THE world is definitely changing. With all the focus on climate change, another major change is happening quietly. Baby-boomer consumers are growing older and business is booming for those companies that have significant exposure to the ageing baby boomer demographic.
Baby boomers have been a force to be reckoned with since they first came of age in the 1960s, wielding tremendous political and economic power these past five decades. People who were born between 1946 and 1964 are an enormous voting and buying block. As more boomers are hitting retirement age over the coming years, we’re bound to feel the effect of this significant demographic shift. And shifts can very often lead to business opportunities.
The Economist Intelligence Unit, a respected advisory company specialising in economic research, recently published the report: “A silver opportunity? Rising longevity and its implications for businesses” with responses from a global survey of 583 senior executives during January to February 2011, showed that about three quarters of companies recognise that there is a significant difference in the needs of older customers. Here are some interesting insights:
Business is largely optimistic about longevity 71% of executives see it as an opportunity, compared with 43% who consider it a risk.
Relatively few firms (13%) claim to have not considered the implications of rising longevity.
Healthcare and pharmaceuticals, leisure and tourism and financial services are seen as some of the key sectors likely to benefit. Also consumer goods, food and beverages, retail and technology companies are expected to find new opportunities. Those who successfully adapt will benefit.
For some specialised companies, longevity already offers significant growth opportunities.
Many firms are starting to consider how to develop products for this demographic and how best to market them.
Such optimism from the report is reassuring, but the reality is that only a minority (of firms) are gearing themselves to deal with the changes possibly because such changes seem so slow-moving.
Silver Group, a consulting company that helps businesses leverage the exploding 50+ market segment recently conducted the 2011 SilverPoll survey of age 50+ Singaporeans (close to 14,900 responses). The results are also significant to business. It show that more than half of respondents will likely buy a product or service if it is age-friendly compared to one that makes them feel old. When an aged consumer feels excluded by branding and marketing, perhaps due to a focus on youth, such as in sports gear, clothing, skin care, bank, insurance and airline marketing, they take their money elsewhere.
Silver Group finds that “age-friendly” businesses also tend to fare better in their share value creation as they are able to reap the benefits of a larger pool of customer segments.
So, no business category should ignore these findings, even in Malaysia. If companies do not change their way of doing business quickly, they may lose their present market share when the number of older consumers is increasing taking with them their huge purchasing power. In fact, there are new opportunities to create products and services to meet the changing physiological needs and lifestyle of these new old consumers in Malaysia. Many are pursuing a fun, active and trendy 21st century lifestyle.
For instance, Silver independently conducted SilverAudit on several top brands around the world including Apple. It reveals that Apple Inc, a company that seemingly appears to market to a young and trendy cohort, is in fact one of the most age-friendly brands. From their simple and clear online presence and intuitive products to their phone sales support, Apple scored 4.4 out of a possible 5.
Research from the United States indicates that between 25% and 44% of Apple’s customers are aged 55+ and their recent meteoric sales and share price appear to reflect the benefits of their inclusive marketing savvy.
Apple Inc understands and leverages brand loyalty to the fullest it has succeeded in tapping into baby boomer trends for the last three decades. The boomer consumers have rewarded Apple until today.
Other consumer companies targeting older consumers are also seeing greater business growth and better stock performance.
JP Morgan’s Aging Population Index which tracks a selection of stocks with exposure to this group of consumers, found that stocks of companies most likely to benefit from the ageing population included anti-ageing products, clothing, hotels, cruise lines (tourism) besides the usual suspects such as health, wellness and pharmaceutical businesses.
In fact this index has outperformed the S&P 500 Index in six of the past eight years! Now, isn’t this another interesting piece of insight?
Without a doubt, “age-friendly to older consumers” is the new mantra for business. In Asia Pacific, the explosive growth of the 50+ population will definitely mean there will be a large, affluent market that no company can afford to ignore. Understanding their changing needs and offering an age-friendly customer experience will be critical to retain their existing customers’ loyalty and attract the business of others.
The essence of the age-friendly mantra can also be extended to basic daily needs including housing, transportation and nursing care.
Age-friendly business for older consumers must be price-friendly. Otherwise, it will be financial challenging for baby boomers to continue enjoying the lifestyle they are used to.
As smart consumers of these products and services, we must be smart with our wallets and bank accounts too. We need to compare which company offers the best value for money products and services that meet our needs. It is better to be financially smart. We shouldn’t blindly follow trends and be unconsciously sucked into the consumerism trap.
There is another smart thing to do. Consider investing in shares of companies that boast age-friendly business lines. It may be a once-in-a-lifetime chance to make money from this booming opportunity. We are, after all, each contributing to the growth potential of age-friendly businesses as we get older. – Comment by CAROL YIP
Source: The Star