08On Aging - Infinia Group

08
On Aging
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$207,861
ON AGING
GEN X
60%
50
70%
49%
40
of disposable
income
30
More than
60% of those
earning
$200,000 or
more are
boomers
Purchased
44%
Researched
10
Average spent online
$138
$200K +
$150K +
$75K +
$125K +
$50K +
$100K +
0
$35K +
$15K -
85%
$25K +
$200K +
$150K +
$75K +
$50K +
75%
20
81%
$125K +
73%
$100K +
$15K -
$25K +
$15K +
$200K +
$150K +
$75K +
Generation Y
$125K +
$50K +
$100K +
$35K +
$15K -
$25K +
$15K +
$200K +
$150K +
$75K +
$125K +
$50K +
Generation Z
$35K +
of U.S.
Population
$100K +
$35K +
Future
$15K -
$25K +
$15K +
Past
of consumer
packaged
goods
$15K +
MILLENNIALS
TRADITIONALISTS
$84,494
$264
Generation X
72%
81
$311
Younger boomers
67%
72%
$367
Older boomers
66%
7%
$259
Golden generation
57%
64%
$292
PART EIGHT:
The Longevity Economy
infiniagroup.com
© 2012, Infinia Group, LLC
Source: Forrester Research
We’re pleased to continue
Infinia on Aging, our new series
of “conversation-starters.”
The rapid aging of the population promises to
reshape the nation’s financial and social future.
It also provides countless opportunities for
brand and marketing innovation.
Aging is an emotional issue where drama, debate
and data often create more heat than light.
For the rest of 2012, Infinia will highlight aspects
of aging and wellness to show how ideas and
content can come to life in new ways.
Infinia is focused on helping clients instill clarity
and illuminate knowledge by integrating our
strategic and creative capabilities in ways that
make the complex clear.
We hope you will find this and others in our series
engaging and a catalyst for conversation.
—Ron Cappello
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AG IN G IN A M E R I C A :
The Longevity Economy
With its size and wealth, the boomer generation
will reshape elderly markets with unprecedented
opportunities, and risks
Boomer spending
outpaces
That the ranks of retirees will surge
as boomers march into old age is
well understood. Less appreciated is
that living longer will combine with
aging boomers to create an economy
increasingly dominated by seniors.
It’s an unprecedented opportunity
to develop and market products for
the elderly. But it runs counter to so
much conventional marketing that
companies are slow to wake up.
“There are huge industries yet to be
created that explicitly address the
population of people over 50,” Jody
Holtzman at AARP recently told the
Financial Times. “In the private sector,
the opportunity of the 50-plus market
is simply not front and center.”
Holtzman calls the new opportunity
the “longevity economy” — recognition
that an aging population will forever
change the shape of future markets. It
all starts with the boomers who began
turning 65 in 2011. Every day, another
10,000 turn 65 and by 2025 this trend
will have remade the entire country
into a market that will resemble Florida
today. It won’t stop with the boomers,
though, as succeeding generations are
nearly as large.
The “most valuable
generation” has the
most disposable income,
helping to explain its
importance to sellers
Boomers
account for...
70%
49%
of disposable
income
of consumer
packaged
goods
44%
of U.S.
Population
Too many companies may recognize
the new elderly boom, but have
compartmentalized it into silo
products, Holtzman recently told
Source: The Nielsen Co., and BoomAgers
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U.S. News & World Report. So they’ve developed senior
housing, health care products, and bunches of retirement
investments. But they’re not taking the broad view of aging
boomers as a new market.
Boomers are
dragging
unprecedented
spending
power with them
into old age.
That’s despite boomers also dragging unprecedented
spending power with them into old age. The generation born
between 1946 and 1964 dominates income and spending
unlike any cohort before. Boomers’ real disposable income
and consumption will be roughly 40 percent higher than those
of the “silent” generation ahead of them, those born from
1925 to 1945, according to the consulting firm McKinsey & Co.
Nationally, boomers accounted for $2.5 trillion in 2010
spending, or about 44 percent of the total, the AARP says.
That overwhelms the 16 percent market share of those
currently older than 65.
GEN X
TRADITIONALISTS
MILLENNIALS
And what boomers are spending is more than twice the
consumption of those age 34 and under. Yet so many
companies continue to focus on those 39 and younger.
Marketers traditionally looked to young consumers because
60%
50
40
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20
$200K +
$125K +
Percentage
of each
10 income
bracket
earned
by that
generation
0
$150K +
$75K +
$100K +
$50K +
$35K +
$25K +
$15K -
$15K +
$200K +
$125K +
$150K +
$75K +
$100K +
$50K +
$35K +
$25K +
$15K -
$15K +
$200K +
$125K +
$150K +
$75K +
$100K +
$50K +
$35K +
$25K +
$15K -
$15K +
More than
60% of those
earning
$200,000 or
more are
boomers
$200K +
$125K +
30
$150K +
$75K +
$100K +
$50K +
$35K +
$25K +
$15K +
Their generation’s
size means boomers
dominate nearly
every income
category, particularly
the wealthiest
$15K -
Source: The Nielsen Co., and BoomAgers
The big
breadwinners
they wanted to establish brand loyalty. They all but ignored
those older than 49, who were seen as rigidly attached to
favorite products.
Boomers change that calculation, warns a recent report from
Nielsen Co. and BoomAgers. The cohort’s size alone means
that companies can ill afford to risk losing the allegiance
of the boomers, who the report calls “marketing’s most
valuable generation.” Boomers also may prove more pliable
than oldsters who came before them, given the generation’s
cultural roots as open-minded youth who sought their own
path and broke down barriers.
Most inheritances
yet to come
The biggest transfer of
wealth in history has
only started.
Mean inheritance per
boomer household:
$207,861
In fact, boomers’ loyalty to brands is no stronger or weaker
than that of other age groups, suggesting they should be
approached the same, Nielsen and BoomAgers say: “It’s clear
that taking their loyalty for granted, or forsaking them for
being too loyal or set in their ways, are both risky approaches.”
While earlier generations have markedly slowed their
spending in old age, this cohort will continue consuming at
unprecedented levels, Nielsen and BoomAgers say. The
generation has shaken off recessions more quickly than past
generations, reflecting a post-war culture of affluence and
optimism that enveloped its youth. “These were formative
years, and the values that were forged then have stayed with
them throughout their lives.”
Optimistic boomers indeed overshadow the pessimistic,
according to a recent study by MetLife’s Mature Market
Institute. Some 43 percent of boomers remain optimistic
about the future in the long-term, or more than twice as many
who are pessimistic. And they are most upbeat about their
personal finances and health.
$84,494
Future
There are signs that some companies are getting the message
about the opportunity. Just this year, the fashion industry
showed an unusual interest in aging woman, including the
showcasing of an 82-year-old model in a campaign this year
for the Parisian brand Lanvin.
Past
Better health and the shift to a service economy means more
of today’s aging workers can stay longer on the job. Add to that
an unparalleled transfer of inherited wealth that boomers will
get from their parents, and the generation has reason to be
optimistic, despite the rough economy of recent years.
Source: MetLife
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Biggest online spenders
While a smaller percentage of boomers said
they researched or bought on the Internet in the
previous three months…
Researched
…they outspent everyone
when they did make a
purchase.
Average spent online
Purchased
Generation Z
73%
81%
$138
Generation Y
75%
85%
$264
Generation X
72%
81
$311
Younger boomers
67%
72%
$367
Older boomers
66%
7%
$259
Golden generation
57%
64%
$292
Companies
can win
elderly
customers
without
necessarily
designing
a niche
product for
them.
Source: Forrester Research
Other companies have enjoyed success with
products aimed at older consumers, including
Advanced Radiance products from Cover Girl,
reports Holtzman at AARP. Other innovators
discovered, too, that goods aimed at the elderly
can prove a hit with other consumers, such as
the OXO Good Grips kitchen tools that were made
for someone with arthritis but became a design
standard in kitchen utensils.
Still, there remains a stigma against products
aimed at those older than 65. Companies that
target particular age groups can find it hard to
attract investors, particularly if the target is older
consumers. Venture money is drawn to companies
that appeal to younger buyers, or those that can
appeal to all generations.
Investors want “companies that have longevity with
a customer, not something you sign up for a year
before you die,” Xander Mahoney at Draper Fisher
Jurvetson (DFJ), a venture capital firm, told the
Financial Times.
Those companies should at least employ design
that also appeals to seniors, says AARP’s Holtzman.
He cites a number of recent products designed for
younger consumers that proved a hit with seniors:
• Nintendo Wii, whose simple design generated
good sales to older consumers and nursing homes.
• Apple’s iPad that targeted younger generations
but sold more to boomers and older.
• Zulily, which was developed with young mothers
in mind but sold more to grandmothers.
It’s notable that tech often sells better than expected
to seniors, who are wrongly considered out of touch
with the latest gadgets, Holtzman told U.S. News.
The lesson here is that companies can win elderly
customers without necessarily designing a niche
product just for them. Just be sure, he says, that
“what you’re creating doesn’t create an artificial wall.”
IN O U R NE X T I S S U E:
Boomers give Cosmetic Surgery a Facelift
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