For decades, marketing has been youth-focused. If a product or service could be marketed as hip, cool, and "not your father's," it would be successful, the thinking went. But the fact is, 90 million Americans are 50 and over -- that's 42% of the adult population of the U.S. And during the next decade that number will grow by 22 million. Small-business owners who start recognizing the needs and preferences of middle-aged and older consumers have the chance to gain a leg up on larger firms, says Dick Stroud.
Stroud is the founder of 20plus30, a London-based marketing consultancy, and author of The 50-Plus Market. He spoke recently with Smart Answers columnist Karen E. Klein about how small-business owners can appeal to older audiences effectively and without offending. Edited excerpts of their conversation follow.
You use the term "50-plus" rather than "baby boomers." Why?
To be honest, both names are chosen for arbitrary reasons. The birthrate in the United States increased from 1946 onwards and remained above pre-World War II levels until 1964. That's the origin of the term "baby boom" in the U.S., but that pattern did not occur in other countries. For instance, in the U.K. the birthrate fell from 1946 onwards and only started rising again 10 years later.
When talking about older people, the U.S. media and marketing industry uses the term "boomers." Europe has adopted the term "50-plus." The big danger is in believing that either of these names represents a single group of people. Nothing could be further from the truth.
How does the older demographic in the U.S. break down by age groups?
The largest group of the over-50s is aged 50-59, which represents 43%. Those aged 60-69 and the over-70s are roughly the same size, each representing approximately 30% of the age group. The Census Bureau at the Department of Commerce provides detailed analysis of age groups for all U.S. regions.
How important are the 50-plus consumers?
They represent a very large number of potential customers. During the next decade, their numbers will increase six times faster than their children and grandchildren's age group of 15- to 34-year-olds. The bottom line for entrepreneurs is that they will need to work a lot harder if they are focusing on the younger rather than the older age sector.
The other reason why the over-50s are so important relates to their purchasing power. The 2001 Consumer Expenditure Survey revealed that older consumers are the primary purchasers of transportation, healthcare, housing, food, pensions, and personal insurance. More than half of all cars purchased by an average American household occur after the head of the household turns 50; and they are big spenders on vacations and travel.
But it's not only just how much money the 50-plus spend on themselves that makes them important. Increasingly, the 50-plus are assisting their children and grandchildren with major purchases. This means they become involved in the purchase process, something that few companies seem to appreciate.
How would you advise entrepreneurs to reach these 50-plus purchasers?
First, they shouldn't talk or think about the 50-plus as "an age group" that can be marketed to all at once. No one can target so many millions of people. Last year Duke University published research showing boomers are the most heterogeneous of all the generations. The over-50s includes people of all races, incomes, education, attitudes, and experiences.
So what a business owner should do is to decide what segment of the over-50 population is appropriate to her product or service business. This could be done on the basis of geography, income, lifestyle, gender, or any number of other factors. Then, she must do the research needed to understand what the target customers really want and how they perceive the world. It's important here not to make any assumptions.
What's the danger in making assumptions or following marketing stereotypes about this age group?
The most dangerous stereotype is to view them as a single group. The next mistake is to believe any of the nonsense that the marketing industry talks about older people being averse to trying new brands, not wanting to use technology, or not seeking new life experiences. None of these assumptions is substantiated by research.
Just because [people are] 50, 60, or 80 does not mean they necessarily think alike or want to be treated in a prescribed manner. Young marketers can often appear to be patronizing and judgmental in the way they portray customers of their parents' and grandparents' age. This manifests itself in the language and imagery used in advertisements, which is sometimes seen as offensive by older people.
How can entrepreneurs make sure they're not offending, yet still reach an older market segment?
It all comes back to Marketing 101. Understand your customers, know what they want and get inside their minds as much as possible. I recommend that business owners test the way they present and promote their products with "real-life" over-50s in their target segment, perhaps by using focus groups. They should not rely on standard market research, because much of the testing is done on younger people and so the outcomes are weighted toward younger consumers.
What they want to do is ensure that the creative content in the advertising is understandable and appropriate. A lot of contemporary advertising uses language and imagery that bores or alienates an older audience. That can include crude language, humor, and images as well as personalities or models that an older audience does not recognize or relate to.
That's not to say that entrepreneurs should only look at age in their advertisements or think that only older-age models will appeal to older people. There's a narrow balance to be found. On one hand, older customers like getting discounts, but on the other hand, they don't want to be lumped in with the "gray market."
What about Internet marketing and designing Web sites appropriate for the 50-plus crowd?
I think the Internet is a really important marketing tool, and it's one that's been tested even less on older audiences. The physiological effects of aging do make a big difference here, so that image size, color contrast, and Web site structure are all very important. Also, cognitive decline makes it harder to concentrate, so menu systems and the use of animation all have to be evaluated in that light. The AARP has some fantastic stuff published on this on its Web site.
I think the bottom line is that smaller companies are already leading the way in marketing to this demographic and they're going to continue. Even if entrepreneurs just start to think about this issue and start to ask the questions, they'll be doing more than a lot of large companies are. For instance, there are an awful lot of small travel companies that focus almost exclusively on 50-plus customers because they do spend a lot on travel.
They have found, maybe by accident, that this is a growth market for them, and they've become very successful at it. I've also seen this in the insurance industry. Real estate, with the amount of people who sell their property and move as they reach this age group, is another huge sector. But there are lots of other ways to think about it, if business owners get creative and pay attention.