Monday, August 22, 2016

Looking for Inspiration: Excerpts About Ageism In Marketing

In his book Management Challenges for the 21st Century, Peter Drucker said the number one issue facing business is coping with the worldwide decline in birth rates. This has dramatically changed age ratios, making young people a smaller percentage of the population and older people a larger percentage (David B. Wolfe. Marketing to the new Customer Majority).

Population ageing is unprecedented, without parallel in the history of humanity. One of the great achievements of the twentieth century is a dramatic rise in life expectancy. But, increases in the proportions of older persons (60 years or older) are being accompanied by declines in the proportions of the young (under age 15). By 2050, the number of older persons in the world will exceed the number of young for the first time in history. Moreover, by 1998 this historic reversal in relative proportions of young and old had already taken place in the more developed regions.
The number of people aged 60 years and over has tripled since 1950, reaching 600 million in 2000 and surpassing 700 million in 2006. It is projected that the combined senior and geriatric population will reach 2 billion by 2050.
Most of the developed world now has sub-replacement fertility levels, and population growth now depends largely on immigration together with population momentum which arises from previous large generations now enjoying longer life expectancy.
The majority of older persons are women, as female life expectancy is higher than that for men. In 2000, there were 63 million more women than men aged 60 or older, and at the oldest ages, there are  two to five times as many women as men.
Countries with high per capita incomes tend to have lower participation rates of older workers.
Population ageing is enduring -we will not return to the young populations that our ancestors knew-, and has profound implications for many facets of human life.
The profound, pervasive and enduring consequences of population ageing present enormous opportunities as well as enormous challenges for all societies.
UN (2002). World Population Ageing: 1950-2050

As one would expect, companies should consider these demographical realities and adapt their strategies in order to stay on top of the economic game. Yet, unlike other industries such as travel and insurance, the advertising industry has been slow to respond to these changes (Vivek Vallurupalli. Too Old for Ads? Implications of Age Discrimination in Advertising).

For decades the advertising industry has worshipped at the altar of youth. Advertisers have been chasing young money since the nineteen-twenties, when consultants started advising companies to woo trendsetting flappers. The baby boomers cemented the youth infatuation; the Pepsi Generation was the biggest, most affluent, and most free-spending group of young people anyone had ever seen. In the sixties, ABC persuaded Nielsen to measure a show's popularity with younger viewers so that the network could demonstrate to advertisers that it was the boomers' favorite (James Surowiecki. Ageism in Advertising).

There's only one small problem with that: People 55+ spend the most money in almost all categories. They buy the most cars, spend the most on electronics, and control the most wealth. Yet more than 80% of the wealth in North American financial institutions is in the hands of people over 50, giving them 2.5 times the discretionary spending of the coveted 18 to 34 age group. They spend an estimated $2 trillion per year on products and services.

The advertising industry has focused on the key 18 to 49 target, believing that young people were most likely to develop lifelong loyalties to certain brands.
Media buyers estimate that 55% of the $20 billion spent in television primetime advertising is directed at the 18-49 age group.
Yet only 10% of all advertising is aimed at people 55+.
But, a RoperASW study found that people over 50 were as likely as younger consumers to switch brands for things such as banks, airlines, computers and even bath soap.
Another report showed that when it came to other product categories, like athletic shoes, home electronics and cellphones - older consumers were even more open to switching brands than younger ones. As a matter of fact, 78% of people between 56 and 90 are "likely" or "very likely" to try new products.
If the age-old axiom is to "follow the money," why isn't advertising's famous ability to do that kicking in?
There are three possible reasons (Terry O'Reilly. The Age of Persuasion. Ageism In Advertising):
  1. The average age of ad agency people is around 30. So if the people advising advertisers where to spend their money are young, it's not surprising that companies are being convinced they should be targeting the young. It becomes a self-fulfilling prophecy.
    Or perhaps companies suffer from what economists call an internal audience problem—the people who create their ads don't look like the people who buy their products (James Surowiecki. Ageism in Advertising).
  2. Marketing's lack of attention to 55+ is cultural. Ignoring older people is tolerated. If society feels that way at large, and if advertising follows the parade, why should marketers feel any different?
  3. The advertising industry has institutionalized the youth strategy. While it has recently shifted that demographic slightly to reflect ages 25 to 54, a lot of media thinking believes the 55+ consumers will be reached with the "spill" of their 25 to 54 media buys. But even the word "spill" suggests a lack of focus and respect. So advertisers continue shutting the door at age 49, or even 54, despite the fact that the 55+ market would probably grow revenues dramatically.

"There's now a kind of ritualistic, inertial quality to the way ads get bought", CBS's David Poltrack says. "The old categories are increasingly irrelevant, but we keep using them". Twenty or thirty years ago, brand loyalty was more durable. Consumers—particularly older ones—were less sophisticated and less restless, and had fewer brands to choose from. So it made sense to get them while they were young. But today the boomers, steeped in advertising from cradle to couch, are comfortable navigating a marketplace of limitless choice. Even people supposedly settling into their golden years have been taught to shop at Target, pop Aleve, and drink Starbucks. Of course, there is a demographic of genuine stick-in-the-mud types, who have decided what they're after and are resistant to all arguments to the contrary.
They're the ones who work in advertising. (James Surowiecki. Ageism in Advertising).

Today's richest market is the New Customer Majority-middle-aged and older adults who make up the biggest percentage of the buying public. Never before have adults 40 years and older been in the majority. Understanding this population and persuasively selling to it require a new kind of marketing research arsenal (David B. Wolfe, Robert E. Snyder. Ageless Marketing: Strategies for Reaching the Hearts and Minds of the New Customer Majority).
Older people behave differently. Changes in goals, values, and in what they want from life changes behavior as well as needs. Life satisfaction is more often sought in experiences than in things. The narcissistic and materialistic influences that drive much of the behavior of younger people tend to ebb among older people (David B. Wolfe. Marketing to the new Customer Majority).

Companies that want to tap into this important segment should start learning how to adress the needs of this market and how to reach it.

I started this post with Peter Drucker and I also want to finish it with another of his quotes:

"Basic assumptions about reality are the paradigms of a social science, such as management. They are usually held subconsciously by the scholars, the writers, the teachers, the practitioners in the field. Yet those assumptions largely determine what the discipline assumes to be reality (...)
For a social discipline such as management, the assumptions are actually a good deal more important than are the paradigms for a natural science (...) The paradigm -that is, the prevailing general theory- has no impact on the natural universe (...) The social universe has no "natural laws" (...) It is thus subject to continuous change. And this means that assumptions that were valid yesterday can become invalid and, indeed, totally misleading in no time at all (...)
What matters most in a social discipline such as management are therefore the basic assumptions. And a change in the basic assumptions matters even more" (Peter Drucker. Management Challenges for the 21st Century).

No comments: