Commentary

The Increasing Insanity Of Marketers' Indifference Toward Older Consumers

The following post was previously published in an earlier edition of Marketing Insider.

Mainstream marketers’ obsession with millennials makes less sense with each passing year.

According to the Bureau of Labor Statistics, there are 7.7 million more households headed by persons age 50+ (HH50+) than are headed by younger people (HH<50), 68.9 million vs. 61.1 million.

This imbalance has pushed the average age of U.S. heads of households from 48.8 ten years ago to 50.9 years now, and it has resulted in HH50+ spending more than HH<50 on consumer goods and services annually.

In the latest U.S. Consumer Expenditure Survey, HH50+ were responsible for 52% of all 2017 consumer expenditures. This is NOT an anomaly. HH50+ have been responsible for more than half of all consumer spending four years running.

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The survey provides a wealth of evidence why 50+ has become a critical consumer segment.  The data speaks for itself. Check out these ten impossible-to-ignore stats. 

1. Consumer spending. In the last decade, the share of total consumer spending among HH50+ has risen from 44% to 52%.

2. Spending momentum. HH50+ spend at nearly the same rate as HH<50, $59,236 per household versus $60,984, respectively. (So much for the myth that spending diminishes considerably after age 50.)

3. Spending gap. HH50+ spent $350 billion more than HH<50 in 2017. That gap is is four times what it was just two years ago, $92 billion.

 4. National ramifications. HH50+ have a significant impact on the U.S. economy. From 2016 to 2017, 69% of the growth in total consumer spending was due to purchases made by HH50+.

5. Household income. HH50+ generate $67 billion more income annually than HH<50.

6. Accumulated wealth. In the past year, the net worth of HH50+ grew nearly three times faster than it did for HH<50 (up $20k vs $7.4k). As a result of the net worth growth among HH50+, 75% of the annual growth in U.S. household net worth is attributable to HH50+.

7. Category relevance. HH50+ dominate spending in several key categories, including life and other personal insurance (67% share of market), healthcare (65%), and new cars/trucks (54%). HH50+ also dominate spending in more surprising categories, including entertainment (53%) and personal care (51%) 

8. Home ownership. HH50+ are more likely than HH<50 to own homes (77% vs. 47%) and less likely to carry a mortgage (45% vs. 79%), which frees up money to spend on a wide variety of home-related categories. 

9. Home spending. HH50+ are responsible for more than half of all spending on pets (61%), household supplies (60%), vehicle repairs (60%), small appliances (58%), auto insurance (58%), major appliances (56%), audio/visual equipment/services (55%), household furnishings/equipment (54%), and food eaten at home (53%).

10. Population growth. Based on government population projections, HH50+ will grow at roughly twice the rate as HH<50 over the next five years, all but ensuring the continued spending dominance of HH50+.

Tell me again why millennials are the Holy Grail for marketers?

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3 comments about "The Increasing Insanity Of Marketers' Indifference Toward Older Consumers".
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  1. Ron Kurtz from American Affluence Research Center, November 20, 2019 at 2:58 p.m.

    Good perspective and data. 50+ is definitely the sweet spot for reaching the truly affluent. They have much more disposable income and net worth. 

    The so called HENRY's are not in the same league. 

    Wonder why so many marketers fail to recognize this. 

  2. Jeff Weiss from Age of Majority, November 20, 2019 at 3:17 p.m.

    After many discussions with marketers of all ages in a wide variety of industries, I believe that Active Aging consumers are being ignored because of FOMO --- not Fear of Missing Out but Fear of Marketing Older.  People generally are afraid of growing older and the myths and stereotypes that are prevalent in our society means that marketers don't even want to explore those opportunities.

  3. Ed Papazian from Media Dynamics Inc, November 20, 2019 at 4:43 p.m.

    Jeff, this question has arisen before---indeed, many times. Whenever I am asked about it I segment the question into two parts--One; who is being targeted by the ad messages and executions and two; who is being "reached" by the media buys. In the latter case any TV advertiser knows that as a rule their GRP tonnage---hence opportunity for ad exposures---is far greater among older folks---so in that regard, there is no problem at all. In fact a typical TV buy is slanted too much in the older direction.

    So the real issue is how do you position your brand and how do you execute your ads? This is where we need to recognize that very few marketers are going to risk depicting their brand as an "old folks'" brand, using anything that approaches a realistic old person's scenario. That could easily turn off younger consumers as well as many others---like the Wall Street analysts, your own employees and distribution arm, etc. So the compromise solution is to include peppy oldsters in some commercials---often cavorting or behaving like 30-year-olds---while the main players are younger -all trying  to convey a more "positive" image about the brand. And, it works as old viewers recall the same number of ad messages as younger ones---sometimes more---even though they are stereotyped in this manner.

    The trick seems to be that older consumers are less interested in glitzy presentations but more receptive to factual evidence---so use the glitz to get the attention of younger viewers but include some facts and older consumers will get the sales message---perhaps in a different mindset  context--but still get it. It your message is credible it will generate sales among older consumers.

    I should also add that most older consumers are conditioned to accept being left out---or stereotyped---in this manner. So it's not necessarily the gigantic issue that some think it is. Proposed solutions---like targeting older consumers via digital means--- don't work as like it or not a large number of younger people will still be exposed to your realistic or more relevant "old folks" digital ads and the same is true of TV. There are no websites or TV shows that only reach older---or younger---audiences. Audience  duplication exists in varying degrees in all media and the last thing an advertiser wants to do is send mixed signals to consumers---sometimes positioning the brand as best for old folks, other times as best for young people.

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