Don’t Forget the Boomers, or You Will Leave Money on the Table
November 21, 2019
America’s older population is rapidly growing. This growth will continue for the next several decades as the large boomer cohort moves into their older years. Here are just a few mind-boggling numbers to provide some context to this growth:
- Within 5 years, there will be more Americans aged 65 and over than children under the age of 15.
- Over the next 20 years, the population aged 65 and over is projected to grow by about 44 percent compared to a growth of 6 percent for the population under age 65.
- In 20 years, households aged 55 and over will account for nearly half of all households.
Increased Spending Power of Older Population
Historically, there was a good reason why marketers paid less attention to older Americans: they represented a much smaller share of the total population, and they typically have lower average incomes. However, the average income is only part of the story. A more critical point to consider for a business’s bottom line is the aggregate income and spending of the older population. Since the size of the older population increases much faster than at other ages, their share of income and spending also increases. The chart below shows the shifting shares of total income for various age groups over time. Noteworthy is the increase in the percentage of total income for the households aged 55 and over that increased from 26.7 percent in 2000, when the boomers were younger than age 55, to a high of 40.3 percent in 2017, when most boomers were over the age of 55. Moreover, the share of income of the older population is likely to further rise with the high population growth ahead.
Marketers Need to Change Their Ways
Although the rapidly growing older population presents opportunities for marketers, two other factors are essential to consider. First, the boomers that will make up an increasing share of the older population are very different than their older predecessors from the Silent and great generations. They are more educated and more demanding, in better health and wealthier. One might even say that boomers are redefining the retirement years. Boomers are increasingly focused on enjoying their older years, and this might mean more travel and other leisure activities and perhaps a new car or a refurbished home to better suit their lifestyle. Other industries that should benefit from the aging population include the health and financial sectors. Boomers will also be looking for services to help them live independently and help them in the caregiving activities of older family and friends. Although the older population purchases goods and services for themselves, they also spend on aging parents, children and grandchildren.
Secondly, marketers need to understand the realities of the aging process and the limitations that may eventually affect many of us. While younger seniors are mostly in good health and live independently, in later years, older seniors will likely need help with activities of daily living due to issues related to hearing, seeing and mobility. To capitalize on the opportunity, businesses should modify their products, services and retail environments to serve the older population more effectively. Research has identified problems for older consumers that include the inability to navigate large stores, the need for a place to rest or use the bathroom, the difficulty with hard to reach products and labels that are difficult to read or open. In many cases, the modifications may not require much effort, but they could go a long way to retaining the older population as loyal customers. Training of retail staff, who are often young, is recommended to help with overcoming stereotypes of older consumers and provide practical solutions to improve customer service and communication. Finally, more advertising needs to be directed at the older population showing them as interested, active and open to change.
As with all effective marketing initiatives, it is important to recognize the diversity of the population. The older population is no different. Well-developed analytic techniques can identify the location of high concentrations of the older population. Segmentation can further pinpoint possible new consumers, based on their purchase and shopping behaviors, their media habits and their social values. These analytic techniques can then help marketers craft their customer acquisition strategies and ad messaging for more effective results.
Doug Norris, Ph.D. is SVP and chief demographer at Environics Analytics.
The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.