Market potential of senior citizens

Date: November 11, 2013

Market potential of senior citizens

The "silver hair" or "senior" market is now one of the most untapped market segments in developed economies, with enormous upside potential. According to the US Society of Certified Senior Advisors, more seniors are living longer, are in better health, and possess more resources than at any time in history.

A growing market

The facts speak for themselves. Beginning in January 2011, according to figures from the Society, the Baby Boomer generation in the US has started turning 65. This means that an estimated 10,000 people a day will be reaching that age in the US. Currently, people 55 and older control more than three-fourths of America's wealth, spending more than $30 billion a year. Seniors account for 60% of all health-care spending, purchase 74% of all prescription drugs and 51% of all over-the-counter drugs, acquire 41% of all new cars, buy 25% of all toys, account for 80% of all luxury travel, and purchase $7 billion a year online. As one of the most financially active consumers, the senior market offers substantial business opportunities in developed markets.

Europe is experiencing similar demographic changes. According to the European Commission's 2012 Report on Ageing the European Union's population is expected to reach 517 million by 2060. The age profile of EU countries will also be undergoing dramatic changes in the years ahead, with a growing consumer segment expected to be aged 65 or over by 2060. The population segment aged 15 to 64 is projected to decline from 67% to 56%, while those aged 65 and over will rise from 17% to around 30%. The European Commission says that, on the basis of current policies, age-related public expenditures are expected to rise by 4.1 percentage points to around 29% of GDP between 2010 and 2060. And Europeans will also be living longer. The EU estimates that life expectancy is projected to increase from 76.7 years in 2010 to 84.6 years in 2060 for men and from 85.2 years to 89.1 years for women.

Japan is another country where savvy marketers can take advantage of the silver lining in its aging society. According to a CNBC reportJapan is growing faster than any country in the world. Nearly a quarter of its population of 127 million is above the age of 65, and by 2060 the elderly could make up as much as 40%. In recent years, this segment has emerged as big spenders, helping buttress the Japanese economy, while those under 40 tighten their purse strings. According to government data, households headed by those aged 60 and above accounted for more than 40% of total consumption in 2011, up from 30% in 2000. Traditionally viewed as savers, Japan's older generation is now seen as an engine of consumption that companies ranging from supermarkets to mobile phones are hoping to tap into.

But seniors need a tailored approach

Analysts say the senior market is one of the most difficult to succeed in because of the nature of its buying habits. For example, because of their rich life experiences, seniors are more likely to comparison-shop to find the best value and work with someone they trust who truly understands their needs. Seniors are guided by a combination of health, financial, and social forces, all of which are driven by their values and life-satisfaction determinants. All factors work together and influence a senior's buying decisions. Firms hoping to succeed in the senior market, therefore, need to invest the time and energy to learn its idiosyncrasies and employ practices that align with their senior clients' needs.

According to a report by Promotion World, when it comes to marketing to seniors, standard approaches aren't always effective. For example, establishing trust and credibility comes first with senior audiences, more so than in traditional segments, so experts suggest introducing your business and its brand before trying to make a sale. A "layered approach" seems to work best, they say, with the first layer being getting to know your senior customers. Next comes introducing your products and services, followed by a final relationship-building layer of listening and responding.

Marketers also need to "think senior-friendly," and that means being seen as a senior-friendly enterprise, with content aimed specifically at senior audiences. Experts say this means putting all your product and service objectives upfront and avoiding any complicated and complex jargon. Technical, wordy sentences will turn seniors off. Presentations should be clean and streamlined. Standard font should be used throughout, with subtitles bold and to the point, with plenty of white space on the page.

Don't overlook social media and online shopping

According to recent findings from Nielsen Netratings, seniors age 65 and older are also the fastest-growing age group online in the US. Not only are seniors living longer and becoming more active, they are also increasingly literate online. While seniors find online shopping attractive, it can also be a difficult and time-consuming endeavor to find the right products or information, which creates opportunities for those willing to tailor their marketing to this segment.

One area where seniors are increasingly active is social media, with seniors becoming the fastest growing users, according to a recent Forbes report Seniors no longer just use email, but search on Google, browse Facebook newsfeeds, and watch YouTube. According to the Pew Research Center's Internet and American Life Project the senior demographic is the fastest growing among social networks. There are currently roughly 39 million people aged 65 and older using Facebook, Twitter and Skype, making them the fastest growing demographic on these sites.

According to an All Assisted Living Homes 2010 report 11% of Facebook users are seniors, equivalent to 14.8 million users and representing a 1,448% annual growth rate. In many neighborhoods in the US, more seniors are taking classes to learn online tools. Pew Research found that 13% of adults 50 and older were already using Twitter, and that one in five seniors log on to Facebook for an hour a day.

So for brands that target senior citizens but never considered social media marketing, now may be a good time to consider this new medium. Experts suggest that brands that already have a social-media marketing plan create a separate account for the senior demographic in order to tailor content more specifically. They also need to have a more focused target, engage with senior users, listen carefully, and commit to frequent use and updating of their sites. Brands need to start understanding social media marketing toward senior citizens before all the Baby Boomers retire, since it will be a demographic that is more computer literate than any senior generation before it.

Some successful strategies

To tap into what is a $1 trillion market in Japan, companies there are going all out to target this growing demographic. Last August, Japan's largest wireless carrier NTT DoCoMo launched a new smartphone targeting seniors, as people aged 60 and older account for nearly a quarter of the company's customers. The new smartphone has larger fonts and icons with simplified steps for sending email and taking pictures.

A senior economist at Fujitsu Research Institute has noted that spending by older Japanese is transforming strategies at more and more companies in order to suit the needs of an aging population. For example, in April last year, retailer Aeon opened its first supermarket with a range of products and services aimed specifically at older customers, such as housing a medical center and providing shopping carts with magnifying glasses. Last year, Japanese diaper manufacturer Unicharm said that adult diapers in Japan exceeded those for babies for the first time. The travel industry is also benefiting. According to an industry survey, travel by seniors was stronger than by families, students or honeymoon couples.

Japanese firms are also targeting European consumers, where some European operators seem to be missing out on this growing market. Earlier this year, Fujitsu announced plans to launch a new mobile phone targeting European seniors, a segment where the penetration rate in the 55 to 65-year-old age group is less than 20%, and in the 65 and older segment is less than 2%. Fujitsu is introducing what it calls its "human centric engine," a collection of more than 50 individual technologies that make everything from touchscreens and noise-cancelling techniques more user-friendly for seniors.

In the US, some unlikely products are also making their way into the seniors market. For example, energy shots – pocket-sized bottles with names like 6 Hour Power, 5-Hour Energy, and ZipFizz – are now a favorite of many seniors over 60 who aren't ready to slow down with age. At retailer Costco, cases of the energy shots are stacked beside Ensure nutrition shakes and across from tubes of wrinkle cream. The industry leader, 5-Hour Energy, began running full-page ads in the American Association of Retired Persons Bulletin, which is delivered to 22 million households. The company's sales teams call on doctors and other health practitioners, giving them coupons to pass out to older patients.

So, whatever your delivery format, whether its print, email marketing or social media, the seniors market is likely to form an increasingly important segment in the years ahead. Marketing to seniors isn't any more difficult than marketing to other consumer groups as long as you make the commitment and take the right approaches.

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