building an older person friendly retail environment complete with wider shopping aisles and brighter lights
  • Other findings
    • Some Investigate! participants argued that they had less choice than when younger
    • Investigate! volunteers also highlighted access to information and advice about what was available in the consumer market
    • Examples of good customer service – but it is often poorly promoted.
  • 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”
    • A “Charmed Generation” - Stroud
  • 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.”
  • 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
  • Convenient myth of the elderly hedonist
    • “ The elderly have had a recent makeover, as appears in the ‘70-is-the-new-50’ cliché….This is profoundly reassuring for the rest of us, and it conveniently dissimulates the image of those who live on into their ninth and 10th decade…, too timid to go out, who have lost confidence on the uneven pavements and dizzying shopping crowds; those afflicted by the mysterious paranoias of old age, trembling each time the doorbell rings and frightened of the unexpected telephone call; people whose days are marked by boredom and its twin, loneliness.”
    • Jeremy Seabrook
  • And do we need to 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 more important than age
    • Dick Stroud
  • Many thanks
    • David Sinclair - Head of Policy & Research, International Longevity Centre (ILC-UK)
    • [email_address]
    • Twitter:
    • @sinclairda
    • @ILCUK