As the global population ages, new consumer opportunities and markets will emerge. Every company should have a strategy for tapping into the needs, wants, and buying power of older customers.
In my previous article, I outlined the beginnings of an internal, employee-focused “longevity strategy” that organizations can use to reap the benefits of an aging workforce. In this one, I’ll discuss its external, consumer-facing complement.
The market for products and services for older adults is already strong, and it will become even stronger. With distinct consumption habits and service needs, Americans over 50 accounted for $7.6 trillion in direct consumer spending and related economic activity in 2015, and controlled more than 80% of household wealth, according to a 2016 joint report from Oxford Economics and AARP. Further, a 2010 AARP survey reveals that 90% of older adults say they want to be able to remain in their own homes as they age. Envisioning how communities will respond to the needs of aging people will keep many more of them in their homes and contributing to the economy. Bank of America Merrill Lynch projects that the global spending power of those age 60 and over will reach $15 trillion annually by 2020.
But the potential for forward-thinking companies goes beyond just an interesting business opportunity. Older adults are poised to shape consumer and capital markets in the years ahead. The McKinsey Global Institute concludes that the 60-plus population, one of the few engines of global economic growth, is on track to generate half of all urban consumption growth between 2015 and 2030. “The Longevity Economy is redrawing economic lines, changing the face of the workforce, advancing technology and innovations, and busting perceptions of what it means to age,” states the Oxford Economics/AARP report.
Across industries, there are multiple avenues for offering products and services that make a difference in people’s lives. In the health sector, “gray is the new black,” a Reuters piece observed. New offerings in biotechnology, devices, pharmaceuticals, and care services all target older consumers.
Research reveals that older adults dominate spending in 119 of 123 consumer packaged goods categories, spend more in grocery stores and purchase more new cars than any other age group, and account for 80% of luxury travel. The demographic is eager to spend on transportation, entertainment, food, and alcohol, representing an immense target market for fresh ideas and innovations.
The financial services industry has always catered to older people — primarily those planning for retirement. As customers and clients prepare for longer lives, retirement remains a powerful growth driver. But a financial market for older workers and entrepreneurs is rapidly expanding too. Driven by financial assets controlled by older investors, this segment of the longevity market simply cannot be ignored. People age 60 and over hold the majority of wealth worldwide and 70% of the disposable income in the U.S.
For most companies, longevity marketing is still in its early days. That must change. You need a strategy for older consumers, and identifying new opportunities and markets is just the first step. You and your employees also need to reconsider what you “know” about this population to avoid ageist and outdated messaging. Incorporate older employees into product planning, design, and communications to benefit from their experience and understanding. Use focus groups that include older participants to test products and services before they make it to market.
While most companies are in the early stages of developing their strategies, it’s worth exploring what some industry leaders are up to.
Philips and Nestlé have fundamentally shifted their businesses to capitalize on trends that are driven in many ways by the aging population. Both global companies have focused their futures on health and wellness, recognizing the massive opportunities ahead. In partnership with the Global Social Enterprise Initiative at Georgetown University’s McDonough School of Business, Philips is developing new technologies that can meet the needs of its older customers, including connected care solutions, safety applications, and cognitive health innovations. Patients and their doctors will be able to see, monitor, and share vital health information through secure devices, for example. Nestlé is investing in personalized diet and nutrition initiatives, and is broadening its portfolio by buying or acquiring stakes in health supplement and pharmaceutical companies.
Best Buy, with its recent acquisition of GreatCall, the provider of connected health and personal emergency services to the aging population, is focused on building relationships with older consumers. By gaining access to GreatCall’s customer base, Best Buy can further penetrate the health services and monitoring business and grow through its supply chain efficiencies and marketing reach. Several analysts hailed the acquisition, praising Best Buy for recognizing the market’s size and potential and the opportunity for a services business line to diversify the company’s offerings and counterbalance the margin pressures on electronics products.
Bank of America Merrill Lynch is training its customer-facing workforce to understand the needs of its aging clients. The bank recognizes that increasing longevity leads to new health care choices, housing issues, and questions about retirement and financial security. In partnership with the USC Leonard Davis School of Gerontology (which I’m affiliated with), the company’s longevity training program teaches financial advisers about older people’s experiences, priorities, and goals.
Uber and Lyft have developed programs to provide rides for older adults through age-friendly web tools, apps, and phone systems. Recognizing the importance of mobility to health and well-being, both ride-hailing companies are creating partnerships and scaling up efforts to facilitate access and ease of use for older adults and their families and caregivers. For example, both companies are working with call services (Lyft with GreatCall and Uber with RideWith24) to make it easier for older adults to book rides.
Intel is working on internet-of-things software that flags health concerns, and projects such as enabling wearables to analyze and communicate health data faster than ever through 5G internet connections. And Nest has begun modifying its line of smart home products to help older adults continue to live independently.
These are just a few examples of the longevity market’s prospects and possibilities.
Finally, as longevity strategies are developed and implemented, companies must consider not only how their products and services are designed but also how they are promoted. The power of media and advertising should be used to reflect realistic images of older adults instead of stereotypes. Older consumers do not want to be patronized, but they do want their needs acknowledged, and companies can do this while emphasizing both positive and real aspects of aging. While many companies have a long way to go, some are getting it right. On the positive side, Unilever’s Dove successfully employed its Pro-Age campaign, realizing significant market share increases. The smart marketing for Dannon’s Activia yogurt is focused on the common issue of digestive health. And in 2017 Allure Magazine showed leadership when it announced that it would no longer use the term “anti-aging” to describe skin care or makeup.
We’re still in the early stages of understanding what older consumers’ needs are and how to address them. The aging population is diverse, and the answers are not simple; one size certainly does not fit all. But we do know that there’s already a clear demand for products and services that can help people live longer, more-comfortable, and more-meaningful lives — and that are promoted without stigma or stereotype. This demand will grow rapidly in the coming decades, and companies that start meeting it now can reap a sizable dividend. It’s a huge opportunity, one that will have benefits both to their bottom lines and to society.
About the author: Paul Irving is chairman of the Milken Institute Center for the Future of Aging, the chairman of the board of Encore.org, and a distinguished scholar in residence at the University of Southern California, Davis School of Gerontology. He is also a member of the Advisory Council of the Global Coalition on Aging.
Source: Harvard Business Review