Grey marketing means business
Whilst Mick Jagger’s 60th birthday is newsworthy and brings about some pop psychology articles on ‘baby boomers’, I’ll be honest with you, marketing to the 50+ consumer generally bores the crap out of most marketers. It shouldn’t. This article explains why.
What do we mean by the ‘grey market’?
Many people associate the term ‘grey market’ with the sale of products by unauthorised distributors or cross-border trading. Sometimes it is used as another term for ‘baby boomers’ or pensioners. The definition I prefer is all consumers over the age of fifty; a group that equates to about 20 million people in the UK.
This is a huge single market category that spans 30-40 years of a person’s life as a consumer. It is a category that covers all the variants of wealth, health, education, marital status and geography, not to mention the male, female split. Clearly it is a complex market group that subdivides into many sectors. Unfortunately it is too often seen as a homogeneous group that lumps together the fit, wealthy fifty-something with the ill, cash-poor, 75-year old.
There are some common characteristics that span all the ‘grey market’ sectors. Ageing does affect cognitive, vision and psychomotor abilities. Put more bluntly, the decline in short-term memory, failing eyesight and problems with manual dexterity. It marks a period of life where the financial and time demands of the family decrease, allowing the individual to pursue their personal interests. Other than these two factors the segments have little in common.
Let’s keep the simple definition of the grey market being the ‘over 50s’ but remember the breadth of consumer types it includes.
Is it important?
Not only is the ‘grey market’ important, but it is becoming moreso. Firstly, the size of the group is increasing. People aged over 60 now account for 20% of the UK population compared with 12% in 1950. By 2020, over 40% of the population in Western Europe will be over 50.
Secondly, these consumers will remain economically active for longer. On average we can now look forward to 20 years of post-retirement life expectancy. In 1950 the figure was half this value.
With many years of active life remaining, retirement is now perceived as the beginning of the new phase of living (and spending), not held back by work and family commitments, rather than a slow decline to the nursing home.
Undoubtedly the most important reason this age group is so important concerns their economic power and how this is increasing. The over-50s own three-quarters of all financial assets and control half of consumer discretionary spending. The over 45’s spend their way through a staggering £145 billion of disposable income a year!
It is this age group’s buying power that should convince marketers of their importance. They dominate the market for top of the range cars; buy 50% of face-care cosmetics and 35% of all travel. And remember, their relative importance will increase for at least the next two decades.
The relentless rise of importance of this age group is mirrored by a decline in the economic influence of their sons, daughters and grandchildren. The income of the 20-something now has to fund education loans, pension contributions and huge mortgages. The trend towards contract work, rather than traditional paid employment, means that many of the younger generation have little employment protection and are locked into irregular and low-income jobs.
For all of these reasons the economic centre of gravity of many markets is moving towards the over 50s.
Why the age group is largely ignored
Do you need convincing that marketers largely ignore the over-fifties? A recent report from Help the Aged showed that just 5% of advertising targets the over 50s. This is an age group that represents nearly half of peak time TV audiences and dominates radio listening figures.
The comment of Mike Waterson, the Chairman of the World Advertising Research Centre, says it all, “Advertisers and marketers are astonishingly neglectful of older audiences even for products primarily sold to older people.”
“Marketing myths, rather than facts, explain the lack of focus on the over 50s”
Why should this mismatch of marketing effort to marketing potential exist?
There is one main and several subsidiary reasons that explain this situation. At the core of the explanation is the view that older people are less receptive to new ideas and new products. Once you accept this premise then the other arguments make perfect marketing sense. Older people are less likely to try new brands. It is harder to change their behaviour using advertising. They are less likely to use new channels, like the Web.
These arguments do have a ‘ring of truth’ but cannot justify the derisory amount of marketing spend the age group attracts. Maybe this rationale was correct, a couple of decades ago, but the over 50s of today are very different from their parents. Marketers are guilty of using a stereotype of the older consumer that has radically changed.
There are two more explanations. Around half of advertising agency staff are under 30 and in the interactive media industry the average age is even less. So maybe it is not surprising that there is such a focus on the peer group of those at the centre of the marketing industry.
The second explanation concerns how demographic and economic changes evolve over decades while most marketing decisions get made annually. Let me explain. In any one year the 50+ age group’s importance will change by a small amount and it is easy to avoid making a major decision to re-align the marketing spend to account for its importance. Over a period of 10 years, far longer than most marketing directors will be in place, its impact is significant.
No single reason explains this marketing anomaly. Rather it is their cumulative effect that accounts for this crazy situation.
Do you understand it?
Every marketer needs to decide if the ‘grey market’ is a threat, opportunity or an irrelevance. Not knowing or caring is not an acceptable option.
This is a short test to understand how well you understand the issues.
What would be your reaction to this scenario?
The phone rings and you are asked to present to your company’s board of directors. Because you have just half a day’s notice, they make life easier, by specifying its title, ‘Our grey market strategy’ and the topics it must cover:
- How we segment our 50+ age group market
- How our marketing plan exploits the changing demographic and economic power profile
- How we ensure our interactive media is 50+ friendly
- Our research processes to understand the changing requirements of the 50+ consumer
- Why our marketing communications strategy is appropriate for the 50+ consumer?
Do you feel totally relaxed? Well done, then you have a good grasp of grey marketing issues. If you are feeling stressed and wondering where to start looking for the information then this article will have been a timely warning.
Author: Dick Stroud
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[...] I added this article on the back of my blog’s marketing post titled, ‘Grey marketing means business‘. [...]
How very true! Isnt it natural that targeting these GREY areas (pun intended) will naturally yield optimum results? The answers are all stated in the article and quantified by the examples. For me, its as simple as Grey areas mean intelligent activity promoted by sheer experience, wisdom, maturity and the TIME taken to react to make the CORRECT choice!
Regards,
M Bhave
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